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Regulation needs a revolution

In a slowing global economy, we need to do away with unnecessarily bureaucratic measures

As Asean countries seek closer economic integration by eliminating tariffs and boosting trade, some members have come up with more regulations that can slow cooperation.

There has been a four-fold increase in the number of non-tariff measures (NTMs) in Asean from 2000 to 2015.

Some NTMs are unnecessarily bureaucratic. Indonesia demands that imported fresh fruit must be refrigerated for 17 days, at 2.8 deg C, before they can be sold in local markets.

This arbitrary provision imposes additional costs on foreign suppliers and makes their products less fresh and appealing compared to local produce.

In Thailand, it is mandatory for all imported goods to be labelled in the Thai language. This means other Asean countries have to redesign their packaging for Thailand, costing money.

While regulation is necessary to protect consumers, the rules should serve a practical benefit rather than become an unnecessary cost that makes products more expensive.

This is even more critical in a slowing global economy with rising uncertainties from a Donald Trump-led US, a Europe in the midst of Brexit, and a rising China. What the world needs is smarter, not more, regulations.

We need regulations that help lower barriers and boost trade, not deter it.

Smarter regulations should legalise ride-sharing services such as Grab and Uber rather than relegating them as pirate taxis in the hope of protecting traditional taxis.

What the world needs is smarter, not more, regulations. We need regulations that help lower barriers and boost
trade, not deter it.

Technology-driven new industries operating in the sharing economy offer new opportunities, and they must be met with a new regulatory outlook that will allow consumers choice instead of protecting old ways of working.

The Philippines was the first country in Asia to do so and, today, there are designated Grab passenger pick-up points around some Manila malls.

Some Grab "stands" have appeared inMalacca, Malaysia. It is good Malaysia and Singapore are putting in place legal frameworks to regulate such services.

Smarter regulation should allow companies to list dual-share structures, a major attraction for big technology start-ups. The top dual share-structure companies including Facebook, Google and LinkedIn in the US have a combined market capitalisation of US$927 billion (S$1.3 trillion).

Singapore gave the green light last September but the concept is still a no-go in Hong Kong - costing it Alibaba's listing.

The online shopping platform's founder Jack Ma recently said Hong Kong should reform its rules to attract new-economy businesses to remain relevant as Asia's financial hub as many of its regulations predate the Internet era.

Admittedly, the regulatory regime is a complicated process, with many stakeholders to consider. This results in tension and seemingly contradictory rules.

For instance, authorities in many countries know they should strengthen intellectual property (IP) laws to encourage local businesses to innovate, thereby creating more jobs.

Yet Australia and the United Kingdom are doing the opposite when they introduce laws that compromise trademarks such as getting tobacco products to be placed in plain packaging.

Singapore and other countries are also considering this.

It is important to protect public health but smarter regulators should find other ways to do so.

More worryingly, with the growing trend of a more health-conscious population, there is also a discernible shift towards regulating lifestyles and limiting citizens' freedom to choose.

The targets are products perceived as health hazards such as tobacco, sugar and trans fat.

Activists are campaigning for governments to dissuade people from smoking and snacking, through measures that range from packaging rules to taxation.

In some Asean countries, Singapore included, there is talk about taxing sugary foods and drinks to fight diabetes.

It is unfathomable how such a policy can be implemented in a way equal to all actors, a key element of rule of law. Or will we see populist practices, such as taxing only multinational corporations and ignoring the teh tarik served in a kopitiam?

If stricter regulation is deemed necessary, it is useful to follow the 2012 recommendations of the Organisation for Economic Co-operation and Development.

This includes engaging the stakeholders such as business communities and consumer groups to reach a consensus on new regulation, introducing a regulatory impact assessment to identify policy goals, evaluating if regulation is necessary or other approaches are more ideal, and publishing reports on the performance of policies.

Has legalising Grab led to less public transport woes and satisfy consumer demands? Has plain packaging for tobacco products prevented smoking or led to more counterfeit cigarettes?

These are questions that regulators should seek to answer.

In a slowing economy, we need smarter rules that encourage innovation, drive growth and enhance consumer choice.

The writer is chief executive of the Institute for Democracy and Economic Affairs, and director of the South-east Asia Network for Development. He is also a board member of the Malaysia International Chamber of Commerce and Industry. This commentary, which ran in The Business Times yesterday, is an adaptation of his discussion points at the Financial Times' FT Business Regulation Forum held here on Dec 8.

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