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This report examines Malaysia's early experience of implementing regulatory impact analysis (RIA) to support evidence-based rule making. The introduction of RIA is a key element of Malaysia's National Policy on the Development and Implementation of Regulations, launched in 2013. Malaysia has put in place the institutional infrastructure for implementing RIA at a rapid pace, learning from the experiences of a number of OECD countries among them Australia, the Netherlands, Korea and Mexico. However, Malaysia needs to move its attention from advocacy and awareness raising to guiding and supporting regulators to apply RIA. This report's recommendations focus on the need for the government of Malaysia to: consolidate the implementation of RIA over the medium-term; integrate RIA into Malaysia's policy-making processes; and build the capacity inside government necessary for ensuring high-quality RIA. Implementing these recommendations will assist not only Malaysia's domestic policy goals but also promote regional integration in Asia Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations (ASEAN) through supporting regulatory convergence.

Malaysia’s achievements in the 15 months of implementation of the National Policy on the Development and Implementation of Regulations (NPDIR) provide a strong foundation for advancing regulatory policy and governance in coming years. The NPDIR is closely linked with Malaysia’s policy and machinery of government reforms contained in the New Economic Model, as well as its Economic Transformation and Government Transformation Programmes. These reforms aim to position the government to support a streamlined, proportionate, market-focused and supportive regulatory framework, while retaining a role to manage market failures.

Regulatory impacts analysis (RIA) is a systemic tool for improving regulatory quality. It requires well-structured processes of managing the obligations effectively to be successful. This chapter assesses the development of Malaysia Productivity Corporation’s (MPC) systems to assess the adequacy of regulatory impact statements (RIS) and support regulator’s compliance with the National Policy on the Development and Implementation of Regulations (NPDIR). This includes evaluating the quality of RIS, developing guidance, institutionalising compliance and ensuring the provision of capacity building activities, including by the National Institute of Public Administration (INTAN).

The OECD Recommendation on Regulatory Policy and Governance states that regulatory impact analysis (RIA) should be integrated into the early stage of policy making. This chapter examines the role of RIA in Malaysia’s policy-making process within the framework of the National Policy on the Development and Implementation of Regulations (NPDIR). The chapter discusses: i) the Regulatory Management Process Requirements and responsibilities of regulators, the National Development Planning Committee (NDPC) and the Malaysia Productivity Corporation (MPC); ii) the relationship between RIA and cabinet decision-making processes as well as development planning; and iii) co-ordination between MPC and other central government bodies with roles linked to assuring high-quality regulation, including the Economic Planning Unit (EPU) and Attorney Generals Chambers (AGC).

This report was prepared by the Public Governance and Territorial Development Directorate’s Regulatory Policy Division. The Directorate aims to help governments at all levels design and implement strategic, evidence-based and innovative policies to strengthen public governance, respond effectively to diverse and disruptive economic, social and environmental challenges and deliver on government’s commitments to citizens.

In 2013, the Government of Malaysia asked the OECD to review its regulatory management system and provide support for piloting and implementing its regulatory policy. The review was conducted by delegates of the Regulatory Policy Committee and the OECD Secretariat in 2014, using expertise developed over two decades of peer learning under the OECD programme on Regulatory Reform. Peer reviews of good regulatory practices have also been conducted for Viet Nam (2011) and Indonesia (2012). The project drew on a number of OECD publications and instruments, including the 2012 Recommendation of the OECD Council on Regulatory Policy and Governance. This report presents the findings of the project.

The Recommendation of the OECD Council on Regulatory Policy and Governance recognises that a fundamental basis for a country’s regulatory management system is to have in place a whole-of-government policy underpinning how it develops, implements and evaluations regulation. Malaysia has evolved from a “deregulation” regulatory policy towards one advocating for good regulatory practice (GRP) across the entire regulatory system. This chapter provides an overview of Malaysia’s National Policy on the Development and Implementation of Regulations (NPDIR) and its link to the country’s domestic policy goals and regional commitments.

Selecting the appropriate strategy to implement regulatory impact analysis (RIA) and other good regulatory practice (GRP) is a dynamic and careful process. This chapter discusses the government of Malaysia’s evolving strategy to effectuate the National Policy on the Development and Implementation of Regulations (NPDIR). It analyses the action plans adopted to deliver high-quality RIA during the first 15 months of the Policy’s implementation and discusses the necessary considerations for the next phase to consolidate the government’s quality regulatory management system (QRMS).