How the private sector vote could decide 2018

The conventional political wisdom in the 2008 and 2013 national assembly elections was that as long as political parties had the support of the supposedly ‘influential’ civil servants and the mass farmers in rural areas, any election could be won.

This is in part why the manifestos of all four parties in 2018 promise generous salary hikes and other incentives for civil servants while the bulk of the developmental activities are targeted at farmers in rural areas.

However, the 2018 elections is seeing an increasing realization of the importance of the private sector voters in deciding the outcome.

The numbers

The President of the Bhutan Chamber of Commerce and Industry (BCCI) Aum Phub Zam said, “The private sector covers a wide array of areas and combined together it has the second biggest number of voters after farmers.”

Bhutan currently has around 60,000 business licenses ranging from big industries and companies that employ thousands or hundreds of Bhutanese to shops that are run by three to two people.

Even if a conservative average of two adult people per business are taken then there are around 120,000 Bhutanese engaged in the private sector.

The Population and Housing Census of Bhutan 2017 has even more accurate data. It found that out of a total of 332,099 people working in Bhutan there are 145,691 people engaged in agriculture.

The next biggest block is the private sector made up of approximately around 130,000 people working in shops, hotels, services, manufacturing, transport, education (private) etc.

Of the total 293,912 Bhutanese working this number is still significant at around 110,000 or so after reducing the foreign or non-Bhutanese workers.

This is compared to the around 27,000 civil servants as per RCSC and 7,000 government corporate employees coming to a total of around 34,000 only.

Even in terms of postal ballots an increase of numbers of postal ballot voters to 133,795 is in part due to the facility being extended to hotels, manufacturing industries and banks.

Voting on issues

The BCCI President said that based on her own assessment and that of other business leaders, when it came to voting, the members of the private sector’s main priority has always been the state of the economy as it has direct implication for their business- be it a small shop or a bigger company.

“These days one cannot even step a foot outside without money and so their income and business would be the main factor in deciding which political party to vote for,” said Aum Phub Zam.

An indication of the private sector’s voting preferences can be seen in the 2013 elections.

A prominent business person on the condition of anonymity said, “In the 2012-13 economic crisis while everybody got hit, the worst hit sector was the private sector. Shops and businesses could not get enough rupee for imports, the value of the Ngultrum for cross border trade had fallen by 10 percent, banks stopped giving loans which is vital for big and small businesses to operate and import of certain products was banned.”

The business person said that while government employees still got their monthly salaries the above conditions was hurting the income of those in the private sector.

The business person said that this led to a significant number from the private sector voting based on these issues in 2013 which played a major role in the results then.

The BCCI is not a single entity and is composed of multiple associations representing industries, hotels, tour guides, shops IT, importers, exporters etc. It also has local chapters in all 20 Dzongkhags.

In the 10th year of democracy Aum Phub Zam said that there is definitely more awareness and organization in the private sector on getting governments or political parties to listen to them.

What parties have to say

Incumbent PDP

With the PDP government being in the incumbent government the decision of the private sector voters will be based in part on the performance of the incumbent government.

The PDP President Tshering Tobgay said, “I don’t see the PDP chasing any vote banks as we have to set the agenda for the whole country and everyone must benefit. All votes are important.”

The President, however, said that when it came to performance as the incumbent government, the PDP had done a lot of things to strengthen the private sector and many of these moves were not even in the 11th plan.

He said that apart from implementing the 11th plan in its full the PDP government had stabilized the economy which was in a bad shape when they came into office in 2013.

The PDP President pointed out that it was his government that solved the Rupee crisis which was affecting everyone including the private sector. He said that import restriction had also been lifted which again benefitted the private sector as well as everyone else.

He said that the government through its moves ensured that loans could be given once again to kick start the economy. “Credit has increased from 55 bn in 2013 to 105 bn in 2018, which has benefitted everyone including the private sector,” he said.

The President also pointed to the fact that loan interest rates had been lowered by around 2 percent saving a lot of money for the private sector which could be given as salary raises and reinvested by the private sector.

He said the 11th plan saw a huge construction boom with roads, central schools and others that benefitted the construction industry. The construction sector was one of the hardest hit in 2013.

The President pointed out that private businesses in rural areas did not have to pay tax under the PDP government. He said that exports had grown and the trade deficit was only 17.4 percent of the GDP in 2018 compared to 25 percent in 2013.

He pointed to the fact that from 32,872 business licenses in 2013 it almost doubled to 59,748 licenses as of June 2018. He said Bhutan had also moved up dramatically on the ease of doing business index and more would be done.

The President said that if elected PDP would do a lot more to facilitate and strengthen the private sector and remove red tape and other issues. He said that the PDP Manifesto had a large and significant component on the private sector.

DPT

The DPT President Pema Gyamtsho agreed that the private sector is an important voting block and had a lot of diversity and blocks within it. “We should not narrow down the private sector to only those doing businesses but it also includes others like taxi drivers, farmers, truck drivers etc.,” said the President.

He said that for DPT the private sector is an engine of growth and it should drive economic growth. He said private sector development should be fast tracked.

The President pointed out that that lot of the developmental activities in the 12th plan would be carried out by the private sector be it in construction roads, water supply etc.

He said the DPT would develop the private sector by encouraging fiscal incentives, FDI investment etc. He said that private sector development is a part of their manifesto.

DNT

The DNT President Lotay Tshering said, “All voters are the same be it rich or poor and private sector or government as it it is not just about numbers and every vote counts.”

“We do not want to politicize any section of society according to the biggest votes as this would be vote bank politics,” he added.

He said that the party would focus on private sector development and would go by the suggestions of the private sector development committee.

The DNT President said that the private sector had not been given due attention by the first two governments and it still remained weak.

He said that if the private sector is strengthened then it would address the issue of employment as well. He said that private sector development is a big part of their DNT’s agenda.

BKP

Despite repeated calls and messages the BKP President did not respond. The BKP Vice-President Sonam Tobgay said, “BKP has provisions to support the private sector under our seven jewels.” He asked the paper to refer to the manifesto.

What the Manifestos say

All four parties have made pledges to develop and strengthen the private sector.

Of the pledges the longest is by the PDP with 1,670 words, followed by DNT at 600 words, BKP at 160 words and DPT at 150 words.

The above does not include tourism, mining, cottage industries, transport and finance which are dealt in different section by the parties in varying lengths.

PDP

The Private Sector Development aspect of PDP’s manifesto runs into four pages and is divided into five sections.

The section on Industrial Estates and dry ports sees PDP promising to develop and operationalize the four Industrial Parks of Bondeyma (Mongar), Dhamdum (Samtse), Jigmeling (Sarpang) and Motanga (Samdrup Jongkhar) and a dry port in Pasakha, Phuentsholing.

It promises to invest in the maintenance of industrial parks in Pasakha, Phuentsholing and Bjemina, Thimphu and develop a mini-industrial estate in every dzongkhag.

On the Improving Ease of Doing Business PDP says it will review legislations and rules and regulations that impact businesses to remove bottlenecks and red tape. PDP shall streamline and fast track services by introducing One Roof Services.

PDP says it will improve Bhutan’s World Bank Doing Business ranking to the top 50 position in the world. It promises to review regulations to address double taxation.

On the section for Developing the Local Economy PDP says it shall work with Local Governments to stimulate growth of rural economy. PDP says it will explore urban and export markets to promote rural economy.

Cottage and Small Industries with economic potential will be promoted with the objective to generate employment

PDP says it shall initiate One- Gewog-One-Project and One-Dzongkhag-One-Project programs to boost local economy. PDP promises to facilitate access to finances for businesses that promote local economy and jobs creation. PDP will prioritize the integration of local enterprises and communities in the tourism industry. It promises to promote rural economy, tourism, handicraft and other indigenous products.

Under Export Promotion PDP promises to incentivize businesses that promote exports. It shall ensure that the average growth of export in the next five years increases by 5% annually. PDP shall work towards 20% increase in export volume of 22 identified products having export potential. PDP shall increase value of export of manufactured products by more than Nu. 5 billion.

In the Construction Industry PDP says PDP shall promote employment creation in the construction industry by incentivizing construction companies that employ Bhutanese.

PDP promises to prioritize diversification of locally produced construction materials, thereby reducing import of raw materials.

PDP promises to review the Bhutan Schedule Rates (BSR), develop user-friendly guideline on Building Construction approval and promote mechanization in the construction sector.

Under its flagship project of Startup Bhutan, it will establish a dedicated startup Office that would serve as a single point of contact for the entire Startup ecosystem and one-stop-shop for the startups. It would provide incubation to provide facilities for idea generation and provide logistical support for startup like office space, equipment etc. PDP says it would support startups in accessing finance, loans, obtaining clearances, license, intellectual property rights et and facilitate international networking, networking events with investors and experience sharing, etc.

DPT

DPT’s manifesto says that it will redouble the efforts to accelerate the growth of the private sector through policy, fiscal, and tax reforms and institutional and infrastructural development.

It promises to transform it to be the robust bedrock of economy and true engine of economic growth and mainstay of employment, through the main mechanism of continuous dialogues with the stakeholders in the sector.

DPT says it will demonstrate policy stability and consistency to provide confidence to the private sector, establish a Macroeconomic Advisory Panel to advise the Cabinet on economic affairs and elevate the Private Sector Development Committee to a Private Sector Development Council.

It promises to improve the macro-economic policy co-ordination mechanism within public sector agencies, improve information dissemination and accuracy of the macro-economic data by increasing frequency of GDP data to real time quarterly basis and extend Commercially Important Persons (CIP) status to high tax payers.

DNT

DNT promises to improve the investment and business climate by creating conducive environment for businesses and efficient public services, with active engagement of BCCI in policy making.

DNT promises to cut red tape, promote transparent decision making on procurement, frame consistent and uniform policies and deregulate unnecessary bureaucratic procedures. It says it will take public services online, which is to be embraced by all concerned government agencies.

DNT says that since 90 percent of businesses in the country are small and medium enterprises improving the Ease of Doing Business will have significant impact on thousands of businesses that will provide employment opportunities to a large population and socioeconomic development in the country.

It promises to expand access to social and economic infrastructures through better, efficient and more reliable communications and transport, supporting integration of local markets, accessing regional and global markets and investing more in public-private-partnership initiatives.

DNT says the issuance of trade licenses will be made efficient by eliminating and reducing unnecessary bureaucratic procedures for small enterprises.

It promises to improve essential public services delivery such as kerosene and LPG among others in both urban towns and rural areas and strengthen existing services such as banking and POL services by strengthening Community Service Centers in each gewog.

It aims to promote enterprise development by collaborating with financial institutions and enable easier and more reliable access to finance.

DNT says that while considering the increase in ceiling for large industries and enterprises, it will also push for greater investment in funding small, micro and cottage industries.

It says it will support incubation centers and invest in potential start-ups and expand agro-industries and rural enterprise.

DNT promises to create regional balance by stimulating economy in the eastern and central regions through relocation of few institutions to these regions and establishing projects and manufacturing industries. This would create economies of scale and decongest Thimphu city.

DNT says it will review rules and regulations for employing foreign workers in hotels and restaurants and also consider allowing foreign workers in the agriculture sector but ensure that foreign workers do not crowd out opportunities for Bhutanese.

BKP

BKP pledges to develop the private sector through enabling policies by providing easy and cheaper access to credit, timely bill payment, low transport cost, effective fiscal instruments, minimal government regulations and transparent procurement procedures.

It promises to support existing industries that are of strategic value to the economy through enabling policies, fiscal measures, infrastructure, training, skills and research.

BKP says it will invest in intelligent infrastructure facilitating trade and business growth with integrated licensing system and integrated export and import windows.

BKP will develop the tourism industry with products and services, agro or eco-tourism, immigration and labor regulations, entry point beyond Paro and Phuentsholing, roadside amenities, tourism promotion in east, center and south and incentives for development of tourism infrastructure beyond western region.

The development of industrial estates in Samdrupjongkhar, Gelephu, Mongar and Samtse shall be expedited. BKP says it shall create conducive environment for FDI and for cross border investment within the SAARC/BIMSTEC region and beyond.

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