Tuesday, 18 March 2008

Regulation and the Businessman

Dealing with regulation is component of managing a company. And this is where in many countries the trouble starts; you often simply don’t know how lengthy it will take before you can get on with doing business. A comment by a lawyer during a recent trip to Zambia describes: “After you deposit your documents at the land registry, it goes into a black box. Nobody knows when it will come out. It can take weeks, but also years.”

How do you plan for that? How do you act in response to clients, let alone execute their expectations and compete both locally and globally?

Many countries had start reforming after realising this is a problem. Unfortunately, many also think that legal time limits are the answer. Research had established that time limits don’t work unless they are tied with a silence is consent rule.

“In countries with time limits without such a rule, company registration took on average 19 days longer than the global average. Silence-is-consent rules also guarantee something that investors and entrepreneurs highly value: predictability. No response in 5 days means approval.” Source: Doing Business Blog

This works for administrative registrations, but what of court procedures or customs controls? At the end, institutions have to perform more efficiently. Predictability and speed will have to come with simplified internal processes and explicit rules. And that’s where any reform should begin – not with legal time limits.

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