The emergence of the rupee crisis and the consequent credit crunch from 2012 onwards highlighted the biggest and most immediate challenge facing Bhutan – its economy.
The main agenda of the 2013 elections was the state of the economy and the party that came into power, PDP, promised to take it up as its number one priority. The unofficial one year ‘honeymoon’ period of the new government has come to an end as the government completes almost a year in office.
The new government has had almost a year to think out, plan and discuss their programs to strengthen the Bhutanese economy and ultimately to achieve economic self-reliance.
In the Prime Minister’s recent State of the Nation address, which got largely drowned out in the pay hike controversy, the report laid out an interesting blue print for the Bhutanese economy. It focuses on the five jewels of hydropower, tourism, agriculture, small and medium enterprises and mining, and also outlines nine measures to strengthen the business environment in Bhutan.
As pointed out by His Majesty the King, during Royal address to the nation in the past, people in Bhutan may be good at planning and theory, but the problem usually comes during the time of implementation of the plans. The success or failure of Bhutan’s economy will lie in reducing the gap between theory and implementation, taking into account ground realities and also larger national interest issues.
At the policy level, it is good that the government plans to relook at and revamp some of the key economic policies, like Economic Development Policy (EDP) 2010, Foreign Direct Investment Policy (FDI) 2010 and the Mineral Development Policy.
All of the above policies, though well intentioned and comprehensive, have failed to achieve its collective objectives of encouraging economic activity and encouraging investments.
The government of the day must study and see the aspects in the policies that need improvement, what can be made more in tune with ground realities, and most importantly, what are the implementation bottlenecks.
It will be important to carry out widespread and genuine consultation to ensure that all voices are heard, and ultimately the policies that emerge have to be in Bhutan’s long-term economic interest.
It is interesting to note that the government has assigned ten indicators for strengthening Bhutan’s ‘Doing Business Index’ to ten ministers to demonstrate seriousness in clearing the implementation bottlenecks. It is also significant that there is a high level government ‘Doing Business Steering Committee’.
There will be three important aspects to look at while doing away with implementation bottlenecks.These three aspects are poor quality or outdated laws and rules, procedural red tape and work ethic.
In the first case, it would do well to remember His Majesty the King’s recent address to the Parliament where His Majesty advised the nation about the pitfalls of the proliferation of poor quality laws implemented poorly that can do more harm than good. This government will do well to examine, and if necessary, revamp various laws and rules that discourage a good business environment.
The government should also identify red tape within its own agencies and reduce the time and manpower dedicated to a certain process, for example, obtaining a permit or clearance. It will be important for government agencies to cooperate and coordinate with each other instead of engaging in turf wars or refusing to cooperate.
Perhaps the most challenging aspect will be improving the work ethic. This can be done in three ways by working closely with the Royal Civil Service Commission. There is first a need to further deepen and strengthen the government’s Performance Management System so that even individual performance is recognized and rewarded. The second way is to look at the human resources needs and bottlenecks that hamper performance. This will create and encourage a result-oriented work culture. The final work ethic measure cannot be done only at the office level, but must be led from the front with senior ministers and officials setting examples including a strong advocacy program.
The problem in Bhutan is neither the driver nor the vehicle, but it is the fact that we are yet to understand the nuts and bolts and how they can be improved for better performance.
One often ignored partner in strengthening Bhutan’s economic growth has been the private sector that overall receives less importance than even new consultants coming from outside. The other less discussed problem within the private sector is a few big players dominating most discussions with the government. In this light, the government’s new and high powered Better Business Council must not only effectively listen to the private sector but also ensure that they are listening to a wide range of voices. The most important function, however, would be responding adequately and effectively to the private sector’s genuine concerns.
One positive development from the pay hike issue is that – with higher pay and better perks, our ministers and MPs now have no excuses to not perform, particularly on the economic front. The best example is Singapore, where ministers and politicians are well paid, but they, at the same time, return the investment made in them by manifold through their sheer brilliance in steering well distributed economic development and growth.
“Emergencies have always been necessary to progress. It was darkness which produced the lamp. It was fog that produced the compass. It was hunger that drove us to exploration. And it took a depression to teach us the real value of a job.”