Malaysian Business, June 12, 2008

Impact of Regulation – The Need to Remain Engaged

By Razif Aziz
Vice President, Legal and Regulatory Affairs, Malaysian Biotechnology Corporation

In 2005, MALAYSIA EMBARKED on an ambitious plan to put biotechnology at the forefront of economic and social development. The National Biotechnology Policy (NBP) launched by the Prime Minister seeks to create wealth by utilising and advancing biotechnology for socio – economic benefits. Its objective is to position biotechnology as a new economic engine for the nation’s development.

Biotechnology, which involves the manipulation of living materials, has ignited heated debates over ethical, legal and scientific issues. The principal cause of the debate surrounds the health and environmental impact of the technology. Though many scientists believe that the technology is safe, still many maintain that the possible effects on human health and the environment justify extreme caution.

What is clear however is that regulations on biotechnology remain appropriate, necessary and in many ways, are inevitable.

Regulatory impacts can be viewed from a number of perspectives, notably:

• Time – A function of cost, a concern when activities are time sensitive;
• Cost – Can be time or direct cost;
• Transparency – Assists predictability and certainty;
• Proportion – A proportionate system requires only what is necessary to achieve a certain goal. Relates to both time and cost; and
• Science – Specifically in the context of biotechnology and assists predictability and certainty.

Within this context, regulations can, make or break a business. In fact, the overall cost compliance with particular set of regulations could well become a barrier to entry and a disincentive to investment.

It is therefore imperative for the industry to remain engaged with regulatory processes in order to preserve the ability to do business.

What do you mean by being engaged? In this context it will include, among others, the following element:

AWARENESS

What laws and regulations affect your business? Knowing which laws and regulations impact your business is a key first step towards successful engagement. This necessary includes an awareness of upcoming laws as well as an appreciation of the objectives of the regulations in question. An appreciation of the latter provides a better understanding of the issues at hand and could lead to a more fruitful engagement process.

INDENTIFYING ISSUES AND OPPORTUNITIES

What are the issues or concerns to be flagged? This involves a detailed examination of the relevant laws and regulations to identify problem areas. As mentioned earlier, regulatory impacts can be viewed from number of perspectives such as time, cost, transparency, proportion and science. So, if your business is time sensitive, regulatory processes that take too long or is of an indeterminate length will be of concern to you. You may therefore seek from regulator shorter or definite processing periods for speed and certainty.

Are there opportunities that can be used to advantage in your business? Although counterintuitive at first, regulations may also yield surprising opportunities. For instance, the introduction of new policies sometimes results in inconsistencies with existing laws and regulations. These inconsistencies manifest themselves either in the form of gaps in the regulations or simply as provisions which are at odds with other. Rather then being seen as a threat, these represent opportunities for change which can be seized upon to benefit the industry.

FORMING A POSITION

What is your point of view in relation to issues/opportunities? Does it favour certain regulations to be reviewed or amended? Does it require new regulations in its place? This forms the basis of your engagement effort.

MODE OF ENGAGEMENT

How do you engage the regulator?

Indirect Means:

Industry organisations provide a formal and appropriate channel and should be the first port of call for industry to advocate its issues and concerns regarding the impact of regulations. In this respect, the Malaysian Biotechnology Industry Organisation (MBIO) provides its members focused representation and support and has become the premier industry organisation for the biotech sector today.

Industry promotion agencies also provide an effective channel for advocacy of Industry issues and concerns and the Malaysian Biotechnology Corporation (BiotechCorp) plays a leading role in this respect. BiotechCorp’s unique position as a Government – owned entity allows it to reach relevant stakeholders more expediently than others.

Less conventional but no less beneficial is via a Member of Parliament, particularly where the industry plays a significant role in the Member of Parliament represents.

Direct Means:

In recent times, regulators have become more willing to consult the industry as new laws and policies are being developed providing an entry point for the industry to engage and influence the process as well as output.

In fact, more and more laws and regulations today build in consultative processes in a bid to aid industry and consumer buy – in when significant issues are being deliberated. The industry would do well to identify and seize such opportunities when they present themselves.

Where the industry is ahead of the curve in terms of the technology they are developing in relation to regulators and regulatory processes, it may be beneficial to take a leading role in building understanding and effectively communicating the risks or issues involved. This opinion leader approach is advantageous as it allows the industry to actively address issues and influence future outcome.

Players who possess significant weight could also benefit from this opinion leaders approach. Weight here refers to certain qualities which provide an entity leverage for example significant employer of labour or a corporate tax payer. This leverage affords an entity significance beyond the conventional sense.

THE NEED TO BE STRATEGIC

It goes without saying that the industry needs to be strategic in engagement approach. This starts with an understanding of the landscape it operates in and deciding what works best. More often than not, it will likely mean a combination of modes and methods to ensure issues and concerns reach the relevant audience.

Modern biotechnology exists in some of the most heavily regulated spaces today. Ignorance or apathy is pursued at one’s own risk as the very viability or premise of a business may ultimately be affected. An engagement strategy to either remove or mitigate the risks and cost presented by regulatory compliance should from an intergral part of any organisation’s business plan.