Minister for Works and Human Settlement, Lyonpo Dorji Tshering (Photo National Assembly)

Government to throw big money at affordable housing, highways and skilling projects

The main focus of the government’s plan to borrow and invest big money (see main story on pg 1) to help Bhutan overcome the COVID-19 impact will be in the construction and skilling sectors.

Construction

Talking about a potential area of investment Lyonchhen Dasho (Dr) Lotay Tshering said almost 37 percent of the GDP is supported by public expenditure and of this 80 percent plus is in construction.

“From construction around 80 to 85 percent leaks out and so when we revive our economy we have inject money into the construction industry and so therefore identify the leak points and try and seal those leakages though it cannot be totally sealed,” said the PM

The Prime Minister said that Minister for Works and Human Settlement, Lyonpo Dorji Tshering came to him with the construction scenario in Bhutan for the last 15 years. In  2013 and 2018 there was a clear dip of almost three fold from the peak.

The PM said that he has, therefore, asked the MoWHS Minister to bring a list of activities to him.

“At the same time, I also told the MoWHS Minister to be very intelligent and smart in this. We must inject money into economic activities which results in circulating the money more in our economy and money that does not leak out upfront,” said Lyonchhen.

Lyonpo Dorji Tshering said that they realized that during every election for about 13 to 15 months there are no major activities or the activities drop down.

He said during the election period there are no tenders and and so there are no works or very less works which he said the government feels will not do.

The minister said that with the COVID impact and this transition, 2024 is expected to be a very difficult year, and so that government to avoid this will have to initiate some big construction activities.

He said with the pandemic when the people are suffering and when the market is suffering it will be foolish to stick to only the 12th Five Year Plan. He said the current 12th FYP is already significantly changed and is now mainly targeted at bringing up the economy.

Lyonpo said it will be more important to protect the economy then stick within the 12th plan.

The minister said when the construction sector faces a tough time in 2024 it will not only be the construction sector but it will also hit many other related sectors like truck drivers, Bhutanese youth engaged in construction as excavator drivers, workers etc, stone quarries, hardware shops, wood industries and carpenters, brick factories and more.

“If construction stops, everything stops,” said Lyonpo.

He said to avoid this the government is planning to come up with major construction activities during this period. 

Here the minister is taking the lead to draw up a list of major construction activities for the government for which even soft loans will be required.

Affordable Housing 

Giving an example Lyonpo said that the government has already applied for USD 30 mn or Nu 2.220 bn loan from the World Bank for affordable housing which will be executed by the National Housing Development Corporation (NHDC) but be contracted out to local contractors.

He said other projects could be highways and bridges that need to be built.

Lyonpo said these activities should be in full swing by 2024 with the tender and mobilization happening within 2023.

Lyonpo said that with the government pumping in billions during the election period he expects there will be some political opposition as well as opposition by some other institutions who will insist on rules and regulations, but the issue at hand is the welfare of people at an extraordinary time.

Lyonpo Dorji argued that five year plans are allowed to spill over into another like with the 10th and 11th FYPs.

The minister said that in 2024 the government has to ensure that at least 50 to 60 percent of economic activities of the peak period is taking place.

The Finance Minister Lyonpo Namgay Tshering said, “In a small system like ours whatever risk we foresee the major equalizer role can be played by the government. Now if we foresee the risk of asset bubble burst and if we foresee the risk that people in Thimphu are having a tough time meeting the demand of soaring house rents, how can we equalize that and so affordable housing is an answer to that.”

He said in order to come up with the affordable housing project the government can consider pulling out the idle money in the banks and put the money into that project.

He said the outcome is guaranteed as it is like killing two birds with one stone. Firstly, loan repayment is not an issue and secondly the government is safeguarding the interests of the tenants.

At the same time, he said the government has to be very cautious, as when they come up with the affordable housing project two conditions have to be very clear.

The first and foremost is to think beyond 20 years and what is going to be the next phase of developmental activities.

“If you are going to connect Paro and Punakha with a high speed train to Thimphu then people who have invested in buildings in Thimphu will suffer because they will not get the rent as people will spread out and come to office to Thimphu from Paro and Punakha. So you will have to be very careful,” said Lyonpo. 

The second thing is that how many private buildings are expected to come in and what is the projected population growth in Thimphu City.

“So you cannot turn that affordable housing into a white elephant. We have to make a calculated move,” said Lyonpo.

Lyonpo said that roads and urban amenities is another major investment area. He said the in Thimphu the infrastructure it has is not commensurate with the standard of the vehicles that the rich people drive in Thimphu. People drive Mercedes but the roads are full of potholes.

Skilling

Lyonpo Namgay said another key focus of the government apart from construction is in human resource development.

He said in HR development skills is something an individual must possess as the time has now come where an individual with a very conventional certificate like a BCom or BBA is challenged.

“If you do not possess a particular skill in the 21st century you should be cautious as you could be replaced by machines. I think you need certain skills such that a robot engineer cannot replace your skill. HR development is skilling,” said Lyonpo.

“We are very happy and it is proven that in no time His Majesty has gifted us with the DeSuung skilling program and this is proving to be very successful within no time,” added Lyonpo.

He said this has already set a bar or standard and given them lot of hope, and I see now that the future direction is very clear for us.

The minister said with climate change on the global agenda the government can also consider investing in renewable energy.

“With climate change in the coming years the loss from hydropower can be substituted or offset from other renewable energies,” said Lyonpo.

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