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  • Armen Yeghiazaryan: The Nation's Elite Should Be Employed In The Sta

    ARMEN YEGHIAZARYAN: THE NATION'S ELITE SHOULD BE EMPLOYED IN THE STATE GOVERNANCE SYSTEM
    by Emmanuil Lazarian

    http://www.arminfo.am/index.cfm?objectid=3C571AC0-5B57-11E2-90F9F6327207157C
    Thursday, January 10, 21:52

    ArmInfo's interview with ex-minister of economy of Armenia Armen
    Yeghiazaryan

    The National Center for Legislative Regulation under the Government
    of Armenia started taking shape in the second half of 2012 and has
    already come out with a number of serious initiatives on reduction
    of administrative barriers and improvement of the business environment.

    The first topic of 2012 was the sphere of information and
    communication, where the "regulatory guillotine" studied the situation
    in the market and offered the Government to seriously reform the
    license system and to cancel the licenses for internet provision,
    voice communication and network construction. Below is ArmInfo News
    Agency's interview with Armen Yeghiazaryan, Head of the National
    Center for Legislative Regulation, ex-minister of economy of Armenia.

    Mr. Yeghiazaryan, when will a governmental decision on the sphere of
    telecommunications be taken?

    It has already been taken. As a result, the economic entities will no
    longer receive licenses authorizing them to provide data transmission
    services and voice communication services. There are also licenses
    authorizing entities to build networks, but it is planned to cancel
    them in a year, after relevant amendments to the by-laws. The matter
    also concerns regulation of the services quality.

    Can one suppose that the Center is inclined to depart from the
    licensing processes in the sphere of information and communication?

    We advocate giving up this practice. For instance, in the case of
    Beeline we deal with the license for provision of fixed telephony
    services. I think it is inexpedient to license this activity. While
    the advocates of licensing think that licensing is needed for creation
    of premises for telephone penetration into remote villages, we believe
    that this problem is quite resolvable by means of mobile communication:
    now the number of subscribers of various mobile operators is higher
    in Armenia than the population of the country.

    Only the usable radio frequencies and the initial codes of the
    operators' phone communication numbers are to be subject to licensing.

    Do the departments cling to the regulation?

    Certainly, there may be a disputed situation. However, in this case we
    have reached almost full mutual understanding with the Public Services
    Regulatory Commission and all our decisions were coordinated with it.

    So, our experience of work with the Public Services Regulatory
    Commission shows that it will be possible to avoid a conflict, even
    if the departments are deprived of power levers.

    What other structures do you want to "offend"?

    The next sphere is electric power supply. Here the construction and
    exploitation of generating capacities and water consumption should
    be licensed.

    But it is the field of natural monopolies, isn't it?

    It is not so, as a matter of fact. Only the distribution and
    transportation networks are the objects of monopolies. As regards
    the licensing of electric power generation activity, it will remain,
    but here it is necessary to reduce "bureaucratism", as one and the
    same entity is to receive the license for construction of a power
    plant, then for its exploitation and then it is to apply to the Public
    Services Regulatory Commission to approve the tariff of the generated
    electric power within 15 years of payback period. Afterwards this
    tariff is to be reduced. The companies exploiting small hydropower
    plants are to prolong the license upon expiry of 15 years. It
    is necessary to relieve the license burden for power generating
    companies with due regard for the fact that now nearly 120 projects on
    construction of small HPPs are underway. Another task in the sphere
    of power engineering regulation is to connect new subscribers to the
    network: by this indicator Armenia ranked the 150th in Doing Business
    2012, and has now risen to the 100th position. On the other hand, if
    we compare the average price of this connection in Armenia with that
    in other countries, it is quite moderate in our country. As regards
    the period of connection, the Center has worked out proposals to
    reduce that period, but it cannot be considerably reduced. The Public
    Services Regulatory Commission representatives agreed that besides
    the Electric Networks of Armenia, other companies can also connect
    subscribers to the network. The matter concerns the subscribers, who
    will be supplied with electric power via a line with the voltage of no
    less than 6.35 KV. Now the Electric Networks of Armenia is doing now
    such work, it is holding tenders for subcontracting. The idea is to
    accelerate the connection of enterprises, large corporate subscribers,
    who will no longer wait for their turn for months or even for a year.

    This novelty may further cover small and medium businesses as well.

    What about water supply?

    Such practice is already active in the sphere of water supply:
    a subscriber is provided with a point of connection and involves a
    specialized company to the process at his/her own wish, but the issue
    of connection in this field is not regulated.

    Should the organizations engaged in construction activities for
    connection to water and electric power supply networks be licensed?

    The contractors are provided with a so-called "general" license for
    construction, but they receive allowance if they have a relevant
    experience and specialists. It should be noted that there are also
    problems with regulation in the gas supply field and the Center has
    outlined the principles of reforms in the gas supply system. The thing
    is that the current regulations have been worked out by ArmRusgasprom
    for the gas distribution network development project in the country.

    The project is mostly completed and by the gasification level Armenia
    holds one of the leading positions in the world.

    I would also like to mention that the Center will study the price
    formation mechanisms in this sphere. Here the monopolist ArmRusgasprom
    imposes some services on the business and the population. We have
    suggested canceling this practice and we hope that this problem
    will be solved. Certainly, the company should ensure the security
    of gas consumption, but it should include its "price" in the gas
    tariffs, but not "invent" services and fix prices for them. And we
    have revealed many such services I call "Armenian outsourcing". The
    Center suggests that the Public Services Regulatory Commission should
    approve these prices.

    In general, we have revealed many cases in various spheres, when the
    regulatory bodies and monopolistic economic entities provide fanciful
    services at uncontrolled prices, and the business and citizens have to
    pay for them. A vivid example of it is the services of notary officers,
    who united into self-regulated associations and fixed prices for
    their compulsory services. But the state has blocked this activity
    by means of canceling the obligatoriness of notary certification. I
    think the optimal solution is that the state must fix the prices for
    all those services that are considered to compulsory.

    What other activities is the Center carrying out to study regulation
    in the sphere of public services?

    First of all, the Center will once again consider the price formation
    mechanisms in these spheres and will present its suggestions to the
    Public Services Regulatory Commission. In general, the Center is
    studying the regulation in the spheres of healthcare, education,
    entrepreneurship, financial relations, tax and customs administration.

    Healthcare is an interesting, complicated but urgent topic.

    We have almost completed the surveys in the sphere of healthcare. The
    situation is rather poor in terms regulation, and the reason is also
    the healthcare system itself, as this sphere provides 3 or 4 types
    of various services. For instance, a patient comes to a hospital,
    hoping to get treatment within the frames of the state-guaranteed
    order, but he/she is told that the state-guaranteed order funds
    are over. The patient may also be told at the polyclinic that the
    free X-ray examination may have low quality, and if she/he wants to
    receive a high quality service, he/she should pay for the service or
    go to the nearby hospital.

    I think, the regulation problems are best of all settled in the
    British healthcare system, which has free, insured and paid healthcare
    simultaneously, but one can receive any medical assistance there
    free of charge. I hope a political decision on similar division of
    healthcare services will be taken in Armenia as well.

    What about education?

    The sphere of education also faces some problems, but they are
    fewer than the problems in healthcare. In the sphere of education,
    particularly, at schools 10-15% of the pupils or students really
    study and get knowledge regardless of the quality of the educational
    establishments. By the way, this index was almost similar in the
    Soviet times.

    It is hard to agree with this index. A personnel is trained in
    families, at schools and higher educational establishments. I think
    the latter has completely decayed.

    It is the epoch of internet now, and students educate themselves
    if the universities give them nothing. The system does not make the
    students get knowledge, because it is commercialized, and I think it
    is an absolutely wrong approach.

    Is there a chance to cross the 15% limit you have mentioned?

    It directly depends on the quality of education. The education system
    is directly connected with teachers and lecturers and it is hard to
    reform it without taking into account the personnel problem. I think
    it is impossible to simply change the education system at the Armenian
    higher educational establishments, as the system is connected with
    people. It is simply necessary to build the system anew.

    And what regulation-related problems does this system have?

    The pre-school and school education systems do not need much regulation
    as we have few private schools and kindergartens. I think we must
    minimize the profit-making element in the education and health care
    systems. Profit must not be the goal here. When you commercialize the
    higher education system, you get lower social mobility and need to
    support your students - as they in the United States do. In Armenia
    we have the problem of young people entering university for the only
    purpose of dodging the draft. I think we can solve this problem by
    making education free of charge for the students that have served in
    the army.

    Are you considering applying the "regulatory guillotine" in the
    transport sector?

    Yes, the government has already considered a package of relevant
    proposals. We believe that we need public transport of higher passenger
    capacity, that is, buses and electric vehicles as well as subway. Most
    of our transport problems concern Yerevan. As regards route taxies,
    we are suggesting making relevant tenders more transparent and
    effective. We also need to regulate the operation of non-scheduled
    transport. I mean transportation of tourists and international bus
    services. We are also trying to regulate the cargo traffic. Here we
    don't have strong contradictions with the regulators.

    There are also questions concerning railway services.

    You have been doing this work for half a year already. Are you still
    optimistic?

    I didn't expect things to be as complicated as they proved to be,
    but this is an interesting work and it makes me enthusiastic. We are
    already beginning to find solutions and we hope that our efforts will
    give results.

    Did your Center make a contribution to Armenia's going up from 50th
    to 32nd rank in Doing Business 2013?

    We had no time for making any contribution to this as we started up in
    May 2012. This is all thanks to the government and its hard work. On
    the other hand, you must not overestimate the 9th rank of Georgia -
    for ease of doing business is not the only factor ensuring the high
    quality of business. There are also factors that have nothing to
    do with regulations. The same is for Armenia: no matter how well
    computerized we are and how helpful high-speed internet may be in
    working with foreign partners, we are still far from being leaders
    in terms of economic development.

    Can one say that our progress in Doing Business was due to our
    e-governance system?

    Not only. Before our center was set up our authorities had already
    made it much easier for users to connect to electronic networks
    and had improved tax administration. In 2009, when asked about the
    key factors preventing companies from being efficient, people named
    tax burden, corruption and stealing, while in 2005 stealing was not
    mentioned. On the other hand, registration and licensing were no
    longer called an obstacle.

    Is it easy for you, as former Economy Minister, to look at this all
    from aside, especially the problems concerning our state administration
    system and the professionalism of our state administrators?

    I would not say that I am looking from aside, better say, it is a
    look from below, while in the past it was a look from above...

    Still what do you think about our state administration system? The
    few professionals that are holding high positions in the government
    are complaining that most of the people there cannot realize even
    elementary decisions.

    I think that this is why the government is simplifying the regulations:
    they are seeking to minimize the human factor and to replace it with
    more efficient electronic systems. I regret to say that the quality
    of government services is still low because of numerous blunders and
    breaches, with those guilty being still unpunished.

    Experts believe that this all comes from the absence of a normal
    personnel selection system. In Armenia everything is based on nepotism
    and corruption. Here even a schoolteacher vacancy costs $2,000-5,000
    depending on where the school is located, let alone the office of a
    civil servant - a position implying access to resources.

    You never know, but the fact is that we have few professionals who
    would like to work in the government system as this is a hard work:
    of course, if you are a civil servant there is a chance that once a
    year you may be sent abroad for some training course, but, on the other
    hard, you are not very popular and do not earn big money. Still loyal
    to this system are only people who love their work and know how to do
    it - and sometimes they achieve quite interesting and serious results.

    I think that only the best must work in a government system - for it
    is the government that sets the pace of a country.

    Armenia's state administration system is very like Soviet research
    institutes, where two employees worked and eighteen more just drank
    coffee, isn't it?

    But sometimes when you drink coffee you may think up quite interesting
    things... Of course, you are right: when control is weak some people
    may work less than the others. This is why in ministries they sometimes
    approve documents that must not be approved as they are simply bad for
    the government's policies. We must start to put things in order here,
    at least, to prevent contradictions between laws and their bylaws. In
    Armenia this mechanism is not proper yet. On the other hand, today
    this system is much more efficient than it was some 15 years ago. At
    least we have an electronic workflow here.

    We must also cancel superfluous regulations. For example, why do we
    still have candidates and doctors of sciences, while almost everybody
    in the world, including those who are part of the Bologna Process -
    just like us - have only PhD, according to the International Standard
    Classification of Education. I am sure that if we suggest leaving
    just one degree, there will be a big row. But this problem is not
    vital for our future, is it? Georgia has granted PhD to all of its
    candidates and doctors, Azerbaijan only to doctors.

    It must be hard to push this all, isn't it?

    We are lucky - we just suggest solutions, while to put them into
    practice is the government's business.

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