Phuentsholing City

Businesses in border towns are not doing well

Trade and commerce in the border towns of Phuentsholing, Gelephu and Samdrup Jongkhar, are down. The people that run businesses in these areas, share there are numerous factors that are killing their business, such as the reopening of borders with India, taxes and lack of population.

The Chair of Members of the Bhutan Chamber of Commerce & Industry (BCCI) of Chukha, Palay Dorji said, “The economy is not doing well and with the borders open and high taxes, goods are cheaper in the Indian territory, and with a lack of population, businesses have not been faring well.”

A store owner in Phuentsholing, Kelzang Namgyel, said the local business cannot compete with the Indian business across the border. He said, “With the border open, people are all going to Jaigaon to shop as it is a cheaper place to shop. With taxes, our goods are always expensive and with the SDF, the hotel industry is not doing well which has affected the whole of Phuentsholing.”

Many store owners also shared similar sentiments, that it is hard to see any money coming their way, with all customers flocking to Jaigaon. Kamal, a store owner, also shared that the high rent for commercial places is also bearing down on the businesses, with some having to run on a loss, and he added that eking out a living is very hard right now. The restaurant business is also not doing well.

Similarly, in the Gelephu area, most shops are closed due to having no customers. The President of a trading group in Gelephu, DK Group, Dasarath, said that businesses, aside from grocery stores, are all not doing well.

“Groceries are the only ones in business, as people have to eat. Aside from it, all business outlets are not doing well, especially the hotel industry. The SDF policy impacted a lot, and with the opening of the borders, it has affected the other businesses too.”

Similarly, clothing store owners shared that with cheaper goods sold in nearby India, it is nearly impossible to earn money, and they further added that during the pandemic time, the business was better as the borders were closed with no access to nearby Indian towns.

A hardware store owner also shared that with construction in Thromde areas of Gelephu temporarily frozen, running business has been hard.

Likewise, Samdrup Jongkhar is also not doing well.  Jai Kumar, a businessman in Samdrup Jongkhar, said “One reason for business not doing well could be inflation, but the biggest reason is the consumer thinking that goods are cheaper in India and shopping there. It’s the mentality that goods are cheaper when in reality it is not, I mean some items are cheaper. However, when one goes to India to shop, they use the Bhutanese currency to shop, and although the Bhutanese currency is pegged to that of Indian currency, one has to pay the exchange rate which makes it even more expensive. If one shops with INR then it will be cheaper, but our consumers use Bhutanese currency to shop, so it is not as cheap as they think it is.”

He also added that being able to shop in INR will also cause an outflow of INR with already dwindling reserves, so it makes more sense to shop and spend inside the country. 

A businessman in Samdrup Jongkhar in Dewathang area, Nob, also shared similar sentiments saying business has been bad after the border area was opened as people opt to buy everything from the nearby Indian towns.

He also added that restaurants and hotels are doing badly.

With regards to hotels in the border area suffering, the Chairperson of Hotel and Restaurant Association of Bhutan (HRAB), Jigme, said that although the occupancy is lower than pre-COVID-19 times, the SDF waiver in the border towns have helped.

“The SDF waiver in the border towns for 24 hours has definitely helped, as earlier guests were kept in Jaigaon and other border towns on the Indian side for a night and the next day, would go straight towards Thimphu and Paro. After the waiver, guests are now kept in the Bhutan side of the town. However, the total tourist since September is touching around 20 percent of the pre-pandemic numbers. The total tourist since the new SDF is still lower than pre-pandemic times so comparatively, the occupancy is on the lower side.”

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