1. Inspection Reform Conference: Approaches and New Trends for Effective Regulatory Delivery 2 - 3 June 2014 Lubna Aqqad, Ministry of Industry & Trade Abeer Shalan, International Finance Corporation Business Inspection Reform in Jordan

2. National Reform Outlooks The Royal Directive to the government on 29 th 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. 2

3. 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. 3

4. 4 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

5. 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 * (* 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 5 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

6. 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 understandin g of requirements Better compliance Frequent inspection with limited resources Inefficient and ineffective inspection Heavier burden on the private sector -Attempts at compliance evasion Bribery and corruption Business exit Low compliance

7. 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 7

8. 8 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

9. High-Quality Inspection Systems Human Resource Management 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

10. 10 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

11. National Program for Inspection Reform 11 In partnership with

12. Phases of Work 12 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

13. 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

14. 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

15. 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 15

16. Participating Inspectorates Labor Enviro nment Touris m Energy Food and Drugs Social security GAM/ Munici palities Health Agricultu re Civil Defens e

17. 17 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

18. 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 18

19. Progress and Achievements 19

20. Inspection Operational Manuals DescriptionAchievements Development 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 20

21. National Registry and Process Automation 21 DescriptionAchievements  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

22. Human Resources Management 22 DescriptionAchievements Developing 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

23. Reducing Overlap and Duplication DescriptionAchievements This 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) 23

24. Framework for the Higher Committee for Inspection Reform DescriptionAchievements Establishing 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 24

25. 25 Partnership and Cooperation with the Private Sector DescriptionAchievements Development 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

26. 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 tools 26

27. Thank you 27