The Bhutanese Leading the way.
Amidst a prolonged economic downturn, the People’s Democratic Party (PDP) unveiled ambitious plans to revitalize the nation’s economy, garnering attention as they will take over the office soon.
As part of its pledges, the new government aims to implement a Nu 15 billion Economic Stimulus Plan (ESP) within the first two months, which is expected to lead to economic recovery within 3 years.
Bhutan Chamber of Commerce & Industry (BCCI) President Tandy Wangchuk shared, “The country has experienced an economic downturn over the past 2-3 years, and the People’s Democratic Party (PDP) has stepped in at an opportune moment to revitalize the economy through its pledges. Of significant note is the establishment of the Economic Development Board, which will engage various sectors at the cabinet level to address concerns and issues. We’re anticipating that members from the private sector will also participate on this board.”
According to BCCI, the revisions to the Foreign Direct Investment (FDI) policy, accompanied by necessary adjustments to economic development policies concerning food security and self-sufficiency, which has remained unchanged for approximately three decades will be taken into consideration once the new government enters the office.
Furthermore, the current negative list restricts FDI in sensitive sectors, potentially deterring investment in emerging industries with significant growth and innovation potential.
BCCI urges the government to reconsider the list, making it more specific and targeted, and adopt a positive approach by identifying preferred sectors for FDI.
Corporate Social Responsibility (CSR) plays a pivotal role in encouraging FDI that generates decent jobs, fosters skills development, and contributes to community wellbeing. It ensures that FDI results in knowledge transfer and skill development among Bhutanese workers, necessitating training programs and technology sharing as part of the investment agreement.
The majority of Small and Medium Enterprises (SMEs), many of which produce local goods, are hoping for government support to promote their products.
BCCI has facilitated market access for these products. Despite challenges, such as the need for improved packaging technology, efforts to harmonize conflicting policies are underway, with stakeholders preparing to submit related issues for consideration.
In terms of import substitution, numerous industries in the southern region rely on imported charcoal, resulting in significant currency outflow.
Bhutan, with abundant natural resources like surplus timber, could potentially produce charcoal domestically. However, conflicting policies hinder private sector initiatives, exemplifying a broader issue where policies inhibit economic growth.
Addressing these challenges could lead to the establishment of charcoal industries, providing employment opportunities and fostering economic growth.
Tandy Wangchuk emphasized that bureaucratic processes, especially complex and inefficient application and approval procedures, act as significant disincentives for investors. To improve the investment climate in Bhutan, he suggests streamlining regulations, digitizing processes, and establishing a single window clearance system. These measures would accelerate and simplify the investment process, making Bhutan a more attractive destination for investors.
According to the business owners in the country issues related to access to finance include limited financial institutions, collateral concerns, inadequate infrastructure, and challenges in accessing skilled labor, alongside trade restrictions that impede export activities due to high tariffs and non-tariff barriers.
A handicraft business owner expressed frustration over high tariffs imposed by the Indian government on Bhutanese handicrafts, coupled with non-tariff barriers that complicate compliance with Indian regulations. This impedes efforts to export goods to India.
In the construction sector, stakeholders voiced concerns about the lack of transparency and predictability in the regulatory environment. They highlighted the government’s tendency to alter rules and regulations without prior notice, hampering long-term planning efforts.
To address these challenges, the construction industry suggests the government establish standardized rules and regulations to address challenges.
BCCI recommends that the government offer greater support to small businesses, including improved access to finance and business development services, thereby reducing trade barriers and facilitating easier export of goods and services.
In a bid to foster economic resilience, BCCI urges the government to bolster support for small businesses by enhancing access to finance and business development services.
BCCI President Tandy Wangchuk emphasizes the need for reduced trade barriers and streamlined export processes to empower local enterprises.
Additionally, he calls upon the government to establish a committee comprising private sector representatives for ongoing review and evaluation of Foreign Direct Investment (FDI) policies.
This move is aimed at ensuring the policies remain effective and adaptable to the evolving economic landscape for all the sectors.
The Tourism industry has said more can be done to help tourism including doing away with SDF at border towns, decreasing monuments fees and others.
