Supporting Regulatory Reforms in Southeast Asia

Executive summary

A commitment to better regulation has been central to Southeast Asia’s strong economic performance. At the regional level, the Association for Southeast Asian Nations (ASEAN) includes regulatory reforms as part of several high-level strategies to promote regional economic integration. These strategies guide ASEAN Member States in their efforts to support public governance reforms, including using regulation to create sustainable conditions for business while protecting citizens, society, and the environment.

Historically, Member States started by adopting good regulatory practices (GRPs) – such as ex ante regulatory impact assessments (RIAs), stakeholder consultation and ex post reviews – and more recently have intensified efforts to build a whole-of-government system of regulatory governance and adopt innovative approaches, such as digital tools.

This report presents the current state of play for regulatory reform in ASEAN Member States across these three areas. Its goal is to foster mutual learning, both among ASEAN Member States and with OECD constituencies, to support domestic regulatory reform efforts. More broadly, it seeks to highlight the important role regulatory reform can play in reinforcing democracy and fostering trust. A collection of country profiles from all 10 ASEAN Member States forms the factual basis for the trend analysis in the first chapter.

Major trends in regulatory reform

Whole-of-government initiatives

International regulatory co-operation (IRC) continues to have a strong impact on better regulation in Southeast Asia, especially given the strategic priority placed by ASEAN on implementing systems to foster regional economic integration. While this focus on better regulation is reflected in high-level national strategic priority documents such as National Plans, they tend to be focused on improving the business environment, and less on regulatory reforms that support the environment or society more broadly. Finally, harnessing regulatory oversight as a centralised institution to drive regulatory reforms across government is taking hold, but more can be done to strengthen this function with the necessary structures and powers to encourage government agencies to adopt regulatory reforms in practice.

Good regulatory practices

Regulatory impact assessment (RIA) is becoming more widely adopted as a way to drive evidence-based policy making but is often seen as a procedural barrier rather than a tool to fundamentally change the way policy makers approach a policy problem. Stakeholder consultation appears to be a constant in almost every ASEAN Member State, though fewer have it as a whole-of-government requirement and it is unclear how consultation changes regulation in practice. Ex post review continues to be dominated by burden-reduction programmes, reflecting early regulatory reform priorities in the region, with only half of the ASEAN Member States using post-implementation reviews or sunset clauses.

Digitalisation

There is a clear movement amongst ASEAN Member States to adopt digital tools to improve regulatory policy design and delivery. All Member States have a national policy or strategy for promoting digitalisation, with a broad focus on public administration reforms. Most Member States focus on improving the business climate and procedures around designing or delivering regulations. However, it was recognised that digitalisation is not a cure-all and the unequal distribution of benefits need to be carefully addressed with holistic approaches to policy making.

Challenges and opportunities for regulatory reform

In addition to the data collected in the profiles, ASEAN Member State also provided feedback on the challenges and opportunities for future regulatory reforms. These include:

• Leadership: Members identified the need for strong leadership as a pre-condition for regulatory reforms to overcome initial internal resistance and to encourage the uptake of reforms.

• Powers and functions: Members noted the need for clear legal and institutional authority to drive reforms and avoid stalling due to lack of internal will to adopt reforms.

• Co-ordination: Building and maintaining a constituency for change was seen as an important avenue for removing roadblocks and gaining support for reform implementation.

• System change: Reforms require governments to adapt current systems of policy making, which can be difficult and imposes new challenges, such as interoperability or long delays.

• Resources: Reforms require an extensive commitment to change, the right financial and human resources to carry them out , and resource stability over time.

• Capacity building: Agencies driving reform need to support public servants across government to learn and adopt new ways of working, which can be challenging to deliver on a large scale.

• Fostering trust: Low-trust environments can result in resistance to reforms, requiring investments in awareness raising and demonstrating the positive benefits of new reforms.

Future of regulatory reforms

Finally, ASEAN Member States identified some expectations for future regulatory reforms in their respective administrations. These include:

• Improving the quality and delivery of online services: There is a strong recognition that online services can greatly benefit citizens; this became especially clear during the COVID-19 pandemic. Improving one-stop shops is seen as a centre piece of this strategy for many governments.

• Re-engineering government systems: Whole-of-government reforms will require further investigation into the most effective and efficient ways to make reform happen at the domestic level. This includes appropriate oversight and scrutiny functions to create positive incentives for change and reviewing mandates and functions of entities to ensure they are fit-for-purpose.

• Refining the use of good regulatory practice (GRPs): Legal requirements to use GRPs continue to be enhanced, but practical use of GRPs is still lagging. Continued political will to implement and iterate GRPs and linking them to broader objectives, such as the Sustainable Development Goals, will be important to bring about positive change on a macro level.