April 24, 2008 - New annual PricewaterhouseCoopers study reveals need for business and governments to work together to meet regulatory challenge
CEOs, having already identified a downturn in major world economies as their biggest threat, have called on governments to loosen the regulatory shackles and let business get on with what it does best – delivering products and services to its customers.
Business leaders accept that in an interconnected global economy there will always be a regulatory burden; the challenge for business and governments is to ensure the burden is justified by the benefits it produces. This is one of the findings from a new annual study called Regulate & Collaborate: Government and the Global CEO undertaken by PricewaterhouseCoopers to supplement its prestigious Annual Global CEO Survey.
One of the key findings of this latest study – involving a series of in-depth interviews with public sector government leaders – is an apparent paradox: business wants both more and less from government.
More leadership to deal with truly global risks such as climate change, and to ensure markets and competition are fair; but less regulation to allow business to get on with what it does best – delivering products and services to its customers.
However, the survey also reveals that CEOs increasingly recognise that they have a key role in working with government to find solutions to global risks and in playing a constructive part in the regulatory process.
Jiøí Halouzka, a partner in PricewaterhouseCoopers Czech Republic’s Advisory Services department responsible for the public sector, stated:
“Business is not always averse to regulation, especially when it helps maintain the type of fair markets and level playing fields on which businesses can compete, innovate and differentiate themselves. If both business and government accept this, the challenge is then to establish that the burden is justified by the benefits it produces.”
For example, the survey reveals that on average more than half of CEOs believe government should drive convergence of global tax and regulatory frameworks; though a country breakdown reveals some stark differences, from more than 75% of CEOs believing this in Italy, Brazil, Germany and India, to only a quarter in the UK.
The call for more concerted government action also comes in the area of labour and tax laws, where an average of around 40% of CEOs seeks improvement.
Karel Pùbal, a senior manager from the Public Sector Services group of PricewaterhouseCoopers Czech Republic’s Advisory Services department, stated:
“Some Czech state institutions are aware of the danger of overregulation and are considering the correctness and functionality of their own rules and structures. An example is our analysis of effectiveness of the Czech Central Tax and Finance Authority and local finance authorities and recommendation of measures to modernize and streamline the Czech tax administration.”
So what is the verdict of CEOs on their own national governments progress in reducing the regulatory burden or creating a business friendly environment? Only in India and China is there overall a balance of CEOs who believe their government is both business friendly and reducing the regulatory burden. In France, CEOs believe government to be business friendly but not reducing the burden on business; in contrast, Japan is the only country where government is seen to be reducing the burden on business, while still seen as unfriendly to business.
Jiøí Halouzka added:
“On the business side, what CEOs want is regulatory certainty against which to plan. Generally business prefers long-term frameworks that create and sustain stability within which business decisions can be made. Business is annoyed not so much by regulation as by changing regulation.”
END
Notes to the editor:
- The research for Regulate & Collaborate: Government and the Global CEO involved a series of 45-minute telephone interviews with a selection of public sector government leaders in supra-national, national and local government entities. The findings from this qualitative research were used to supplement the quantitative survey, comprising 1,150 interviews with CEOs in 50 countries between early September and the end of November 2007.
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