The Importance of Regulatory Coherence for Connected and Integrated ASEAN

Intan M. Ramli and Mohd Yazid Abdul Majid
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Intan M. Ramli: Economic Research Institute for ASEAN and East Asia (ERIA)
Mohd Yazid Abdul Majid: Malaysian Productivity Corporation

Chapter 3 in The Comprehensive Asia Development Plan (CADP) 3.0: Towards an Integrated, Innovative, Inclusive, and Sustainable Economy, pp 80-99 from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: Regulations are important in achieving public policy objectives such as protecting the environment, worker protections, and public health and safety. Regulatory coherence is critical to the design of effective regulations, and regulatory cooperation should be considered but only implemented where it is both feasible and desirable. Therefore, governments should have established commitments to transparency and stakeholder involvement, as such inputs provide regulators the breadth of information needed to balance costs and benefits. In attracting investment and spurring innovation in the Association of Southeast Asian Nations (ASEAN) region, ASEAN has developed a good network and exchange of information with other nations, especially developed countries. In the process, each government must meet internal (within the capacity of organisations), external (balancing the efficiency demands of businesses with social obligations), and international (treaty) expectations. In matching those expectations, the governments of the ASEAN Member States (AMS) have undertaken rapid changes and adjustments to ensure their competitiveness and to avoid being left behind. Regulatory coherence is important to encourage businesses to participate in the market and avoid the dominance of certain firms – creating de facto barriers to entry and innovation. This is especially important as the world moves towards a more innovative economy through digitalisation, and as ASEAN integrates more fully in the global value chain (GVC), for which it needs to boost innovation while increasing trade and investment. Business groups, strong environmental advocates, and multinational corporations have always insisted on being part of decision-making (Farazmand, 2012). These demands have made governments proactive in balancing regulation with the economy, public safety, environmental conservation, and international trade agreements. To address these requirements, the adoption of ‘good governance’ by the respective governments can address market failures and improve the business environment through regulatory reform that will guarantee market efficiency (Sundaram and Chowdhury, 2013)

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