An initiative to promote ease of business

Numa De Magalhaes, making the presentation to PSDC(Photo Courtesy : Minjur Dorji)
Numa De Magalhaes, making the presentation to PSDC(Photo Courtesy : Minjur Dorji)

As part of the on-going Royal Government of Bhutan–IFC Licensing Simplification Project (LSP), a comprehensive e-Portal of business licenses was developed and launched in August 2012.

Subsequently, the Prime Minister of Bhutan signed an Executive Order to make the update and use of the e-Portal mandatory across all 29 license-issuing agencies (which issue 119 licenses, clearances and permits) and to prioritize it as the primary government-to-business interface in Bhutan.

The Licensing e-Portal (www.g2b.gov.bt) provides a gateway to access detailed information on relevant business licenses and permits, including requirements, costs, application forms and contact details for the relevant regulatory and issuing agency. The site is operated, updated and maintained by the economic affairs ministry (MoEA).

In a bid to make the e-Portal transactional, the MoEA in collaboration with IFC presented a number of options to the members of the Private Sector Development Committee (PSDC). The PSDC members welcomed such a portal saying this would indeed help businesses in many ways.

“A further enhanced g2b website will reduce obstacles to businessformalization, increase transparency and reduce regulatory compliancecosts for the entrepreneurs,” World Bank’s senior e-Government Specialist, Numa De Magalhaes said. “In addition, it will also increase government revenues.”

The information brochures and banners on selected licenses were presented to members of the Private Sector Development Committee (PSDC) and relevant government and private sector agencies on Thursday.

According to Economic Affairs Minister Lyonpo Khandu Wangchuk, “All these initiatives are expected to  help the Royal Government to improve the quality of selected priority licences for reforms, increase efficiency of the services and achieve time and cost savings to both the private sector and the administrating agency due to better availability, quality and transparency of licencing information.”

These reform initiatives are in line with the Economic Development Policy 2010 that calls for a review of the national regulatory framework and to the ease burden of compliance for businesses.

The e-Portal www.g2b.gov.bt is a website containing relevant licensing information in one place and helps fast track government service delivery on business start-up and operations to result in a more vibrant private sector and contribute to the national development.

“The current g2b portal contains useful information for business toapply for licenses or obtain sectoral clearances,” said Sayef Tanzeem Qayyum, Task Team Leader for Bhutan Licensing Simplification Project. “The Prime Minister’s executive order dated June 1, 2012, made g2b portal the primaryinterface between the government and private sector.”

Information brochures for the following licenses have been developed and are available for downloading from the e-Portal www.g2b.gov.bt.

 1. Clearance Letter for Tour Operators                  

2. Recommendation of Hotel License                                         

3. Approval for Private Schools                                       

4. Construction Development Board Registration Certificate                              

5. Technical Authorization for Medicinal Products                              

6. Timber Transport Permit                              

7. Timber Release Permit (TROCCO)                                         

8. Work Permit Approval                                 

9. FDI Approval

10. Environmental Clearance

11. Domestic Project Approval

 

 

Background

IFC-RGoB Licensing Reform Initiative

On December 14, 2010 a co-operation agreement was signed between the International Finance Corporation (IFC) and the Royal Government for Business Licensing Simplification. The MoEA is the lead agency on behalf of the Royal Government for this initiative. At the inception of the program a working group with representation from Ministry of Finance (MoF), Ministry of Home and Cultural Affairs (MoHCA), Ministry of Labor and Human Resources (MoLHR), National Environment Commission Secretariat (NECS), Ministry of Information and Communication (MoIC), GNHC, Anti-Corruption Commission (ACC), Office of the Attorney General (OAG), G2C Project office, Bhutan Chamber of Commerce and Industry and the Association of Bhutanese Tour Operators, ADB and McKinsey was formed.

The priority selected licences for review and reforms  were industrial approvals/licences for medium and large, environmental clearances and Foreign Direct Investment (FDI). These three were selected based on the outcome of an earlier co-operation between  IFC and the Royal Government for reforming the  business start-up and operations. IFC and MoEA conducted a comprehensive inventory of licenses (including sectoral clearances, permits and other approvals) in Bhutan  and found that 119 licences, permits, clearances or approvals are required for businesses to start up and operate.  The inventory exercise also found that some licences seem to be lacking legal basis, regulatory justification for some licences are missing, regulatory objective often does not justify an ex-ante requirement and also some liceneses (including clearances) are redundant.

Publicly available information on procedures and requirements  is lacking a standard format and is not always easily accessible, complete or reliable. There are redundant requirements, insufficient co-ordination  and data exchange between authorities. Reliable statitsics for number of licences issued and revenue collected are often unreliable  and need to be improved as these are important information for policy changes. The study also revealed that since many licences require other pre-requisties such as sectoral clearances before they can be processed and therefore the cumulative time taken to receive a licence can be significant.

Based on the recommendations of the study, IFC and the Royal Government reviewed the procedures for reforming the licensing pool, piloting with the three selected priority licenses and disseminating of information on procedures for a selected list of 11 licenses.

The objective of a Licensing Policy for Bhutan is to establish a modern business licensing policy that reduces burdens on businesses while ensuring compliance with Bhutan’s regulatory requirements by i) defining the main principles and criteria for the licensing of business activities; ii) Listing licenses and requirements that can validly be imposed by government institutions (Licensing Authorities) and iii) Providing and endorsing methodologies to review current and proposed licenses to ensure regulatory quality. The Policy defines licensing to include all authorizations a business needs to seek from the Royal Government including sectoral clearances, permits, recommendations, etc.

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