Government goes out of its way to bail-out the ‘White Elephant’

Photo Courtesy : Minjur Dorji
Photo Courtesy : Minjur Dorji

Among many other incentives, even the candidates’ process trainings for the two companies are funded by the government while tenancy progress at the tech park hasn’t improved a bit

Save for the existing two at the Thimphu TechPark Private Limited (TTPL), an uncomfortably good period has passed without any other international information technology (IT) companies willing to rent space. This has put the government in a desperate situation as the Tech dream falls short of miles to bring in promised dreams.

While the government’s effort to rope in major multinationals have not yet paid off and is still underway, two comparatively smaller US registered companies, Scan Cafe and Shaun Communications have rented space at the IT Park.

The government has already provided a host of incentives from providing a telecom subsidy to slashing the internet rates for the IT Park to even furnishing the commercial space of the IT Park for the two companies. At one time TTPL have even lowered rental rates. Fiscal incentives like tax holidays have also been provided.

Experts and business observers said Bhutan could be the only country where the government funds process trainings for BPO employees and allows substantial incentives.

Shaun Communications, a business processes outsourcing (BPO) limited liability company (LLC), registered in the US but operating as an independent company in Bhutan under the name, Shaun Communications Bhutan Private Limited (SCBPL) has leased 10,000 SFT at the IT Park for a period of a year and Scan Café, which operates in the US, Switzerland, and India specializes in digitalizing and editing older formats of photography and video leased another 10,000 SFT for three years.

 

Employment incentive program

In order to encourage and promote the tenants, the labor ministry (MoLHR) is also supporting their human capacity development requirement through an employment incentive program.

TTPL tenants also enjoy ‘grade A’ infrastructure and amenities with power available at under 30% of the cost in other parts of the region.

Moreover, one of the key reasons why the two companies rented space at the TTPL is also because of the eligibility criteria included in the terms of reference for the employment incentive program. The first provision in the criteria requires any company who wishes to avail incentives from MoLHR to have signed the tenancy agreement with TTPL to locate their business at the park.

The criterion also entails each company to have signed a lease agreement of 12 months or more.

A provision of Scan Cafe’s contract with MoLHR signed on February 8, 2013 states the ministry shall pay to the company, an employment incentive of Nu 11,000 for each candidate trained and employed within the third week of this month. The ministry, under this program shall support employment of 500 candidates with a minimum qualification of XII standard, the cost of which amounts to Nu 5.5mn for Scan Cafe alone.

SCBPL’s operations manager of Prodipto Mukherjee said the company is currently enrolling candidates for process trainings. The training expenses such as candidate stipend will be shared equally by SCBPL and MoLHR. “It’s been agreed on 50-50 basis and now we will be able to give them longer and proper trainings,” he said.

Shaun communication’s BPO, ITES director Nabamita Chakraborty said each trainees are eligible for a Nu 8,000 stipend per month of which Nu 4,000 will be deposited into the respective trainee’s accounts by MoLHR upon submission of their attendance sheet on a monthly basis. She said the training period is for four months depending on the performance of each candidate.

If a trainee choose to phase out during the course of the training, he or she is liable to refund double the amount of what MoLHR has incurred till the time.

MoLHR has agreed to share the cost of training 200 recruits with SCBPL which amounts to Nu 3.2mn if all trainees attend the full course of the four-month training.

When asked about the current trainee’s job security and viability of the project, Prodipto said the company had learnt from its past mistakes and has placed stern policies in place to recruit potential candidates. “Earlier, the company had stopped operations due to poor performance by local recruits,” he said. The company restarted operations with over 20 agents last month.

Prodipto also cited internet connectivity problems at the tech park. “The lack of a backup line to maintain redundancy affects production,” he said.

He also said human resource was one of the primary issues.

However, program officer of MoLHR’s human resource development division Tenzin Choden, who is also the ministry’s coordinator of this particular program said ever since the TTPL was at the infrastructure developing stage, MoLHR as early as 2009 has been training youths under the private sector development project (PSDP) aimed at meeting the human resource requirements of the tech park. Till date, 1,034 candidates have been trained of which 898 are employed with BPOs and other institutions inside and outside the country. The ministry incurred expenses to the tune of USD 1mn.

Tenzin Choden said “the students completed their trainings and were ready to join the tech park as planned but then the tech park wasn’t in a position to hire them immediately either because of incomplete construction or lack of tenants. So the trained people had to look out for other jobs.”

 

Government to furnish space

Besides MoLHR’s assistance, as a promoter of the park, the Department of Information Technology & Telecom (DITT) under the information ministry has agreed to fit out or furnish the commercial space of the tech park for the two tenants.

Initially with high hopes of giant multinational occupants, only the ‘warm shell’ stage of the park was developed, which means while the overall infrastructure and essential utilities are provided, the interiors would be fitted out by the occupiers themselves, according to their own standards and design requirements.

The government has had to step in to bear the expenses of the fitting out for both the companies at the tech park.

DITT director Phuntsho Tobgay said “the warm shell, which means providing false ceiling, flooring, walling and wiring among others has been provided but not all companies can avail the fit out services or the plug and play environment.”

To qualify for this component, World Bank requirements also have to be met like having a minimum annual turnover of USD 0.5mn. “It’s only Scan Café that is getting it,” the director said.

As a start, DITT will shell out Nu 5.4mn and the space will be ready for occupancy and operations by mid June this year.

TTPL’s Chief Operating Officer, Tshering Cigay Dorji said once the fit out for both these companies are completed it will allow more room for the Bhutan Innovation and Technology Centre (BITC) to facilitate private businesses.

ScanCafe plans to scale up to 285 workstations in the immediate future while SCBPL has plans to employee 200 Bhutanese by the end of the year.

The DITT director also said it takes a lot of time for tech parks to start generating returns. “It is actually part of a larger ICT vision and strategy for the government. There are new challenges and we must address it as and when it arises and we cannot say that those challenges are the reasons to give up.”

He said it is premature for anyone to make a judgment call on the future of the tech park.

However, despite extra expenses pumped in by the government, the future of the Nu 285mn worth TTPL still looks bleak as it has failed to attract big companies from outside and domestic business houses to rent space at the park.

The mega IT Park has also realized that Bhutan lacks the economies of scale and skills that giant companies seek and domestic companies cannot afford the facility or is least bothered about it.

The first phase of the project which became operational from May 2012 comprises 50,000 SFT of IT office and data centre space. The government has also leased from TTPL 10,000 SFT of warm shell space for 90 years at US $ 2mn to house Bhutan Innovation and Technology Centre (BITC) within the IT Park.

A Data Service Centre (DCS) at the tech park jointly developed by a local IT firm, New Edge Technologies Private Limited and Burland Technology Solutions Limited (BTSL), a UK based IT company was expected to make up for increased overhead expenses.

However, the data center that initially boasted of world-class design and multi-tier 2 facilities up to 10,000 SFT support space and 8,000 SFT server room hasn’t caught up yet as it is the first of its kind in the country. “There are some companies who have shown interest and we hope this will materialize soon,” Tshering Cigay Dorji said.

TTPL is the country’s first IT Park and is promoted by the DITT, Ministry of Information & Communications (MoIC), Royal Government of Bhutan. It is supported by the World Bank and developed by TTPL which is a joint venture between Assetz Property Group (APG) of Singapore and Druk Holdings & Investments (DHI).The Public sector is represented by the DITT, MoIC and the Private party is represented by TTPL.

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24 comments

  1. Hahaha..whats going on? At one hand govt. is in serious trouble in terms foreign debts and in other hand country is knowingly providing huge subsidies and other financial support to FDIs…this is pathetic case of govt. mismanagement.

  2. What more can I comment than what has been revealed

  3. IT Park, you are so dead

  4. Druk Holding and Investment was not required in the first place only. It used to be managed by one Guy in the MoF. The DHI has lot of Hi-FI and WI-FI employees with fat salaries.

  5. Bad luck these guys got caught…otherwise its bonus tay…see how many projects are facing corruption.

  6. Every shoddy work of this government has been exposed one by one. Has this government completed even one project successfully and without any corruption? NO!

  7. i THINK ITS TIME WE HAD GOOD INVESTIGATION TEAM AND GOOD VERDICT PRONOUNCED.tHESE CORRUPT PEOPLE MUST GO TO CHAMGANG FOR A YEAR AND LEARN SOME GOOD THINGS THAT ARE BEING TAUGHT TO INMATES.lEARN MEDITATION AND REMOVE CORRUPT IDEAS FROM THEIR BRAINS.

  8. This government has spent billions on infrastructure that doesn’t even last for a year and the brunt of its failures, including the INR crisis which is directly connected to over-spending and under-supervision, has to borne by us citizens in the form of increasing restrictions just to make up for this governments failure, especially in the economic front. The citizens of Bhutan are in fact bailing out this government.

  9. Secretary down to peon are civil servants and all the corruption are happening in the NEXUS but the fingers are pointed at Govt. and Ministers. Whatever is done is done collectively and all should take his share of responsibilities and accountabilities. Mr. Sonam and Tatogpa are also civil servants- i know this for sure. In all the construction sectors Engineers are involved and they are CIVIL SERVANTS. Govt. comprising few ministers are helpless when all the people below are corrupted.

    Your comment is awaiting moderation.

  10. But wait guys before you jump to the conclusion – soon you will be seeing either Lyonpo Khandu or PM himself on BBS announcing that in few years time the Tech park will earn in billions and we won’t know where to keep all that money.

  11. The return from investment will not accrue as soon as one puts in money. Say you invested 100,000,000/- on contruction of a building on 15 decimal which was also bought at Nu.400,000/- per decimal.The total investment is Nu.106,000,000/-. Your rental earning after completion of building is 150,000/- per month. In how many months do you think we will prifit from the investments. We will have to pay interest on the loan, besides day to day maintenance of the structure/ building.
    How do we expect miracle to work in the IT park. I think the plan is for a long term horizon like the power projects. This is my guess!

  12. By the way the best option now would be to give the IT park to some ministries and move the ministry there.  Best would be MOIC so that IT Park it can be at least utilized for better. Else give it to agriculture ministry to start a dairy farm..

  13. IT Park construction has been done by TTPL’s money and not govt.’s money. Govt did not invest in building the park…the 285 m that has been quoted time and again is being invested by TTPL…

  14. All the incentives quoted come from the World Bank. These money would not have come to Bhutan if there was no IT Park Project. So, Bhutan does not lose, but gains a lot from such projects. The immediate gain is capital inflow.

  15. So the Bhutanese should have done proper homework and inform the people. Please write something good also instead of looking only at black horse.

  16. IT PARK is and will be a white elephant !!! All you fools who thinks the world bank is pumping in money for no business are embiciles. How do you think the country is gaining when the government is so loosing money by allowing loads of incentives to foreign companies. IT PARK WAS DEVELOPED TO EARN REVENUE. NOT TO SUCK GOVERNMENT REVENUE. Mr LAKSAM and company can go do your homework. do some research on BPOs and IT parks worldwide and see if there is any country who allows such subsidy to FDIs.

    • Clarification

      The IT Park infrastructure is constructed by TTPL with major capital investment from FDI company, cuz of IT Park, we as a country understood our shortfalls and developed in ICT area..it is generating jobs…giving space for our innovator and entrepreneurs ….do we still call it white elephant? 
      Please browse such initiative all around the world and see how much govt. is investing to such initiative.
      What we are used to is quick profits but i urge you to wait and watch the success..IT park is not like any housing infrastructure where ones it is completed, it is quickly filled and note that this is first of its kind and it will take time but it will prove its success . Infact we have started seeing success…generating jobs is not a white elephant… 

  17. Mr. Monk
    Our company will carry out research on BPOs and IT Parks, but who will finance, Your Dratshang? Govt. is giving nominal subsidy to attract more participants, I believe.

  18. VisionaryLeader

    Monk, it is you who is a fool. Even countries who have much better value proposition that Bhutan provide incentives to attract FDIs. What Bhutan is doing by way of tax incentives is way too little. The other incentives like telecom trainings are paid by the World Bank. If we have many people like you in Bhutan, you will drag the country back to stone age, or keep it forever dependent on donor money. IT Park is a way towards more economically independent and SOVEREIGN future for Bhutan.

  19. haha your company will never get any funds to do any research. All works are given to foreign consultants by the government undermining our private sector. 
    WE NEED DEVELOPMENT FOR SURE BUT NOT AT THIS PACE draining out national revenue. its national revenue whether we got it from the world bank..ADB or  from tax payers! 

  20. By the way . all incentives are not given by the world bank. MoLHR wasnt part of this project until it had to assist with human resource at the poor park. millions of money is being put into the park! while some of our rural populace has no proper sanitation nor food.

  21. Our consultants and contractors will not perform like the outside ones. See the mess our contrctors and supervisors are creating- Airport projects and pangrizampa renovation works. All are like yourself(monk)

  22. “The Bhutanese” is after MOIC, so a successful project is also a white elephant for the newspaper now! Irrespective of the size of the tenant companies, for me, as a citizen of this country, what is important is resolving/reducing the unemployment scenario now. What the government has put in and now putting in (hard and soft) are long-term investments for this country – may not be like the hydro-power projects (as one contributor to this forum put it!). Both the newspaper and many commentators on this article seem ill-informed on the broader goals of the IT Park project…  

  23. Now that the IT park is built and from all records, it is being under utilized, the RGOB is doing the next best thing by providing incentives to attract more players, now what is the government doing wrong, the Bhutanese, please tell us.

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