Rethinking Government Approvals: The New Administrative Licensing Law

By Lester Ross, Wilmer Cutler Pickering LLP

More than seven years in the making, the Administrative Licensing Law (the Law) is intended to narrow the scope of activities for which a licence or approval is required, and even in cases where a licence or approval is required, the bias has been shifted in favour of self-regulation. This should reduce barriers to market entry and thereby enhance competition in goods and services. To curb the monetary incentive to impose licence or approval requirements, as well as the tendency toward corruption, the imposition of fees for licences or application documents is prohibited unless regulations expressly provide otherwise.

If well implemented, the Law should reduce the potential for the unreasonable procedural delays and non-meritorious rejection of applications with which many foreign investors are all too familiar. In the power industry, for example, an inside-the-fence generating project was held up for years, and foreign investors eventually driven out, by the unwillingness of the power bureau to provide an essential interconnection approval. In another instance, an otherwise completed generating project was unable to obtain an operating licence for failure to obtain certification by the local labour bureau. Long-term power purchase agreements have suffered from discontinuity and bias with respect to dispatch instructions and tariff approvals.