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ARAB BUSINESS LEGISLATIVE FRAMEWORKS

Introduction

The growing interest in legal and institutional reforms, business facilitation and better governance in the Arab region has led governments, donors and development agencies to increasingly focus their attention on improving the regulatory framework for doing business and ensuring a fair balance between the rights and obligations of various social players. Legal reform, however, is not merely about the production of legislation but also ensuring that such legislation is well understood, applied and integrated into the overall legal framework and snuggles neatly with the specific contexts of each Arab State. The Arab region faces a serious lack in the ability of various stakeholders to access laws pertaining to competition, anti-corruption, foreign direct investment (FDI) and consumer protection. Small firms, activists, political reformists, researchers and others face obstacles to access the most up-to-date legislation related to public policy adequately. The lack of a unified consolidated and accessible repository of legislation in the Arab region has negative knock-on effects on transparency, accountability and the rule of law.

In addition to assessing legislative climate using common standards garnered from international best practices, this study seeks to provide a repository of existing legislation in the Arab region. Accordingly, this study has the following objectives:

• Provide a basic assessment of the current business regulatory climate in the region, looking at the legislations related to competition, FDI, anti-corruption and consumer protection;

• Provide a gap analysis assessment of the current legislative, regulatory, institutional and enforcement mechanisms and recommend actions that can tackle and/or alleviate the gaps.

The research also seeks to provide ESCWA member countries with a foundation for a flexible and dynamic assessment model on business legislative frameworks that can be regularly implemented and updated to help establish more coherent and region-wide recognized measures of business legislation and their developments over time.

Methodology

The Arab Business Legislative Framework Report is based on the results of an assessment of the current business regulatory climate in the region, looking at the legislation related to competition; anti-corruption; foreign direct investment (FDI); and consumer protection. The assessment integrated a selection of best practices into tool design in order to ensure that the outputs are informative, objective, take into account context-specific issues and can be easily utilized by stakeholders.


● There is little coordination or standardization of legislative business frameworks at the regional level.

● Consumer protection is the weakest area of business legislation within the region.

● Countries which streamline all legislation relating to a certain issue into one law are generally more successful in its implementation.

● Institutions designed to oversee competition, FDI, anti-corruption, and consumer protection are rarely autonomous.

● Business legislation framework appears to match international standards in some countries; however, poor implementation means that the law can remain ineffective.



1. Competition

The analysis of competition legislation examined the existence of various components as recommended by international best practice. As seen below, key components of competition legislation include laws and articles related to antitrust and competition laws, anti-dominance and monopolization laws, cartels and anti-competitive agreements, competition enforcement practices, international trade agreements, liberalization and competition intervention in regulated sectors.

● COMPETITION On paper, most Arab countries possess some form of competition legislation, and enforcement across all appear to be strong, but widespread exemptions in key sectors undermine the law.

● Many institutions lack the autonomy and enforcement powers needed to implement their respective country’s competition law.



2. Foreign Direct Investment

The analyses of FDI legislation in the Arab region examined the various components of FDI as recommended by international guidelines. As seen below, key components of FDI legislation include laws and articles related to banking regulations, macro-economic policies, investment regulatory framework, incentivization schemes and bilateral treaties.

● The Mashreq sub-region has the most “Developed” overall FDI legislative frameworks in the Arab region.

● Arab countries struggle to include clear and coherent definitions within their FDI laws.



3. Anti-Corruption

The analysis of anti-corruption legislation examined the existence of various components, as recommended by international best practice. As seen below, key components of anti-corruption legislation include laws and articles related to anti-corruption and integrity in the public sector, anti-bribery and whistleblower laws, budgeting and public expenditures, digital government, open government and transparency, and public procurement standards.

● Most Arab countries have reached an ideal state in outlining enforcement mechanisms recommended by international guidelines but still have several gaps in enacting sufficient enforcement in their anti-corruption legislation.

● In December 2010, almost all Arab states signed the Arab Anti-Corruption Convention, but only 12 countries ratified the convention, making it largely ineffectual.



4. Consumer Protection

Overall, consumer protection legislative frameworks in the Arab region were seen to be the least developed in comparison to other themes under study. This indicates a serious need to develop further and understand the field of consumer protection and how it relates to the wide consumer base that forms the Arab world. Key components of consumer protection include laws and articles related to physical safety regulations, protection of consumers’ economic interests, measures enabling consumers to obtain redress, and promotion of sustainable consumption.

● Consumer protection is a relatively new legislative field in the Arab world, where countries have passed or amended their consumer protection laws only in the past 15 years.

● The concept of sustainable consumption is almost absent within the Arab consumer protection legislation. (SDG12)



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