Nitya Nanda CUTS International Jaipur, India Advocacy and Capacity Building on Competition Policy...

Nitya NandaCUTS International Jaipur, India

Advocacy and Capacity Building on Advocacy and Capacity Building on Competition Policy and Law in AsiaCompetition Policy and Law in Asia

(7Up2 Project)(7Up2 Project)

Project Synthesis ReportProject Synthesis ReportPreliminary Draft

Structure of the reportStructure of the report

IntroductionPolitical Economy ContextMarket and CompetitionSectoral Regulatory PoliciesConsumer Protection and CompetitionAnticompetitive PracticesPerspectives on Competition PolicyConclusion

IntroductionIntroduction - Objectives - Objectives

Establishment of structures/actors able to advocate efficiently Developments/changes in competition law and policy Establishment of enhanced training facilities in the country Development of a dialogue between consumer groups and government officials.

Introduction - MethodologyIntroduction - MethodologyTwo Pillars: Research and advocacyCountry research partnersResearch: Secondary information, empirical/case study and some field surveysAdvocacy: NRG, Training, Dialogues etc.This Report: A Synthesis Country reports – five countries NRG meetings and the review meeting,

other secondary sources

Political Economy ContextPolitical Economy Context

Four least developed countries, one developing countryLargest LDC and one of the smallest LDCsHistory of centrally planned command and control type, one-party ruleDemocracy – emergingLandlocked and hillyEndowed with huge rivers and water bodiesPopulation: 144m in Bangladesh to 6m in Lao PDR

Per Capita IncomePer Capita Income

0

100

200

300

400

500

600

Bangladesh Cambodia Lao Nepal Vietnam

Pe

r C

apit

ia In

com

e in

US

$

GDP Growth Rate (2000-2004)GDP Growth Rate (2000-2004)

0

1

2

3

4

5

6

7

Growth Rate 5.973706672 5.69738144 6.441826867 5.291787292 3.469501634

Lao Cambodia Vietnam Bangladesh Nepal

Economic Structure Economic Structure ((Percentage share)Percentage share)

0

10

20

30

40

50

60

70

80

90

100

Lao,PDR Nepal Bangladesh Cambodia Vietnam

Agriculture Industry Services

The Year 1986The Year 1986

Bangladesh: The Industrial Policy, 1986Lao: November, Fourth Congress of LPRP - New Economic MechanismVietnam: December, 6th Congress of CPV, Doi MoiCambodia: Hun Sen became the Prime Minister and the First Five-Year Program of Socio-economic Restoration and Development (1986-90) started Nepal: Assembly elections (pro-democracy sweep), Structural Adjustment Facility (SAF) programme with the IMF, bilateral textile agreement with the US

What Else Happened?What Else Happened?

February 1986 February 1986

27th Congress of the Communist Party of Soviet Union "Perestroika" (restructuring and

socialist democracy) "Glasnost" (openness and flexible

system of economic management) Rapid transition to communism?

Trade PolicyTrade Policy

Bangladesh: WTO, SAARC and BIMSTECCambodia: WTO (2003), ASEAN (1999)Nepal: WTO (2003), SAARC, BIMSTEC, IndiaLao PDR: ASEAN (1997) Vietnam: ASEAN (1995), US (2000)

Size of MarketsSize of Markets(GDP in PPP $bn)(GDP in PPP $bn)

258

28

10

35

202

0 50 100 150 200 250 300

Bangladesh

Cambodia

Lao PDR

Nepal

Vietnam

Trade OpennessTrade Openness((Figures in $bn)Figures in $bn)

Countries Exports Imports Trade (Exp+Imp)

GDP Openness = (Trade/GDP)

X 100

Bangladesh 7.478 10.03 17.508 56.8 25.75

Cambodia 2.311 3.129 5.44 4.597 118.35

Lao PDR 0.365 0.579 0.944 2.412 39.14

Nepal 0.737 1.8 2.537 6.7 37.87

Vietnam 23.72 26.31 50.03 44.0 113.70

Products with high Products with high concentrationconcentration

Country Products

Bangladesh Toiletries, tobacco, pharmaceuticals, cement

Cambodia Tobacco

Lao PDR Cement, beer, tobacco, motorcycle

Nepal Cement, sugar, iron & steel, paper, dairy products

Vietnam Tobacco (cigarettes), beer, soft drinks, cement, petroleum products, steel, sugar, fertiliser, automobiles, motorcycles

*Based on available information only. There can be several other products with high market concentration

Cost of starting businessCost of starting business

Countries No of procedures

Duration (days)

Cost (US$)

As proportion

of PCI

Bangladesh 8 35 352.86 0.896

Cambodia 11 94 1550.50 4.58

Lao PDR 9 198 61.82 0.159

Nepal 7 21 183.83 0.759

Vietnam 11 56 136.07 0.258

Hong Kong 5 11 824.77 0.030

USA 5 5 210.00 0.00528

Singapore 7 8 261.65 0.011

India 11 89 264.59 0.413

Some Notable BarriersSome Notable Barriers

Saturated industry: BangladeshApproval of a state-owned enterprise: Cement (Vietnam), Electricity (Nepal)Regulations at sub-national and local levels: Preah Vihear (Cambodia)Government licence not enough: Bangladesh, Nepal

Some Regulatory IssuesSome Regulatory IssuesInadequate or no regulationRegulators are usually not “independent”Independent regulatory agencies often have potential problems -"regulatory capture" by other groupsAnd industry capture can undermine the effectiveness of regulationWeakness of the overall administration systemLow sophistication level of policy-making skills

Consumer ProtectionConsumer Protection

Nepal and Vietnam have enacted statutes, but implementation…Nepal Consumer Protection Law has competition provisions, while Vietnam Competition Law has consumer protection provisionsBangladesh and Lao PDR are considering their draft lawsCambodia ??

Level of AwarenessLevel of Awareness(percentage of unaware)(percentage of unaware)

Prevalence of anticompetitive Prevalence of anticompetitive practicespractices

Need for competition lawNeed for competition law

Objective of competition lawObjective of competition law

ConclusionConclusion

Thomas Jefferson, "The price of freedom is eternal vigilance." - price of free market is eternal regulatory vigilance. Regulatory bodies are important components of social infrastructureAppropriate regulatory framework is a development requirement.Independence, accountability, conflict of interests

Conclusion (contd.)Conclusion (contd.)

Business opposition: Genuine or government alibi?Desired outcomes - complement by consumer protection regulatory lawsHybrid law or agency for small countries - paucity of financial and human resources, inter-sectoral learning, resolving interface problemsConsumer lobby is almost non-existentCapacity building of the regulators, policy makers and other stakeholders