PERAK STATE RECOMMENDATION REPORT ON GOOD REGULATORY PRACTICE (GRP) Table of Contents Contents Page Table of Contents ii CHAPTER 1 INTRODUCTION 1 1.1 Background, mandate and methodology for 1 the study 1.2 Objective and Scope 2 1.3 What is GRP – NPDIR 2 CHAPTER 2 ABOUT THE STATE GOVERNMENT 6 2.1 State characteristics 6 2.1.1 Brief History of Perak State 8 2.1.2 No. of State Governments and Local 10 Authorities 2.1.3 Population by Local Authorities 13 2.1.4 Land area of Local Authorities 14 2.1.5 Population density 14 2.1.6 Median average resident income 14 2.2 Income of local authority from rates, 15 licenses etc. 2.3 Dominant economic activities and 16 industries 2.4 Regulatory Responsibilities (state list and 17 concurrent list) CHAPTER 3 ANALYSIS OF STATE GOVERNMENT RULE 18 MAKING PROCESS 3.1 Existing regulation and governance 18 rulemaking (include institutions) Rule making process of Perak Local Authorities ii 3.1.1 Mechanism of Rule Making Process (Current 23 Procedures) 3.1.2 Evaluation of the Existing Mechanism of Rule 29 Making Process (gap analysis but benchmarking against what) 3.2 Rulemaking Regulation and Governance 32 of Perak Land and Mines (PTG) 3.3 Gap analysis matrix – to compare between 36 existing state rule-making process with NPDIR CHAPTER 4 RECOMMENDATIONS & CONCLUSIONS 38 4.1 Recommendations to Improve the Rule 38 Making Process (recommendations) 4.1.1 Recommendation PBN & PBT 38 4.2 Conclusion 42 iii CHAPTER 1 INTRODUCTION 1.1 Background, mandate and methodology for the study The Government’s regulatory reform initiative took a significant step forward in 2013 with the introduction of the policy and guidelines for implementing good regulatory practice. The circular on the National Policy on the Development and Implementation of Regulations (NPDIR) was issued by the Chief Secretary to the Government of Malaysia on 15 July 2013 which requires all federal ministries and agencies to undertake good regulatory practice (GRP) and regulatory impact analysis (RIA) in developing new and amended regulations. This policy seeks to ensure that regulations are developed according to international best practice in regulatory management. In the Eleventh Malaysia Plan (2016-2020), Malaysia Productivity Corporation (MPC) has been mandated to expand the adoption of the National policy on Development and Implementation of Regulations (NDPIR) to states and local governments. This initiative is to accelerate a comprehensive and inclusive regulatory reform in Malaysia to ensure new and existing regulations, as well as their administration and enforcement, are aligned with GRP. For the purpose of this report, the methodology consists of three main phases: Phase 1: • Desk research – collecting data and information. • Data collected from several related website such as Department of Statistic, State Economic Planning Unit, 1 State Agencies, local Authorities and few other related websites. • Data and information also collected via phone call and email. Phase 2: • Analysis of data, review and confirmation of data and information. Phase 3: • Recommendations for improvement and report writing 1.2 Objective and Scope Generally, the objective and scope of this report is to develop a recommendation report to implement GRP for the state of Perak and Local Authorities. The specific objective and scope are: a. To analyze practices existing regulation and governance rule- making (include institutions) b. To find the gap analysis between existing state rule-making process with NPDIR c. To provide recommendation on how to improve the rule making process to ensure that it is align with NPDIR. 1.3 What is GRP – NPDIR The National Policy on the Development and Implementation of Regulations (NPDIR) has been developed to support the modernisation of the regulatory regime. There is increasing recognition that over-regulation, poorly designed regulations or in some cases under-regulation leads to regulatory failures which undermines the intentions of good policies. Global competition, social, economic and technological changes requires the government to consider the inter-related impacts of regulatory regimes, to ensure that regulatory structures and processes continue to be relevant, robust, transparent, accountable and forward-looking. 2 The goal of good regulatory policy is to achieve coherence, effectiveness, efficiency and accountability in the rule-making and implementation process. This modernization is also an essential part of realizing several of the policy objectives of the NEM that include: • Removal of barriers and reduce cost of doing business; • Improvement in decision making for policy implementation; and • Improvement in economic efficiency through enabling fair competition. The Special Task Force to Facilitate Business (PEMUDAH) was established by the government to ensure that Malaysia remains an attractive and competitive investment location. PEMUDAH has been addressing service delivery issues that relate directly to investment and starting a business. It has recognized that changes in rules and legislation are also required. NPDIR policy complements PEMUDAH’s efforts and will ensure that any new regulation does not result in disincentives to business, investment and trade. NPDIR guides the development of good regulations, which is essential in achieving the NEM policy objectives. It sets out core principles that regulatory authorities should adhere to in regulating and outlines a number of steps that will be taken to put the principles into practice. It will also seek to reduce, if not eliminate, cumbersome and inappropriate bureaucratic procedures that affect the cost of investing and the potential returns on investment. The objective of the policy is to ensure that Malaysia’s regulatory regime effectively supports the country’s aspirations to be a high-income and progressive nation whose economy is competitive, subscribes to sustainable development and inclusive growth. The policy is implemented to promote a regulatory process that is effective, efficient and accountable as well as to achieve greater coherence among the policy objectives of government. This policy applies to all federal government ministries, departments, statutory bodies and regulatory commissions. It is also applicable for voluntary 3 adoption by state government and local authorities. Regulators proposing new regulations or regulatory changes must undertake the regulatory impact analysis (RIA) involving the following components: • Problem Identification Regulators must establish clear objectives, evidence that a problem has arisen and government intervention is required. Regulators must ensure that risks are of sufficient significance to justify intervention. • Objectives Objectives of the proposal or the problem must be identified, described, analysed and documented clearly and concisely. • Instrument Options The objectives must be analysed to ensure the most effective and efficient option is chosen. It must be demonstrated that new regulations will help solve the problem. • Assessment of Impact An assessment of the impact (costs, benefits and where relevant, levels of risk) of a range of feasible options for consumers, business, government and the community must be carried out to assess potential effects. • Consultation Regulators proposing new regulations or changes must carry out timely and thorough consultations with affected parties. • Conclusion and RIS should include a statement identifying the Recommendation preferred option based on the impact analysis. • Implementation The implementation strategy and a review of the preferred option must be described comprehensively in RIS. 4 • Publication of RIS RIS is to be published on the regulator’s and MPC website as soon as practicable from the date of official announcement of the decision. In order to standardize the way that polices, laws and regulations are developed and improve overall regulatory quality, regulatory impact statements and public consultations were introduced. Under National Policy on the Development and Implementation of Regulations (NPDIR), all Federal Government regulators must undertake Regulatory Impact Assessment (RIA) and present the Regulatory Impact Statement (RIS) in the creation of all new regulations or review of regulations that relate to, or impact business, investments and trade, upon assessment by MPC. The process is also applicable for voluntary adoption by state governments and local authorities. RIA will be applied in all ministries and agencies. The tool is to enable governments to make sound analysis, evidence-based decision making and ensure transparency in all new and amended regulations. 5 CHAPTER 2 ABOUT THE STATE GOVERNMENT 2.1 State characteristics Perak is a peaceful and beautiful state, and full of opportunities. Bordered by a number of other states, Perak offers various privileges in aspects of economy, tourism, infrastructure and others. Perak or also known as Perak Darul Ridzuan is the second largest state in Peninsular Malaysia (after Pahang), with an area of 21,000 square km. It is one of the states that form the Federation of Malaya. Hulu Perak District with size, position and features itself is a special territory that the volume of population growth will be the smallest population between regions. Northern Region (Mature and Long Dissolved District as well Kerian region) as a growth region that driven by the ‘Greater Kamunting’ Growth Area is projected to be the focus of 23 percent of total population of Perak by 2040. Kinta Valley Metropolitan