Gridlock No More How Regional Cooperation Accelerate Regulatory Reform The Case of Passenger Transport Sector Pich Nitsmer, Ph.D. 26 February 2007 Fiscal Policy Research Institute, Thailand 1

Fiscal Policy Research Institute 2 Presentation Outline Policy and Regulatory Process  Why sub-optimal?  How to reform? Regional Cooperation  Which forums and channels?  What to be gained? perhaps with the support of … 2

Fiscal Policy Research Institute 3 National Economic and Social Development Board 5-year National Plan 1) Transport Ministry2) A Ministry20) B Ministry Transport 5-year Plan Transport & Traffic Policy & Planning Office … A Policy & Planning Office Transport ≠ Thailand’s Policy Process: Top-down Policy X Implementation Incompetence Interference Sub-optimal Outcome B Policy & Planning Office Policy Y Policy Z 3

Fiscal Policy Research Institute 4 Department (e.g. Land Transport Dep.) Regulatory Process: Non-linear, Multi-agent Reg. Action Imposed on Operators Internal Internal: Safety, security & scheduling External: Price, coverage & social requirement External Commission (e.g. Land Traffic Commission)  Transport Permanent-Sec.  Land Transport Director-General  Police Commissioner-General  Bangkok Governor Problems  Limited regulatory expertise  Lack of inter-ministerial cooperation  Resistance from vested interest  Interference from rent-seeking public officials Can’t serve as check & balance tool b/c conflict of interest External 4

Fiscal Policy Research Institute 5 Regulatory Reform: Competition Enhancement Risks of Privatization w/out Effective Regulatory Regime  Shares majority-owned by govt  continued govt interference  Share distribution through IPO ‘unfair’  capture & rent-seeking  Operation unregulated  imbalance of economic & social ends Short-term Implications  To facilitate competition before privatization (e.g. quality standard & target for phasing out subsidy)  To strengthen regulatory muscles regardless of privatization How? 5

Fiscal Policy Research Institute 6 Reform: Independence and Other Conditions Regulatory Independence: Separation from Operation & Policy  Commission: Centralised?  Enabling factors (e.g. regulatory capability): How? Regulatory Check-and-Balance  Regulatory Impact Assessment (ex-post & ex-ante)  Transparency & Accountability 6

Regional Cooperation: the Case of APEC Expected Benefits from Regional Forum  Capacity building: Experience & expertise sharing (existing)  Regional institutional building: Developing regional vehicle for independent policy evaluation (not yet materialised) Bangkok Conference (2007) Proposal  Hadi Soesastro: ‘Establishing an ongoing APEC Productivity and Efficiency Commission … that has the capacity to respond to requests by APEC and member economies for analysis of micro- policy and regulatory issues’. Existing Mechanisms? 7

APEC Channels: Existing Mechanisms Trade & Investment Committee (Issue-specific - focusing on deregulation) Transportation Working Group (Sector-specific) Economic Committee (Issue-specific - focusing on reform) Possible Interactive Channels Business Advisory Council (Facilitator) Organisational Structure Leaders’ Meeting Ministerial Meeting Business Advisory Council Sectoral Ministerial Meeting Working Groups (11) - Transportation Economic Committee Trade & Investment Committee Experts Groups (11) - Competition & Deregulation 8

Economic Committee: Issue-specific LAISR Thematic Work Plan Mandate  To promote structural reform by undertaking analysis & action- oriented work PrincipleLeaders’ Agenda to Implement Structural Reform (LAISR)  Priorities in regulatory reform, economic & legal infrastructure, competition policy, governance & public sector management Capacity Building  Studies based on APEC-OECD Checklist on Regulatory Reform  Seminars on competition policy as a sub-set of structural reform Year Focus Issues Regulatory reform -Sector specific (e.g. transport) Economic & legal infrastructure Stocktake of progress on reform Public sector governance Competition policy all relevant to transport 9

Trade & Investment Committee: Expert Group Mandate  To enhance region’s competitive environment PrinciplePrinciples to Enhance Competition & Regulatory Reform  Strengthening the functioning of markets Capacity Building  Technical assistance & training in competition policy & regulatory reform  Competition policy & deregulation database Expert Group in Competition Policy and Deregulation Function Overlapping? 10

Transportation Working Group: Sector-specific Mandate  To achieve liberalisation of transportation services & to encourage sectoral development in Asia-Pacific while balancing safety, security & social objectives, thus focusing on facilitation of domestic policy regulation Principle2004 Transport Ministers Statements  Ensuring a safe, secure, efficient, integrated and environmentally sustainable transportation system for the region Capacity Building  Symposium on Intelligent Transport System Accessibility Very sector-specific but unrelated to the realm of regulation? How to integrate sector-specific with issue-specific mechanisms then? 11

Conclusion: Implications for Transport Value Chain Terminal Infrastructure Vehicle ConstructionSupply Operation regulated what about here? mostly state-run Capacity building through regional cooperation is also needed for procurement process to reduce interference & develop local suppliers along the chain. Component system integration

Fiscal Policy Research Institute 13 End of Presentation … Thank You Ari Skytrain Station – 10 minutes from the FPRI 13