……private sector, dubbed as an engine of the country’s economy is smothered with conflicting and verboten policies but the MoEA minster says sector lack RND
By Dechen Pem
With opening of country’s international gates on September 23 which came along with promising business expectations and hope for better economy.
A thriving private sector is a precondition to improve the income and employment prospects. However, starting from small scale start-ups to large industries, all private sectors generally, are in a stage of direr. With various government policies and changes in executive orders, the private sectors are finding hard to survive in the post-covid pandemic, a road ahead to reviving economy.
“In 2019, the government issued an executive order to upgrade the capacity of budget hotels. To this the owners had followed up by investing 40 to 50 lakhs or even more. But then after the border gates opened, they issued another notification saying that these budget hotels are not eligible to cater to tourist. In that way the government is misleading the private sectors”, said Tandy Wangchuk, President, Bhutan Chamber of Commerce and Industries (BCCI).
Such polices of government has hindered the functioning of the private sectors and imposed a huge loss on them. BCCI president said that the government must try to get into the shoes of the private sector and understand their situation.
“The other issue that private sectors in general are facing is the Non-Performing Loans (NPL). Starting from April 2020 to June 2022, His Majesty The King granted a Kidu with loan repayment deferment of two years and 50% waiver on interest with which the private sectors were salvaged from eminent financial meltdown in the country. However right after the pandemic, the government issued an order that only hotels and tourism were eligible for deferment. Adding on there was another executive order from the Royal Monetary Authority (RMA) saying that the ones who entered Non-Performing Loan (NPL) of 91 days will have to undergo the cooling period of 6 months even if they paid their NPL. Because of this, even if you are doing a good business, for a period of 6 months no banks will provide loans when our economy is in a recovering stage”, he added.
Adding on, the BCCI president said, “In the case of the industries, industries in Pasakha are equally suffering because of the government policy. The State Mining Cooperation Limited (SMCL) being a state owned industry instead of catering to industries within the country, SMCL is focused more on exporting dolomite and gypsum to foreign countries. When local industries buy from SMCL they impose a price hike of 200%. Instead of doing that the SMCL could give their first priority to industries within the country and if they have surplus then they could export to other countries. In other countries, the government guarantee for the private sector and give them a comfortable condition to grow. In our country the government pose lots of obstacles and hindrances. In this way the private sector will never be able to grow”.
Start-ups in the country are also facing a difficult situation to survive. Being a small economy, the start-ups have no market to put up their products. For instance, Druna Ghu, a cookie producing start-up in Paro, produces edible cookies but they have no market in the country. If government could help them in small ways like serving the cookies during meetings it could cater to marketing and selling of the product even if it means selling in small amounts.
The other two major issues as shared by Tandy Wangchuk, BCCI president to Bhutan Today were regarding the Sustainable Development Fund (SDF) and the External Commercial Borrowing (ECB).
“Government says that we must bring in investors but when we bring investors they impose SDF. Investors brought from 3rd countries are charged 200 USD per day. One way the government is encouraging and the other way they are discouraging us. Any investor would not be happy if they are charged for investing in our business. Secondly, under the Ministry of Finance we have something called the External Commercial Borrowing (ECB) where we can borrow with 3% interest, but the government made it tight as if we are taking money from them. So far there are only two beneficiaries of the ECB, Yangphel and Hazelnut. The other start-ups are nowhere to be seen”, he added.
The government on the other side has a different view and opinion on what the private sectors better on.
Loknath Sharma, Minister, Ministry of Economic Affairs said, “Private sector in Bhutan is lacking technology and Research and Development (RND). They must focus on research and technology and come up with new technology and, invest on new minds and skills. Private sectors like Ferro-silicon are still in their primary form and developing but in our country sectors always think about making money quickly. Private sector must invest in human capital and skilling of Youth. For me RND is one area where we are lacking. NPL is not due to pandemic, it has been there since then, which means private sector are not efficient and professional and is not thorough with RND”
The Minter of Economic Affairs shared that the dying trend of private sector is not because of the government policy but because of lack of capital, human resource and innovative skills and technology. Although, this is the trend that the government expects a change in the near future.
“Definitely when rules become strict and when we remove certain incentives and previlages, private sector feel that they are not supported. Change is always not accepted but as private sector is quick, they will now find a way and I am sure they will quickly adopt to it. This is probably happning now due to lots of things happening with simultaneous reforms taking place so, they will review the system and administration and adjest accordingly. There is some kind of confusion but soon things will ease and clear out”, he added.