Monday, October 24, 2011

The Inspection Reform Facilitated at High Level

The Inspection Reform Coordination Council supports the inspection reform process in Armenia aimed at facilitating the business environment, in particular, for small and medium enterprises.

The Armenian businessmen have been long complaining about the excessive burden, put on them by various inspection bodies. Nineteen state agencies have the right to inspect economic entities. Moreover, the inspection process is not regulated and as such contains corruption risks.

The Council, chaired by the Prime Minister, was established in 2011 to address these issues. The objective of this reform is to introduce the EU approach of risk-based inspections in all inspectorates. This concept envisages assessing the risk of each economic entity based on clear and tangible criteria. The companies with higher level of risk will be audited on an annual basis, while others - once every 3-5 years.

In order to overcome the resistance from state agencies, it was important to secure the involvement of the private sector in every step of this reform. A number of business associations have played a very active role in the Council's activities.

Since its inception in the beginning of 2010, this reform has achieved tangible results: the risk-based approach has been developed for the fire inspectorate, hygene and anti-epidemiological inspectorate and labor inspectorate. Another important process - preparing of checklists for another 10 inspectorates - is now at its final stage.

To rapidly move the process further, on 17 July 2011 the Armenian Parliament adopted amendments to the law on state inspections and legislatively introduced the risk-based concept. The Prime Minister issued a decree suspending inspections by the inspectorates which do not comply with the new risk-based inspection system. Currently the EBRD's Business Support Office is assisting the Secretariat in making amendments in laws and sub-legislative acts, regulating inspection functions of supervision bodies, to secure smooth implementation of the new law.

The EBRD BSO has provided assistance to the Council Secretariat in all aspects of the reform, from mapping of current inspections and reviewing of about 500 laws to defining the risk-based approach, drafting the checklists, etc. Among other things, the BSO worked extensively with the business community in raising the awareness of this reform, discussing and seeking comments on legal and regulatory changes and drafting presentations to the Council.

The Armenian office of International Finance Corporation is also actively supporting the activities of the Council and has provided a team of experts to assist the Council's Secretariat.