A key component of the Economic Stimulus Plan (ESP) which is the Business Opportunity and Information Center (BOIC) will start its activities from the 27th of August, 2014 according to the Minister for Economic Affairs, Lyonpo Norbu Wangchuk.
The BOIC will start accepting applications for Nu 1.9 bn worth of potential loans that can be given to entrepreneurs, small businessmen, farmers and ordinary citizens with good business proposals.
Of the Nu 1.9 bn, Nu 1.5 bn will be for small and cottage industries with bigger projects in it having a maximum ceiling of Nu 8 mn and smaller projects within it having a ceiling of Nu 2 mn. The remaining Nu 400 mn will for rural development and business targeting farmers and the agricultural sector with a ceiling of Nu 100,000.
The Minister said, “The original plan was to launch it in the first week of August as per my announcement in the Parliament, but we could not do it as this month is a ‘da-na’ or inauspicious month as per the Bhutanese calendar. We had also consulted the astrologers in Pangrizampa which is why we settled for 27th August but otherwise we are all set.”
Lyonpo said that the launch would include the launch of a website www.boic.gov.bt, operational guidelines to access funds, brochures and application forms for the funds. The BOIC would also start taking in applications from 28th onwards. BOIC would also have a toll free enquiry number at 158 with information officers and fund counselors at the Business Information Centre (BiC).
“The guidelines will show how the funds will be managed, how each project would be appraised, what projects would be available and how the applications can be processed and received,” said the minister.
The minister said that the projects should generally be of a manufacturing and production in nature that are exports oriented and can substitute imports.
“The BOIC on the instructions of the government could also use some of the funds to build critical infrastructure for promoting small and medium industries (SMEs),” said Lyonpo.
He said that this could be something which benefits all SMEs who individually cannot build such infrastructure giving the example of cold storage for farmers or a seasoning kiln for furniture manufacturers.
BOIC will not only receive applications for funds but the agency itself will indentify viable business opportunities and offer it to the public. These could be commercial farms, livestock projects, brick manufacturing, furniture units, charcoal projects, agriculture and etc.
The minister said that with aim of making BOIC customer friendly and also accessible, people, apart from walking in could also submit their applications online after filling a simple form. The website apart from an online application registration system would also have a tracking system.
He said gewog offices, regional BCCI office and regional trade offices would also be empowered to collect these applications in rural areas and send them to BOIC in Thimphu. The minister said that people would also have the option of posting in their applications.
After a project is received by BOIC it would be appraised by one of the two project appraisal committees. One committee would look after the revolving fund 1 of Nu 1.5 bn for SMEs and another committee would look after revolving fund 2 of Nu 400 mn for rural businesses.
The minister said that the project appraisal committee members comprised of very efficient and experienced committee members who would use set criteria and guidelines to appraise the projects. He said it would be similar to a bank’s loan appraisal committee except that it would be more stringent.
He said that among the other things the project would see the viability of such projects, the rate of return, its location and etc. The committee could also decide to decrease the amounts applied for.
The minister said to address concerns of the potential misuse of BOIC loans due to the lack of collateral, the BOIC has come up with set of measures to ensure that there is no misuse.
Those taking loans and not paying it back would not only be taken to court but their guarantors would also be held accountable. Lyonpo said that all loans would require a guarantor and there would be a legal agreement to ensure repayment.
Another safeguard is that the BOIC would not necessarily release all the money directly to the client but it would monitor the project and ensure that the money is being used for the project and not other purposes. For example if a loan is being taken to buy farm machinery then BOIC would ensure that the payment is made to the machine supplier.
The minister also highlighted the importance of BOIC in the government’s larger economic strategy for Bhutan.
“We have always realized that just as any other country the main engine of growth of Bhutan must be small and medium enterprises but they have been stagnant and are weak in numbers and contribution to the economy. The root cause is access to credit and as SMEs have never been able to get a fair deal in terms of credit so the ESP fund will be a huge opportunity for SMEs,” said Lyonpo.
The minister said that the ESP was aiming to create around 6,000 SMEs and it would have a huge positive impact on the economy on several fronts. He said it would bring about a general vibrancy in the economy, it would generate employment and self employment, it would be a direct source of income and personal wealth creation for individual entrepreneurs.
Lyonpo pointed out the SMEs was one of the five jewels of the economy as mentioned by the PM and the BOIC would ensure that something could be done to help it.