The Bhutanese Leading the way.
Some Civil Servants and the Private sector worry about its impact on grants, capacity building, business investments, and idea sharing
In a three-year time period from 2017 to 2019 various government organizations invited 11,856 people as official guests waving off the need for them to pay the USD 65 SDF.
Around more than 3,000 were invited by the Ministry of Foreign Affairs alone.
Though the above included visitors from India and Bangladesh who did not have to pay SDF at the time, a large number of the guests were from SDF paying countries.
Then apart from that there were another around 5,000 people invited as personal guests and these were mainly from countries where SDF was applicable.
This means a total of around 16,000 people coming in as guests when many of them would have been paying SDF if they came as tourists.
It was due to these figures and a feeling that such invites could be misused to not pay the USD 200 SDF and also the INR 1,200 SDF that a very strict exemption list has been drawn up.
This now means that official guests of the government, civil society, religious organizations (including pilgrims), corporations etc will no longer get a waiver of the SDF and the cost of SDF must be paid by the host agency into the account of the Department of Immigration (DoI).
There will also be no SDF exemption for participants of Meetings, Incentives, Conferences and Exhibitions (MICE). Any such meetings must be recommended and endorsed by the Foreign Secretary. The cost of the SDF is to be borne by the host agency or the RGoB.
The above means that government agencies, CSOs, corporations and the private sector can only get in official guests after paying SDF.
There is now concern among various segments from civil servants to the BCCI that this rule will have many unintended negative impacts both on government agencies and the private sector.
If a government agency wants to bring in experts than it will have to budget the amount at the beginning of the year and pay the SDF.
Donor impact
A senior government official on the condition of anonymity said Bhutan is still an aid dependent country and this could have an impact.
He said that in the past Lyonpo Chenkyab Dorji as the Planning Minister used to host endless dinners for donors where he would narrate the story of Bhutan’s development and treat them well with trips to Haa, Phobjikha etc and that worked.
The senior official said that even today every ministry was doing it in its own way as the majority of the capital budget comes from donors.
He said sometimes to generate a project people have to be invited and six or seven months down the line then something can be signed on.
He said that if foreign agencies or organizations are funding projects and other events in Bhutan then it is good to invite them here, host a dinner and give a trip to Dochula etc and the returns are much more. He said the people also come here to assess an organization institutionally, see its standing within the government and also its connections.
“Civil Service will become less productive as there won’t be many programs,” he said.
On government agencies having to predict the SDF and budget it he said that it would be difficult to predict how much SDF is required and the problem with the budget is that it is locked in.
He said the SDF revenue from government agencies to DoI will be a ‘fictitious revenue.’
Diversification and experts
“This kind of things gives huge uncertainty on how we can connect with the world and diversify our relationships and cultivate friendships. We want good technology and ideas and stand independently next to others in conferences etc. If there is no contact then it will harm our growth,” said the senior official.
He said the restrictions will also impact agencies across the board in terms of getting in experts, researches or scientists for bodies like Ministry of Agriculture, Ministry of Health, Royal University of Bhutan, Center of Bhutan Studies, CSOs and all other agencies that require experts.
He said this is in the context of Bhutan being short of experts and he also asked how consultants will come after they have to pay.
The senior official said that in the earlier system a letter to the Department of Immigration would be enough but the new rules make the process very bureaucratic as the matter has to go up to the Cabinet even.
Pvt Sector and CSOs
The official said that while 16,000 sounds like a large number for three years it is nothing for a population of around 700,000.
He said even outside the realm of government as any society progresses the private sector and CSOs play a bigger role and so they have to cultivate ties and get in investments and this would be hampered.
He said if Bhutanese people are hosted outside then it will be difficult to reciprocate. He said the exchange of ideas will be impacted and it will not be the same as getting it of the internet.
The official said that the tourism centric nature of the exemption will lead to all relationships being seen through the prism of tourism.
According to sources the recent Vajrayana conference involving around 200 international participants almost did not happen as the rules meant that all the participants had to pay SDF which was not informed when they were first invited, and the conference could only go ahead after a waiver was given at the higher level.
Registered CSOs are also seeing the list being as restrictive, especially since they have to keep flying in resource people.
Ideas
A former senior civil servant said that charging SDF to official delegations will not raise any upfront objections but they will wonder what is going on and find it odd behind our back.
The former senior civil servant said he does not feel that overall grants will be impacted as Bhutan only has a few big donor countries, but charging the SDF may turn off potential new partners from helping.
He said, “For any country to grow we need money and ideas and ideas are more valuable than money and this could be impacted.”
Capacity building
Another mid level civil servant who works in the regulatory sector and also requested anonymity said that the list will impact capacity building. He said people cannot go out for training and now even if those who want to come in and give training or capacity buildings are charged SDF then they will back down too.
He said while conferences and meetings can be done virtually but it is not the same as meeting face to face.
He also said that some donors do not give funds right away but they come to do a needs analysis and if they come here then it would a much more different picture as opposed to just sending a report.
Hotels and Pvt Sector Investments
A member of the Hotel and Restaurant Association of Bhutan (HRAB) said there is already a drop in footfalls after the SDF and now this policy will impact them even more.
He said the fact that people as official guests and those coming for MICE are not being exempted from SDF will means hotel occupancy will suffer more as these people all stay in hotels.
A mid level civil servant, who works in the economic sector, but did not want to be named, said the list will discourage investments as those wanting to study the establishment of business ventures will be discouraged. He said there is also the danger of offending members of official delegations.
He said the exemptions given for some and not for others may lead to misunderstandings.
The Bhutan Chambers of Commerce and Industry (BCCI) President Tandy Wangchuk said the new list will have a 100% negative impact on the private sector as the economy will not grow as expected after coming out of two plus years of the pandemic.
Giving two examples he said he went for a meeting outside and met the Canadian Ambassador and Indonesian Ambassador.
He said the former wanted to make it easier for Bhutanese students to come to Canada by helping establish a bio-metric facility in Bhutan.
Tandy said that unlike Australia, Canada does not have onerous requirements of ‘show money’ etc.
But he said to get the two education guys here they would have to pay the USD 200 SDF which BCCI cannot afford.
Similarly, he said in his meeting with the Indonesian Ambassador and delegates he found that things that Bhutanese are importing from Bangkok and Malaysia can be had cheaper from Indonesia but here again the SDF would be a challenge for any trade delegation from Indonesia.
An Industrialist from Pasakha said, “The whole approach is with suspicion rather than support for what the private sector wants and what is required to take it forward.”
He said that it will be expensive for existing businesses to hire foreign experts or others to come in for short durations like repair work, advice etc.
“The bigger business houses will be able to cushion the impact but it will be very difficult for medium and small businesses,” he said.
He said there should instead be a mechanism where an association can raise the matter to BCCI which can take it up with the Ministry of Economic Affairs and genuine cases are exempted.
Human aspect
There is also a human aspect to the list. Recently a Bhutanese with some relatives in India expired but except for his Bhutanese family members his relatives in India could not attend the last rites as they would be charged the SDF.
Govt says aim is to prevent misuse
The Foreign Minister and Chairman of the Tourism Council of Bhutan (TCB) Lyonpo Dr Tandi Dorji said there should be no problem for government guests as the SDF would be paid by the host agency and even if there are not enough funds it can be met by the contingency fund of the budget.
Lyonpo said if there is genuine case of someone coming for an FDI investment then the MoEA can also pay.
Lyonpo said the mechanism has been brought in to prevent misuse.
He said that this is a new system and there are bound to be some problems as it is implemented but they will be resolved as they move forward.
Lyonpo said the new system will ensure that now agencies only bring in people that are absolutely needed unlike in the past when there were workshops with no relevance to Bhutan and while the workshop would be only for a short while people would spend days in Bhutan.
A senior official aware of the list said the exemption list has been tightened to ensure that people do not try to avoid the new USD 200 SDF. He said it is to also avoid having junket trips of three to four days in Bhutan when the actual program is only for an afternoon.
The official said at the same time there have been exemptions provided.
Another senior official also aware of the list said the above issues are petty and said when donors can give millions of dollars in aid a USD 200 SDF is nothing.
He said the SDF is for a noble cause and serious donors will appreciate this.
He also said that the private sector should come on board as the aim is to make Bhutan a prosperous nation in the next 5 to 10 years.
He asked that if someone is serious about doing an investment in Bhutan then why can’t they pay the SDF.
He said business as usual will not work and there is no room for complacency as Bhutan is in the process of transformation with ambitious goals that will make Bhutan stand out.
He said this is serious business.
The exemptions list
SDF will now be waived off only for diplomats, officials of international organizations, resident embassies and missions and their direct dependents, foreign workers approved by labour and immigration, day workers and process workers at border areas, casual visitors in border towns (no halt), foreigners married to Bhutanese and their legitimate children, foreign students taking regular courses, volunteers of international organizations based in Bhutan (no individual volunteers), uniformed personnel of DANTAK and IMTRAT and their direct dependents and expatriate traders with valid business licenses and their direct descendants.
SDF will also be conditionally waived off for nationals of Thailand and Switzerland with diplomatic and official passports and solely on official business.
It will also be waived for SAARC nation member states entitled to the visa exemption scheme again only for official business and SDF will be applied if the purpose of visit is tourism.
SDF will be waived for promoters and investors of established FDI and their direct dependents but not for those coming for feasibility visits to curtail misuse.
Every Bhutanese can invite a maximum of two personal guests in a year but in case of misuse the person will be barred indefinitely from bringing in guests and will have to pay the SDF. The personal guest criteria are also to be made more stringent to prevent misuse.
Sports professionals on recommendation by the Bhutan Olympic Committee can be exempt provided they have political clearance from the Ministry of Foreign Affairs and also the Committee for Coordinating Secretaries or the Cabinet.
SDG for foreign journalists will only be waived off for those invited by RGoB to cover events of national significance, accompanying the head of state or government on an official visit and are endorsed by the Foreign Secretary.
Pilgrims to the Gomkora and Hindu pilgrims to Jayanti Mahakal temple near Phuentsholing are exempted provided they do not go beyond these areas.
The facility to invite two personal guests in a year to Bhutan for diplomats and professionals working in Bhutan will no longer be there though SDF will not be applied on
Other categories not listed in this list can submit applications to the DoI which in turn will seek approval from the Committee for Coordination Secretaries or the Cabinet.
In terms of accountability the recommending agency will ensure a foreign visitor is coming strictly for official business and not for tourism to avoid paying SDF and will not recommend SDF waiver for the visitors’ dependents.
However, exceptions can be made for important dignitaries on the recommendation of the Foreign Secretary.
Accountability for any lapses will be fixed on the head of the recommending agency (Secretary) and periodic audits will be carried out by an independent agency.
The exemption list is already being implemented by the DoI.
