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    20-Sep-2022

Replacing regulatory bodies - By YUSUF MANSUR, Jordan News

 

 

Jordan started its liberalization program in 1989 at the behest of the World Bank and the IMF, and after an economic collapse that was brought about by ballooning, unsustainable, and bad spending habits. Overspending on unnecessary and low-quality ventures (non-productivity enhancing type of spending), had swelled over a decade and a half prior to 1988, the year that preceded the storm. Thirty-three years later, the average per capita real income in Jordan remains below that of 1988, which indicates, among other things, that government spending remains profligate.  One area of apparent waste is the institutional framework of competition in Jordan.
 


It is well known in economics that competition legislation is the most important framework for the development of a country. Normally, the competition, law applies to all production, commerce and services in a country, as well as all international economic activities that have effect(s) on competition in the country.

There was no specific legislation governing competition in Jordan before 2002. After two failed attempts in 1995 and 1998, Jordan enacted the Competition Law No. 33 of 2004, which came into force on September 1, 2004, and replaced the Temporary Competition Law No. 49 of 2002. Revisions, in my view, have weakened the law. Furthermore, according to several studies, implementation of competition rules and regulations remains weak in Jordan relative to the powers extended to other sector-specific regulatory bodies in the country, which also happen to be more costly.
So why not have one supra regulator of competition instead of the various commissions, and thus save funds and avoid waste?
Let us look at the regulatory agencies in the country, which are bodies tasked with regulating competition in their sectors. Note that their powers may exceed those of the Competition Directorate that is nestled within the Ministry of Industry, Trade, and Supply, since the directorate is administratively below them. The individual commissions, which carry out regulations within their respective sectors, tend to maintain large numbers of workers and spend millions per year. In the 2021 Government Budget, four regulatory commissions spent JD32.7 million: the Energy and Minerals Regulatory Commission (JD4.8 million);  the Telecommunications Regulatory Commission (JD8.6 million); the Civil Aviation Regulatory Commission (JD10.2 million); and the Land Transport Regulatory Commission (JD9.1 million). Over JD462 million was spent on these commissions in the period 2011–2022. Moreover, the four commissions employ close to 800 employees. In comparison, the Competition Directorate has a few employees and a budget that is in the hundreds of thousands at best.

The upshot is the following: the function of regulatory commissions is principally to safeguard competition in their sectors, while that of the Competition Directorate is to protect competition throughout the Kingdom. So why not have one supra regulator of competition instead of the various commissions, and thus save funds and avoid waste? The answer is not so straightforward.

Some detractors would mention the technical expertise that is required to regulate these sectors. The answer is that competition issues are the same (price, quantity, and quality), regardless of sectors. When a case arises that requires expertise in a sector, technical experts are brought in to help with the investigative process.

Another question is what to do with all the staff? Most of the employees in these commissions are on contracts; they can be let go once the contracts expire or end. Some can be employed within their respective ministries, and those who were seconded from ministry departments can be returned to their old departments.

The whole concept of creating regulatory bodies followed the example of the Telecommunications Regulatory Commission, established in 1995, which was considered a success story and thus spurred the creation of other regulatory bodies.

Imagine how much money could have been saved had the above suggestion been adopted 10 or 15 years ago.


Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.
 

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