The legislative role of the state

Dr Nabil FahedVice Chairman

Chamber of Commerce , Industry, and Agricultureof Beirut and Mount Lebanon

March 26, 2013

The legislative role of the stateThree main categories of legislation and regulatory

intervention that affect entrepreneurs and markets:

1) laws and regulations that impact the economy as a whole, the structure of the business sectors, and the pace of its growth and development;

2) legislation that directly affects the business environment

3) regulatory action that seeks to meet demands of interest groups.

 

CSR in the context of Pro-Business & Civil Society Lobbying

The Welfare of the citizensThe Balance in the EconomyThe Interests of the Business

CommunityValue SystemImpact AnalysisEconomic Analysis based on moral

considerations not only objective elements

Global competitiveness Index 2012out of 144 countries / World Economic Forum

Soundness of Banks 12Ease of Access to Loans 37Intellectual Property Protection 124Wastefulness of Government Spending

127Judicial Independence 131Bribes 132Government Services for Businesses 137Quality of Infrastructure 141Public Trust in Politicians

142Quality of Electricity Supply 144

IFC Survey: Ease of Doing Business 2012

Lebanon’s Overall Rank 95Topic Rankings DB 2013 Rank DB 2012 Rank Change in Rank

Starting a Business 114 111 -3Dealing with Construction Permits 172 161 -11Getting Electricity 47 46 -1Registering Property 108 111 3Getting Credit 104 97 -7Protecting Investors 100 98 -2Paying Taxes 37 36 -1Trading Across Borders 95 94 -1Enforcing Contracts 121 121 No changeResolving Insolvency 131 131 No change

The legislative role of the stateLebanon’s legislators and policymakers should be

drawing on a long tradition of efficiently managing a free enterprise economy.

Our policymakers should have developed a vision as well as the appropriate legislation that would have placed the post-conflict economy back on a path of growth and prosperity.

The legislative role of the stateYet, what the business sector is currently enduring is

a three-pronged jeopardy:

1. our economy has become inordinately dependent on capital transfer for its wellbeing.

2. legislative lethargy thwarted the modernization of laws and regulations and undermined efforts to integrate the economy within the emerging global trade and investment order.

3. the fiscal drag has rendered fiscal policy quasi ineffective.

The legislative role of the stateReform and Corruption

Business legislation based on: the sanctity of private ownership of personal and business

assets, the freedom of movement of capitalnon-intervention in the interplay of market forces, were

never questioned

Legislators and policymakers should have capitalized on these principles to create a business environment that should have acted as a much stronger magnet to FDI.

The business sector bears the high cost of dealing with the public administration combined with a reluctance to reduce red tape, political opposition to reform, and corruption.

 

The legislative role of the stateRole of Impact Analysis

State’s response to the pressure and lobbying of interest groups’ demands and balancing the costs and benefits of any legislation it contemplates to enact in response to these demands.

The net impact of a policy decision on collective welfare can only be assessed by the universally adopted approach of Impact Analysis.

How many of our laws and regulations were subjected to the rigor of an impact analysis to determine whether their net result will advance or set back communal welfare?

The Beirut Chamber’s Research Center applied the method of regulatory impact analysis to a regulation imposed on the food processing industry. The analysis was conducted less than a year ago, and to our knowledge it was the first, and so far the only such study.

The legislative role of the stateCommunal Welfare

Meeting indiscriminately all the demands of pressure groups that constitute society is neither the proper role of statesmanship nor is it feasible in practice

Different groups have conflicting interests and aspirations.

Good governance, therefore, requires granting various interest groups the dose of concessions that would generate the highest level of societal welfare.

That exercise in optimization is never easy. Suffice it for lawmakers to strive to reach the highest realizable level of communal welfare.

RANKINGS AND DATAIFC SURVEY 2012

Ease of doing business (rank): 95

Starting a business (rank): 114 Procedures (number): 5Time (days): 9Cost (% of income per capita): 67Minimum capital (% of income per capita) 35.2

Doing Business in Lebanon (2012)

Dealing with construction permits(rank): 172 Procedures (number): 19Time (days): 219Cost (% of income per capita): 301.8

Getting electricity (rank): 47Procedures (number): 5Time (days): 75Cost (% of income per capita): 99.5

Doing Business in Lebanon (2012)

Registering property (rank): 108 Procedures (number): 8Time (days): 25Cost (% of property value): 5.8

Getting credit (rank): 104 Strength of legal rights index (0 -10): 3Depth of credit information index (0 - 6): 5Public registry coverage (% of adults): 18.6Private bureau coverage (% of adults): 0.0

Doing Business in Lebanon (2012)

Protecting investors (rank): 100 Extent of disclosure index (0 - 10): 9Extent of director liability index (0 - 10): 1Ease of shareholder suits index (0 - 10): 5Strength of investor protection index (0 - 10): 5

Paying taxes (rank): 37 Payments (number per year): 19Time (hours per year): 180

Doing Business in Lebanon (2012)

Trading across borders (rank): 95Documents to export (number): 5Time to export (days): 22Cost to export (US$ per container): 1,080Documents to import (number): 7Time for import (days): 30Cost to import(US$ per container): 1,365

Doing Business in Lebanon (2012)

 Enforcing contracts (rank): 121 Procedures (number): 37Time (days): 721Cost (% of claim): 30.8

Resolving insolvency (rank): 131Time (years): 4.0Cost (% of estate): 22Outcome (0 as piecemeal sale and 1 as going

concern): 0Recovery rate (cents on the dollar): 20.9

Doing Business in Lebanon (2012)