A major part of the government’s Nu 5 bn Economic Stimulus Plan is the Nu 1.9 bn in Revolving Funds, for mainly small and cottage industries and rural businesses, to be implemented by the Business Opportunity and Information Center (BOIC).
The BOIC has received a major impetus with the selection of its new CEO Karma Tshering, 42, who had earlier served as the Deputy Managing Director (DMD) of the Bank of Bhutan.
13 applicants had applied for the job, of which four disqualified for not meeting the basic criteria of qualifications and work experience. For the remaining 9, there was a presentation round out of which 5 candidates made it to the final round where Karma Tshering was selected.
The new CEO had started his career in the Ministry of Economic Affairs where he worked on drafting the FDI policy, helped set up Pasakha Industrial Estate, did feasibility studies for businesses and also set up the Company Registry as the Registrar.
The MoEA Minister, Norbu Wangchuk, said, “The BOIC will be looked after by a BOIC Board with the Trade Joint Secretary as its Chairperson and the Ministry in turn will have an oversight role over BOIC.”
The Minister said that BOIC will require around 4 months to start functioning as various measures had to be put in place.
The Joint Secretary, Sonam P. Wangdi, said that the BOIC Board would have nine members from the MoEA, Ministry of Agriculture, Ministry of Finance, Royal Monetary Authority, BCCI and two competent experts.
The CEO Karma Tshering said that his immediate priority would be to help set up the BOIC office, recruit people, come up with various rules and procedures and also credit procedures within the next three months or so after which BOIC could become operational and they could start giving loans.
Karma Tshering said that the BOIC will fulfill its mandates as given under the ESP. He said that BOIC will help implement the Nu 1.9 bn Revolving Funds consisting of Nu 1.5 bn for small and cottage industries and Nu 400 mn for rural businesses.
He said that BOIC was not entirely a new set up, but a continuation of the Entrepreneurship Promotion Center set up in the MoEA around two decades ago. He said the first task would be to reorganize the organogram and get it approved by the board to fulfill the mandate and targets given to BOIC.
He said the BOIC was not just a financing organization but would be a one-stop-shop to help all Bhutanese businesses so that they could just walk into one place and get help with various processes and procedures which would make it easier to do business.
The CEO said that BOIC would also do an inventory; mapping and research of all the business projects that can be done and they would be offered to the public.
He said that he would submit to the board the possibility of occasionally submitting common administrative burden issues faced by businesses to the government.
Karma Tshering said that BOIC would like to help convert various business ideas within the country into actual projects.
He said that an immediate priority would be to submit a concept note to the board and get approval for it.
The CEO said that currently he was working out of some office space in the MoEA and he would have to set up an entire new BOIC Secretariat, come up with transparent recruitment rules, procurement manual and financial manual.
He said his banking background will help him focus on setting up credit rules and systems to ensure that while credit is given collateral free at concessional rates, the money can be recovered back.
Karma said that he would also work towards ensuring the BOIC would not be just Thimphu centric but also accessible to other areas of the country.
He said that the BOIC staff would be kept as small as possible, but the eventual number would also depend on the targets and timeframe given to BOIC. He said if the targets were more aggressive, then more staff would have to be recruited to fulfill them.
Nu 1.9 bn BOIC Revolving Fund
Of the Nu 1.9 bn Revolving Fund, Nu 1.5 bn will be kept for cottage and small industries and Nu 400 mn for non-formal rural activities to be looked after by the Business Opportunity and Information Center (BOIC).
The ESP implementation report says that for the Nu 1.5 bn cottage and small industries fund, the maximum ceiling of funding will be Nu 8 mn per project with a debt equity ratio of 4:1. There will be no collateral requirement and financing will be dependent on viability of the projects. The report expects an average of Nu one million per project, though it also expects several projects to cross this average. The interest rate is at four percent.
The main purpose of this fund would be to provide credit to small and cottage industries to foster entrepreneurship, stimulate economic activities, add value to domestic resources and create employment.
To promote the non-formal activities in rural areas, the Nu 400 mn part of the Revolving Fund will be used as baseline financing for individuals and cooperatives engaged in agriculture, livestock, forestry and fishery.
The fund shall be the most concessional collateral free support provided to individual and cooperatives. A household or cooperative may be extended this fund, based on the practicality of the proposal, a sum up to the maximum of Nu 100,000 per project. This is expected to translate to around 4,000 projects going by the size of the fund. The interest rate is at four percent.
There is also a provision for special essential infrastructure projects where, upon approval from the cabinet, the government may implement special infrastructure projects to be implemented by the government, directly or in partnership with a private company. These could be like animal feed, cold chain facilities, etc. It could also include the converting vehicles into electric vehicles to save on fuel consumption. The funds could be used from unused revolving funds and adjusted accordingly.