OECD Product Market Regulation (PMR) Indicators: How does Colombia compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Colombia
2.04
OECD countries Average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Colombia 5 Most competition-friendly countries
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Product market regulation in Colombia is somewhat less competition friendly than in most OECD countries. There is scope for greater simplification of the administrative burdens imposed on new businesses, as well as for reducing the complexity of regulatory procedures. There is also no regulation to ensure transparency in the interaction between interest groups and public officials. In addition, barriers to entry for foreign suppliers are higher than in most OECD countries in both service and network sectors. By contrast, overall regulation in services is close to the OECD average, though with differences across sectors. Public ownership of firms is lower than the OECD average, but the governance of these enterprises could be improved to enhance their efficiency and to level the playing field between privately and publicly owned firms.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Colombia
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Colombia
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS In general, regulation of network industries in Colombia could be better aligned with international best practices in some sectors. For example, the regulatory framework in road transport is not competition friendly, whereas regulatory settings in water transport is close to that of the best performing OECD countries. Transport by rail is also in line with international best practices, but this is partially due to there being no transport of passengers by train, which is usually characterised by stricter and less competition-friendly regulation in most countries. In services, regulatory barriers to competition are lower than in many OECD countries, with the exception of notaries and accountants, which are more strictly regulated.
Regulation in network and service sectors PMR Indicators for network sectors Index scale 0 to 6 from most to least competition-friendly regulation Colombia 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4 3 2 1 0 Electricity
Gas
Rail
Air
Energy
Road
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services* and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Colombia 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2018. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0.
Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Colombia.
Strengths
Challenges
The regulatory framework for general retail trade is competition friendly. For example, owners can decide on shop-opening hours, and, in general, there are few constraints to competition, even with respect to online sales. In addition, there are no restrictions to the number, location and ownership of pharmacies, and non-prescription medicines can be sold online.
The regulatory framework for lawyers is competitionfriendly. In particular, professionals have freedom to set their fees and advertise their services, and there are limited restrictions on the legal form legal that firms can take and who can own them.
The process for starting a new business is burdensome, especially because of the complexity of the licensing regime. In particular, there is no single one-stop shop where all licenses and authorisations can be issued, and information on all the licenses required can only be obtained through physical one-stop shops located in the main cities, but there is no online one-stop shop that provides this information.
There is room to allow better and easier access to laws and regulation. For example, there is no obligation to use plain language when drafting regulations, there is no online database of secondary legislation, and is the regulatory agenda with a list of the regulations that will be approved, modified or repelled is not regularly published online.
There is no regulation requiring transparency in the interactions between interest groups and policymakers, which may favour lobbying activities by incumbents.
There is scope for paying greater attention to competition when designing and assessing new regulation. In particular, the obligation to perform a regulatory impact assessment, which includes an evaluation of the impact of new regulations on competition, only applies to some secondary legislation.
Barriers to foreign direct investment are very low.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), " The 2018 Edition of the OECD PMR Indicators and Database – Methodological Improvements and Policy Insights", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr
Contact us at: PMR2018@oecd.org