“Verily only Islam is the religion before Allah and the men of book did not dissent but after the knowledge had come to them, because of their hearts burning. and those who denies the signs of Allah ;then no doubt Allah is to call to account very soon” (Surah Al-Imran ayat 19)

“Again O beloved! If they argue with you, then say I have submitted my face before Allah and those who followed me and say to the men of book and to those who read not; have you submitted? Hence if they submit they got the guidance; and if they turn their faces then its upon you it is only to convey the message and Allah is seeing his bondsmen” (Surah Al-Imran Ayat 20)

Managing The Regulation

Flow of topics

Introduction Conceptual basis of Regulation Types of regulation Case of Geo Super Concept of Regulatory state Concept of Regulatory governance Regulatory governance in Pakistan List of regulatory agencies in Pakistan Model for effective regulation Conclusion

Sources

Regulatory reform and governance: a survey of selected developing and transition economies by Yin-fang Zhang and Margo Thomas, IDPM University of Manchester UK and World Bank.

Regulatory governance in developing countries Edited by Martin Minogue and Ladivina Carino.

Setting and enforcing regulation by Schiavo-Campo, Salvatore and McFerson, Hazel M.(2008). Public Management in Global Perspective, New York

Agencification in Pakistan: A Comparative Study of Regulatory    and Service Delivery Agencies (Paper for the EGPA CONFERENCE, 7-10 September 2010, Toulouse, France SG6: Governance of Public Sector Organizat

ions ) by Aisha Rizwan & Prof. Muhammad Zafar Iqbal Jadoon  Cabinet Division - Government of Pakistan. PEMRA Pakistan media watch PEMRA ordinance 2002

Institutions For Market Governance And Doing Business by Ishrat Hussain

INTRODUCTION

Regulation

Economic Theory of Regulation by

Adam Smith Market failures

Basis for Regulation

Public Interest theory of the English Economist Arthur Pigou,

An economic theory that holds that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices.

To benefit society as a whole

Regulation

Regulation is broadly defined as imposition of rules by government, backed by the use of penalties that are intended specifically to modify the social and economic behavior of individuals and firms in the private sector. (OECD)

Regulatory Targets: Prices, Output, Rate of return (in the form of profits, margins or commissions),

Disclosure of information

Indeed, the single most important source of corruption the world over is a complex, opaque and overlapping regulatory framework.

Accordingly, the strongest single anti-corruption measure, is regulatory simplification and streamlining.

Deregulation

The relaxation or removal of regulatory constraints on firms or individuals.

Promoting competition Market oriented approaches

Re-regulation

When new or additional regulations are enacted after an industry or sector is deregulated.

Reversing deregulation where it turns out to be impractical or unmanageable.

Sources of Regulation

Central government

Provincial government

Local government

Benefits & Costs of Regulation

Benefits of Regulation

Provide predictability and consistency for those outside as well as inside the government.

Reduce the scope for arbitrary behavior Enhance the likelihood of orderly and efficient

transactions Help legislators and citizens alike in holding agencies

accountable. (as all agencies have been created under special law)

The Costs of Regulation

Costs to the government of administering the regulation. Administrative and paperwork costs for businesses and

citizens…in developing countries this cost s estimated at almost 2% of GDP.

Especially heavy costs for the poor and for those without “connections”.

Quality of Regulation

The quality of regulation is inversely related to the volume of regulation

without an improvement in regulatory capacity, enforcement becomes more and more difficult, the more rules are to be enforced.

Types of Regulation

Economic Regulation

Social Regulation

Administrative Regulation

Economic Regulation

Directly affects the market, such as rules on pricing, competition, market entry or exit, employment, and access to credit.

National Electricity Power Regulatory Authority (NEPRA) Oil and Gas Regulatory Authority (OGRA) Pakistan Telecom Authority (PTA) Pakistan Electronic Media Regulatory Authority (PEMRA)

Social Regulation

Protect public interests, such as environment, health, safety etc (ex health warning on cigarettes)

Pakistan Medical Dental Council (PMDC) National Horticulture Authority (NHA) Health Development Agency (HDA) National Disaster Management Authority (NDMA)

Administrative Regulation

An administrative regulation is a regulation, issued by an administrative agency under authority granted by a legislature, rather than by a legislative body itself.

Administrative control of NCHD (National Commission for Human Development) by Cabinet Division

PEMRA vs. Geo Super

PEMRA & Geo Super

A show cause notice was issued by PEMRA to Geo Super for suspending its satellite transmission since April 5 in contravention to Section 28 of PEMRA Ordinance 2002 and clause 24.1 (c) of the license terms and conditions which prohibits any broadcast media or distribution service operator from ceasing or suspending broadcasting.

As a Pakistani citizen, sports lover and in national interest I hereby give license* to GEO SUPER to broadcast my country’s first and only sports channel from Pakistan.

*I also request the regulator and courts to enable GEO SUPER

to broadcast from Pakistan

REGULATORY GOVERNANCE

Concept of regulatory governance The concept of regulatory governance is still

relatively new even in developed economies. It can be seen as the framework for

regulation and defined as ‘the mechanisms that societies use to constrain regulatory discretion and to resolve conflicts that arise in relation to these constraints’ (Levy and Spiller, 1994, p.205).

More precisely, the concept covers both the design and implementation of instruments and methods for assessing the impact of regulation, and the governance principles such as transparency, accountability, efficiency, adaptability and coherence (OECD, 2002).

The regulatory governance agenda .

Adoption of processes and institutions Assurance of the quality of regulation. Maintenance and improvement over time. regulatory structures as an integrated whole. Linkage of regulatory reforms. Incorporates governance values. The central principle is that the success of

regulatory reform.

Background

Interventionist government replacement by

minimal state.

Result: “Regulatory State”

Emphasizes on “better regulation” and “good

governance”

Importance

Nicoletti and Scarpetta (2003); Estache (2004); Dollar and Kraay (2002) suggested that Good governance in general and regulatory governance in particular is critical to a sustainable development process while excessive regulation has negative effects on private investment, international trade and growth.

Appropriate regulatory frameworks are needed to tackle market failures, which can take the form of pervasive externalities in market transactions, monopoly abuse, missing markets and information asymmetries (Parker, 2002).

ISSUES REGARDING DEVELOPING COUNTRIES

It is most true that issues are there in developing and transition economies.

Lack of accountability, transparency and consistency in policy formulation and implementation.

Foreign investors are discouraged from investing .

Realization of urgency to improve regulatory governance.

More and bigger difficulties for developing and

transition economies.

Transference of best practices from developed countries. A reality gap between ideas of best practice and the

actual legal, administrative, political and economic processes that exist in low- and middle-income countries means that a ‘one size fits all’ approach is likely to produce perverse outcomes, or what is called ‘fatal remedies’ (Hood, 1998, p.208).

Lack of the essential institutional underpinnings . Consideration of a wider range of objectives. Emphasis on ‘pro-poor development’.

Regulatory Governance in Pakistan

Regulation through regulatory agencies.

Musharraf’s Regime.

Development and establishment of new

regulatory agencies at a large scale.

The List of few regulatory agencies in Pakistan are given below:

1. Pakistan Medical & Dental Council (PMDC)2. National Horticulture Authority (NHA)3. Health Development Agency (HDA)4. National Disaster Management Authority (NDMA)5. National Electricity Power Regulatory Authority (NEPRA)

6. Oil and Gas Regulatory Authority (OGRA)7. Pakistan Telecommunication Authority (PTA)8. Pakistan Electronic Media Regulatory Authority (PEMRA)9. National Commission for Human Development (NCHD)10. Pakistan Engineering Council (PEC)

Creation of the autonomous bodies revolved

around two main reasons:

1. International trend and policies of

international financial institutions.

2. To provide a professional goal-oriented

environment to the agencies.

According to Ishrat Hussain Until the beginning of this decade all functions of policy making,

ownership of the assets and regulatory oversight in Pakistan were bundled together and carried out by each Ministry. In early 2000s the Cabinet decided to unbundle these functions to avoid conflict of interest, protect consumers and provide a level playing field for both the public and private sectors. The concern was: How can a private firm compete with a public sector firm in the same field when the owner of the latter firm enjoys substantial relative advantages.

The Cabinet therefore set up an independent regulatory agency not answerable to the Ministry to carry out regulatory functions, it established autonomous Boards of Directors consisting mainly of independent non-executive Directors to govern the public sector firms and made the Ministry responsible for policy making only. This pilot experiment was carried out in the case of the Ministry of Petroleum and Natural Resources (MPNR). Oil and Gas Regulatory Authority (OGRA) was set up to regulate the oil and gas sector.

MODELS

Here I will discuss two models :

1. 360 degree view of accountability

2. The circle of accountability through the

regulatory cycle

360 degree view of accountability

Regulatory agencies

parliamentThe courts

Interest groups

Regulated companies

Consumers and

customers

Consumer representative

bodies

citizens

ministers

The circle of accountability through the regulatory cycle regulatory objectives

parliament and government parliament and government

The regulatory framework implementing lessons

Ministers regulators

Implementing regulation c conclusion of scrutiny

Ministers and independent courts overturn decisions

regulators

regulatory decisions

Macro•Appropriate statutory framework to meet

the objectives of the regulationMicro

•Competent authorities whether ministers or independent regulators

Reform•Formal proposal for revision of the statutory framework and repeal of

unnecessary regulations•Revised codes and guidance•Improved regulatory practice

Regulating the regulators•Complaints, appeals to the courts,

tribunals and commissions and judicial review

•Scrutiny of decisions by parliament, national audit office, consumer bodies,

press, experts and citizens.

CONCLUSION & SUGGESTIONS Capacity up gradation. Attention to strong enforcement. Role of government. There is no one “shoe fits all”. Filling of gaps. Three key elements focus:

1. Regulatory policies

2. Tools

3. Institutions

Kirkpatrick stated in 2006 :

“In search for better

governance,

regulatory reform is

critical.”