21 May, 2024

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Utilizing The PIP Approach To Develop The Business Sector: A Much-Needed Policy Reform For Sri Lanka

By Dhananjaya Madusanka Dissanayaka

Dhananjaya Madusanka Dissanayaka

Traditional approach to public policy formulation

Throughout human civilization so far, progression has been considered one of the main aims of communities across the globe. Certainly, this will remain unchanged in the future for both advanced and progressive economies. Despite the economic model adopted, public policies play a huge role in this journey. Even though the role of the government varies among countries, the vital role of public policies remains unchanged in every nation. Therefore, public policies can be regarded as the primary tool of a government to influence all other actors in the economy.

The government has the sole authority to formulate policies targeting various aspects of the economy. For instance, certain policies may want to shape the education sector, health sector, agriculture sector, business sector etc. Particularly, the legislature has been granted the ultimate authority to formulate these policies. In Sri Lanka, public policies are often drafted by standing committees in the parliament before passing as laws. Similar legal backgrounds can be seen in most economies in the world.

Traditionally, governments all over the world believed that they were superior to all other actors in the economy. Hence, they assumed that they knew everything about the conditions of every segment of the community. Therefore, governments enjoyed dictatorship with regard to policy interventions across all sectors of the economy. However, while the traditional legal background remains unchanged, this assumption of governments has been found invalid in the modern context. Thus, even though they are the ultimate authority to pass laws, most governments in today’s world do not design public policies autonomously.    

Unfortunately, this situation is rarely seen in Sri Lankan policy formulation. For example, recently, the general public was informed about the Economic Transformation Act which is about to be passed into law. Still, the process of designing this policy is a black box. This implies policymakers in the country are still working on the same assumption of their superior capability. It could be a major reason why reforms suggested by the government are less productive or, in some cases, even counterproductive in reality.

Public Interest Partnerships (PIP) as an alternative perspective

People living in modern societies have various needs from food to freedom. However, all depends ultimately on the quality of the governance (how decisions are made, power is used, and actions are taken). People living in the twenty-first century often deal with multiple complexities in an information technology-driven world. Not only the concerns of the public have become complex but also the methods of addressing these concerns are necessarily changing. As a result, we no longer live in a world where the nation-state is regarded as the sole legitimate decision-making actor.

The Public Interest Partnership approach believes that a wide variety of actors have influence and resources to contribute to solving issues of public concern. This is an attempt to demystify governance which aims to bring concepts and ideas of governance into practical settings where people in communities are coming face to face with pressing practical concerns. Specifically, this approach designs policies with the help of three main actors during the formulation stage. Those actors are the government, private sector and civil society. It should also be noted that this includes only the broader category of the three main actors involved in this approach for policy making. Hence, the components of each category are varied depending on the specific policy context.

Public Interest Partnership Approach for Policy Design

This approach recognizes that several types of capital are required for the success of public policy, including financial, technical, power, authority, structure, trust, and collaboration. The PIP approach also believes that each sector is endowed with a mix of different forms of capital. However, in actual practice, each actor is typically able to contribute specific kinds of capital to a partnership. This mix also varies with the nature of the problem, timing, context, and capacities of the participants. More importantly, PIPs allow government to design policies collaboratively with its key stakeholders in a practical way. Finally, the designed policy is handed over to the legislature to pass into law. This process is depicted in the Figure for easier understanding. Overall, PIP can be considered as an alternative to traditional policy intervention of the government due to its holistic and realistic perspective on the crucial issues of society.

How does this approach differ from Public Private Partnerships (PPP)?

The Public-Private Partnerships (PPP) approach was proposed mainly under the New Public Management initiatives a long time ago and has been adopted successfully by many governments across the world. This approach aims to utilize the strengths of the private sector in government projects. Some PPP projects were used as a solution for the resource constraints, and lack of technical know-how of the government. Furthermore, these projects have been mainly utilized for the infrastructure projects of the government. Overall, PPP projects were suggested as a win-win solution for both the government and private sector while solving the issues of public concern.

However, the PPP approach does not provide a realistic solution for the accountability issues involved in government projects. This means that it does not take into account the concerns of civil society regarding government initiatives. Additionally, it cannot be used as an approach to public policy formulation with a holistic perspective. Therefore, PIP provides a broader approach to solving societal issues by combining all three actors in a single platform. As explained in the next section of this article, PIP can be utilized as a tool to design sound public policies in the modern, complex world.

A successful story of the Vietnam Business Council

Canada-ASEAN Governance Innovation Network (CAGIN) has studied some selected PIP initiatives in four Southeast Asian countries over four years. Finally, they published their experience under the title ‘Opting for Partnership: Governance Innovations in Southeast Asia’ (Gonzales et al., 2000).  Among these cases, the story of the Vietnam Business Council (VBC) could be highly relevant to Sri Lanka in today’s context.

Similar to what we observe in Sri Lanka today, Vietnam’s business sector was struggling to grow and connect with the global market before the 1980s. Hence, the government at that time had to introduce various reforms to facilitate the growth of the business sector in the country. Policymakers realized the benefit of maintaining an interrelationship among all reforms. Consequently, they established the Vietnam Business Council (VBC), providing a platform for all three actors to contribute simultaneously. This is now considered as one of the main reasons behind the development of the Vietnam business sector today.

VBC was established by the Vietnam Chamber of Commerce and Industry with the aim of speeding up the growth of the industry. It served as the national-level partnership forum for government-business-civil society deliberations on trade and economic policies. The Central Institute of Economic Management and other institutions participated, representing the government. The Commerce and Industry Association and many such organizations attended, representing the business sector. Academia, media, and civil society members participated, representing the civil society sector in this partnership. It also needs to be emphasized that the components of each actor also varied depending on the specific area of policy discussion. For instance, when discussing export promotion-oriented policy reforms, the involved business organizations exhibited greater active participation in the discussion.

Large-scale surveys were conducted to identify the issues faced by the business sector at that time. Also, forums were organized once a month to discuss various policy matters, ranging from revising company law to implementing a supportive tax system in the country. Various groups provided their comments during these forums. The final reports were submitted to the relevant government agencies and later legalized by the legislature.

In the recent history of Sri Lanka, the business sector has indicated struggles to grow, even before the recent crisis of the economy. Both fiscal and monetary policies provided incentives for the business sector as part of government policy before the crisis. Accordingly, the business sector enjoyed larger tax concessions, in terms of both direct and indirect taxes, in a low-interest rate environment. Theoretically, it would be a greater policy environment to show progression in the business sector. Unfortunately, it did not bring significant improvements in the performance of businesses in the country. This indicates the presence of numerous structural issues hindering the development path of Sri Lanka’s business sector. Therefore, this is high time for us to initiate a collaborative policy design to facilitate the country’s business sector. Such a perspective will surely assist in identifying practical issues faced by businesses in the present context.

A lesson from Thailand that we should not forget

It should be clearly emphasized that all PIP initiatives have not succeeded in every country, as demonstrated in the above example. We also should learn from the failed attempts when designing a sound public policy. In the late 90s, Thailand established the Khon Kaen Civic Assembly (KKCA) with the aim of promoting democratic planning in the Khon Kaen province. However, only a comprehensive plan was developed without subsequent implementation. This was mainly due to the unclear identity of the PIP. KKCA did not clearly embrace the roles of either advisor to the government or implementer of the government’s provincial plan. This tells us that the government of Sri Lanka also should not implement these PIP initiatives just for the sake of doing so. Rather, they should be designed with the genuine intention of facilitating the business sector of the country, allowing proper authority to function.

*The writer is a Senior Lecturer, Department of Public Administration, University of Sri Jayewardenepura and Currently, reading for the Ph.D. in Governance and Development, GSPA, NIDA, Thailand.

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