Inspection Reform Conference: Approaches and New Trends for Effective Regulatory Delivery

2 - 3 June 2014

Lubna Aqqad, Ministry of Industry & TradeAbeer Shalan, International Finance Corporation

Business Inspection Reform in Jordan

National Reform Outlooks

The Royal Directive to the government on 29th March 2014 to develop a clear vision for the Jordanian economy for the next 10 years, based on several principles that include:

1. Improving the business environment and promoting policies that encourage innovation and sectoral development,

2. Supporting economic growth engines and improving competitiveness, and an investment-attractive environment to create more job opportunities for Jordanians,

3. Supporting productive enterprises and entrepreneurship as well as small and medium enterprises (SMEs) by promoting a competitive environment and preventing monopoly,

4. Improving the quality of government services provided to citizens in different areas to build on the Public Sector Reform Program.

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National Reform Outlooks

Since 2000, the government of Jordan adopted several reform and development programs particularly in the areas of investment and ease of doing business in order to provide an investment-attractive environment that contributes to the creation of new job opportunities, including: • Roadmap to improve Jordan’s ranking in competitiveness

reports, • Restructuring a number of public sector organizations,

particularly in the investment sector.• Enactment of a new investment law.

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Inspection as a factor for Economic Development

The existence of an integrated and effective inspection system would contribute to: • Improving the investment climate• Strengthening the government's ability to protect

citizens• Reducing injuries and accidents harmful to humans

and the environment • Reducing the informal economy• Facilitating access to foreign markets through

compliance with quality standards

Why is inspection reform needed in Jordan

• The Prime Minister's response to repeated requests from the private sector to improve the system of regulation and inspection, expressed in his periodic meetings with representatives of the various sectors of the economy

• The average annual cost of inspectorates is JD 14,688,6oo in operating and capital expenditure

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(* According to a regulatory impact assessment study evaluating proposed alternatives to reducing overlap and duplication, 2010)

• The Increase in the size and number of economic establishments to be regulated, which constitutes an administrative burden on government agencies

• Change in the nature of economic establishments’ work, which poses a challenge to the government's ability to monitor compliance in a systematic and sustainable manner

• Conflicts of specialties and legislation leading to duplication of efforts and lack of focus in inspections of economic establishments

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Economic

Framework

Private Sector

Public Sector

• Overlap and conflict between the roles of the various inspectorates

• Multiplicity of inspection visits and their lack of prior planning

• Lack of clarity and consistency of inspection procedures

• Absence of mechanisms for inspection planning, targeting, and prioritization

• Insufficient communication between inspectorates and the private sector

• Lack of clarity of technical requirements and the lack of information about them

Inspection Regime: Present and Future

Reviewing the

inspection system

Focusing on high-risk

establishments and coordinating with stakeholders

Lesser burden on the private

sector

Better understanding of requirements

Better complianc

e

Frequent inspection

with limited

resources

Inefficient and

ineffective inspection

Heavier burden on the private

sector

-Attempts at compliance evasionBribery and corruptionBusiness exit

Low complianc

e

Government Initiatives for Inspection Development

• The Government adopted many initiatives for inspection reform in the concerned inspectorates

• To enhance work on the national level, the Government adopted the National Strategy for Inspection Reform

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National Inspection Reform Strategy

• The National Inspection Reform Strategy was developed by the ministry of Industry & Trade in cooperation with IFC and USAID in order to upgrade inspection and address challenges

• The Strategy was approved by His Excellency the Prime Minister in 2009

• It includes international best practices in inspection• It forms a comprehensive reference that can be

applied in different inspectorates• A national program for implementing the strategy is

currently being carried out through a partnership between the Ministry of Industry and Trade, IFC, and USAID and in cooperation with the various inspectorates

High-Quality Inspection SystemsHuman

Resource Managem

ent

Strategies and Plans

Risk-Based

Planning

Coordination and

Cooperation

Operations and

Procedures

National Inspection Reform Strategy-Main Pillars

• Identifying establishments subject to inspection

• Drawing action plans

• Availability of resources

• Monitoring performance

• Legal tasks of inspectorate

• Appropriate penalties

• Availability of criteria for risk assessment

• Availability of the necessary information on establishments

• Distribution of sectors according to risk level

• Limiting frequency of inspection visits

• Determining the duties, authorities, and rights of the inspector and business owner

• Developing clear operating procedures

• Determining the technical requirements needed

• Developing inspection checklists

• Appeals and complaints

• Job description • Training • Performance

evaluation • Employment

policies • Rewards and

incentives • Code of conduct

• Reducing overlap and duplication

• Providing means of communication and information exchange

• Awareness and guidance

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Success Factors• The Government of Jordan's adoption of reform and national

development programs, especially in the areas of investment and ease of doing business

• Government's commitment to the implementation of the National Inspection Reform Strategy and the Prime Minister's follow-up on achievements, and his approval to form a Higher Committee for inspection reform co-chaired by the ministers of Industry & Trade and Public Sector Development with membership of the secretary generals/general managers of the relevant agencies to oversee the program, and act as a national umbrella.

• Adoption by some inspectorates of inspection reform programs • The existence of a national institution for the development of

specifications, measures, and technical standards • Availability of the infrastructure for information technology in some

inspectorates and the existence of the e-government program and a national center for information technology

• Donors’ interest in, and support for inspection reform• Availability of international best practices and experts

National Program for Inspection Reform

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In partnership with

Phases of Work

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National Inspection

Reform Strategy

2009

National Inspection

Reform Program

2012 - 2015

Pilot Reforms at the Ministries of

Environment and Labor

2007 - 2009

Designing the

program and

securing funds

2010-2011

First Phase

Second Phase

Pilot Reforms at the Ministries of Environment and Labor: • Contributing to the development of inspection policies • Inspectors’ manual, which contains operating procedures,

forms, checklists, relevant legislation, authorities, and performance indicators

• Training inspectors on inspection procedures and the required skills

• Criteria for assessing economic establishments’ risk levels • Inspectors’ code of conduct • Brochures for business owners to raise their awareness of

the rights and duties of inspectors and business owners

First Phase: Inspection Development Project 2007-2009

National Inspection Strategy: • Involving other inspectorates concerned and acquainting them

with the achievements of the Ministries of Labor and Environment • Developing the national strategy in consultation with all regulators

 

Recommendation to develop a national program for strategy implementation and assigning the Ministry of Industry, Trade and Supply to follow up on implementation:

• Expanding the experience of Labor and the Environment to other inspectorates

• Developing mechanisms for integration and collaboration between inspectorates

First Phase: Inspection Development Project 2007-2009

Second Phase: National Inspection Development Program 2012 – 2015

Developing high-quality inspection systems in line with Government policy to improve the investment climate through:• Reducing unjustified burden on businesses from unregulated

inspection • Enhancing transparency and clarity in regulatory activities • Organizing and clarifying procedures and technical

requirements • Improving the performance of inspectors and raising their

efficiency • Increasing the efficiency and effectiveness of government

organizations • Enhancing the credibility of the public sector in protecting

citizens

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Participating

Inspectorates

Labor

Environment

Tourism

Energy

Food and Drugs

Social security

GAM/ Municipalit

ies

Health

Agriculture

Civil Defense

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Reducing overlap and duplication

Framework for the Higher Committee for Inspection Reform

National Enterprise Registry

Inspection Operational Manuals

Automation of procedures

Human Resources Management

Includes developing areas related to each inspectorate individually

Includes cross-cutting areas among inspectorates

National Inspection Reform Program

Vertical Reform

Horizontal Reform

Partnership and cooperation with the private sector

Main Performance Indicators

• Reducing the total number of inspection visits to any one facility• Reducing the average number of inspectorates who visit an facility

per year • Reducing the number of violations and warnings to private sector

businesses• Reducing the number of complaints from citizens about private

sector facilities• Raising the private sector’s awareness level of requirements and

regulatory obligations • Raising the private sector’s awareness level of their rights (such as

the right to appeal and complain) • Improving the private sector’s satisfaction with the performance

and conduct of inspectors

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Progress and Achievements

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Inspection Operational Manuals

Description AchievementsDevelopment of inspection guidelines and standard operating procedures in accordance with international best practices in order to: • conduct inspections in a uniform

and acceptable manner based on best practices

• Prepare for the stage of automation (Integrated Inspection Management System -IIMS) based on standard procedures

Development and printing 1,250 copies of the inspection manual for inspectors in seven inspectorates, namely the Ministries of Tourism, Agriculture, Energy, and Health, as well as the Greater Amman Municipality (GAM), the General Directorate of Civil Defense, and the Drugs directorate at Jordan Food and Drugs Administration (JFDA)

The inspection manual contains a number of chapters that deal with the legal, economic, and institutional framework, as well as guidelines for inspection planning and visits, an inspectors’ code of conduct, and a special booklet on the basic skills needed

Standard operating procedures include identifying establishments subject to inspection, planning for inspection, types of inspection, appeal to inspection decisions, and collecting feedback from beneficiaries

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National Registry and Process Automation

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Description Achievements Building a central, shared, and

comprehensive database of all economic establishments

Coordination between inspectorates through an electronic inspection management system which connects inspectorates and allows them to exchange data and information about inspections under an agreement between all parties to maintain the confidentiality of information

Computerizing inspection procedures at inspectorates. This includes preparing plans, inspection schedules, electronic checklists, and visit reports, as well as extracting statistics

A general assessment of existing databases and systems

Prepared a high-level design for the national database and automated inspection system

Assessed different alternatives for hosting the system and recommended the most appropriate alternative

Identified requirements needed to build the system e.g. servers, infrastructure and networks

Prepared an implementation plan and tender documents for the implementation and deployment of the system

Human Resources Management

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Description AchievementsDeveloping a human resource management strategy for inspectorates that includes: Job descriptions Authorities of inspectors Appointment criteria Criteria and mechanisms for

performance evaluation and incentives

Classification of inspectors Inspector competency model

(technical, interpersonal and communication skills)

• This pillar will be launched in the

second half of June 2014 where

the general framework of work

on this pillar has been prepared,

and a team of specialized

consultants has been formed

Reducing Overlap and Duplication

Description AchievementsThis pillar aims to identify and resolve areas of overlap, duplication, inconsistency, and redundancy in business inspection through a comprehensive review of the regulatory frameworks of inspectorates from the legal and institutional standpoints, and developing recommendations to reduce overlap and duplication

Legal instruments have been compiled, such as laws, regulations, instructions and memoranda of understanding

A study and analysis of areas of overlap and duplication in the four key areas of inspection (labor rights & OSH, environment and water, public safety, and public health & food) has been completed

Final recommendations will be prepared in consultation with stakeholders from the public and private sectors (could include: merging certain functions, delegating functions, specialization by sector or geography, others)

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Framework for the Higher Committee for Inspection Reform

Description AchievementsEstablishing a national umbrella for inspection reform consisting of senior management in inspectorates that is vested with the necessary powers with purpose of: Improving collaboration and

coordination between the various inspectorates in Amman and the governorates

Setting plans to develop and reform inspection systems

Increasing the efficiency and professionalism of Inspectors

Supporting awareness activities for the private sector

Overseeing the inspection reform programs according and follow up on their work

A higher committee for inspection development was formed and approved by the Prime Minister

The Ministry of Industry and Trade was assigned the secretariat of the Committee

A regulatory framework for the work of the Committee was developed and approved by the Prime Minister

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Partnership and Cooperation with the Private Sector

Description AchievementsDevelopment of tools that enable the private sector to communicate with government agencies and provide their feedback on inspections

Development of a private sector feedback application using smartphones, "Tawasol“

A standard procedure to receive appeals on inspection decisions taken

A standard procedure to handle private sector feedback and comments

Awareness programs and tools to help enterprises understand regulatory requirements and keep them abreast with the latest updates, including: Introducing a link on the website of the

Ministry of Industry, Trade and Supply Preparing a guide for businesses on

requirements

Future

Consultation and coordination in decision-making and setting recommendations

Ongoing

Next Steps

• The practical application of inspection manuals and standard operating procedures

• Deployment and implementation of the automated integrated inspection management system

• Developing a HR management strategy for inspectorates

• Developing and approving recommendations for the reduction of overlap and duplication

• Building risk assessment criteria and tools26

Thank you

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