Regulation under constrained capacity: Lessons for Myanmar

Posted by , on July 13, 2021  /  0 Comments

Successful reform of telecom (or information and communication technology (ICT) infrastructure) sectors requires ex-ante, sector-specific regulation under present market and technological conditions. Theories and concepts relevant to regulatory agency design and the practice are not nation-specific. But what is appropriate for a particular country at a particular time depends on the fit between the conditions and the design, as pointed out by Levy and Spiller (1994). In addition, constraints are unique to specific times and places. It is for these reasons that this paper has Myanmar at this particular moment in its reforms as the problem domain.

Myanmar, having completed the “big bang,” initial reforms is in the process of establishing a regulatory agency to be known as the Myanmar Communication Commission (MCC). Due to years of enforced isolation from the world and neglect of education, Myanmar suffers from severe constraints in terms of skilled personnel. Having already achieved good results by learning from the experience with previous reforms, the government may benefit from learning from the experiences in the design of regulatory agencies and the conduct of ex-ante, sector-specific regulation. From desk research and questionnaires administered to informed respondents, this paper assembles relevant evidence from National Regulatory Agencies (NRAs) in member states of the Association of South East Asian Nations (ASEAN) of which Myanmar is a member. In addition, the paper identifies negative aspects of conventional solutions and suggests ways to address them.

The paper proposes solutions for the problems of finding qualified persons to serve on the decision-making collegial body and as the chief executive. On the former, a collegial decision-making body constituted by persons from within Myanmar who serve part-time, at least in the initial phase, is proposed. On the latter, the need for an expert with in-depth knowledge who can shape the culture of the inchoate organization is recognized. Given the paucity of persons with the necessary regulatory knowledge within Myanmar, there may be merit in creating a limited window/pathway for the employment of an expatriate Myanmarese or even a foreign national. In addition, the overall design of the reforms should factor in resource constraints by reducing discretion and setting default outcomes. The MCC should be required to publish regulatory manuals and work plans.

In terms of funding it is not advisable to rely on the central budget, because it can be detrimental to long- term stability of the NRA and because annual disbursements from general funds allows for the exertion of its ASEAN peers do, requires safeguards, such as the setting budgets and accountability. The yield from a regulatory fee may increase too quickly in a fast-growing industry. Review of budgets through periodic public hearing that reset the percentage is suggested.

Expertise that is sector specific is essential for NRA employees. What they require is knowledge that is different from the generalist knowledge characteristic of the “civil service.” While it is ideal to retain employees in the organization so that specialized knowledge can accumulate, the negative aspects of non- transferability, such as limited promotional prospects must be addressed. The ability to attract qualified personnel and hold them depends on compensation and working conditions. When designing compensation packages, it is necessary to think beyond just money, taking into account the intrinsic rewards of public service and the experience, public exposure and contacts that come from the roles. Outsourcing work to consultants is common in NRAs. This is to obtain expertise that is not available in house. It also helpful in dealing with the inevitable peaks and valleys of workload over time. The first rationale is especially relevant to NRAs in their early years and those lacking a pool of qualified and trainable persons to recruit from. Here, the emphasis necessarily shifts to the international, since the local labor market is where the problem lies. The paper discusses possible solutions to possible negative outcomes of outsourcing.

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