Prime Minister Lyonchhen Dr Lotay Tshering

Lyonchhen’s four-point formula to help the economy recover

The PM says that after the Coronavirus the next biggest worry is unemployment

With the economy taking a series of continuous hits from the stoppage of tourism in March, with the detection of the first case, to the recent lockdown, the Prime Minister has now outlined a four-point formula to help the economy recover.

“We have to tide over this crisis and as we tide over it we wouldn’t like to be very excited with tiding over just for a couple of months to a year. We must have a long term plan and whatever we do now must help our people and the crisis right now but it must also tail off into the long term new normal,” said Lyonchhen Dr Lotay Tshering.

“So what we have done is designed a very basic formula that whatever we do, whatever the government supports and even if the newer ideas come up it must hover around four main points,” he added.

The PM said first it must generate employment even if the government has to break some laws or go against some policies or frame some new policies.

“This is because if we cannot support employment and if unemployment rate goes higher and higher then nothing will work,” said the PM.

He said secondly, Bhutan’s economy cannot be contained within Bhutan. Lyonchhen said that Bhutan must do business with the outside world so the second point is that it should be export generating or export supporting activities.

Thirdly, he said Bhutan is an import driven country and in a situation like these times it is even more difficult to depend upon imports due to Bhutan’s containment mode and as Bhutan has to depend on the situation outside. “So anything that has import substituting activity, we will go all out,” stressed the PM.

“And fourthly business as usual will not be good enough. If we cannot improve on ourselves, mechanize, automate and digitalize we will be left behind,” said the PM.

He said the fourth component is that any innovative ideas that involves mechanization, automation and digitalization will definitely be supported.

“So whatever we do now must have all four or a combination of these four factors,” stressed the PM.

He said that a business that does not generate employment, is not so good with import substitution and if its only for the good of the businessperson it can go ahead, but there will be no special support from the government’s side.

Lyonchhen said that His Majesty has repeatedly commanded that the economy should be managed very strategically and whatever we do now must benefit in the longer run.

“Construction is hit badly because we do not have enough labourers and so we must design anything and everything to keep sectors like this afloat,” said the PM.

Lyonchhen said that unemployment is second to the pandemic on His Majesty’s mind.

“His Majesty kept telling us that if we are not careful and strategic this will hit us badly,” said the PM.

As per the Ministry of Labour and Human Resources there are 13,628 people who are officially unemployed right now.

Of this 9,410 are job seekers registered with the job portal, 3,695 have been laid off due to COVID-19 and 523 have been laid off from overseas returnees.

The Ministry said that it has included only those who are registered job seekers and are permanently laid off, but the actual number could be much higher if they include those who are on reduced pay, leave without pay, leave with partial pay and businesses who are only partially operational.

The PM said that the broad four themes above set up by the government is also under His Majesty’s personal guidance.

In line with the government’s economic recovery plans, the Prime Minister has met the Central Bank twice already and he met with Financial Institutions twice too with one being on Zoom and once physically and then he also recently met the private sector.

“So I have met them all and I know their problems or I can assume I know their problems and so we are in the process of designing solutions to their problems. We don’t want to hear any vested interests, but anything that goes with what I said around the four points is in our interest and so we are here to support them all out,” said the PM.

Lyonchhen said many are there with bright ideas but no access to finance, some are legally allowed but do not have collateral, and some may have ideas or access to finance but there may be no means to set it up.

“So for all this we are going to form a team and see how we can give them access to finance and support them, how central banks can ease out adequate liquidity to the banks, how the banks can redraw their terms and conditions to loan out cash. All those are being worked out and there are already teams working on it,” said the PM.

There is a team between the private sector and Financial Institutions, a team in the Ministry of Finance and another in the Ministry of Economic Affairs who are working on the issues.

The PM said they shared a draft where he asked for some changes and so in another few days’ time they should come back with the changes.

The PM said that a team is working on resolving the issue of Non Performing Loans which is impacting the banks.

Lyonchhen said that the government is also looking at collateral free loans. “We are working on collateral free loans. The government must come in to support newer ideas, small scale businesses, CSIs, SMEs and small scale businesses.”

He said the question of what restrictions will be lifted from the collateral and how much support the government will give on the collaterals or what are schemes to allow lending without collateral are being worked out. 

The Prime minister also said that the government will also continue to be the biggest factor in the GDP by spending money on capital projects as this year’s budget has a record amount for capital works.

He said government expenditure accounts for around 31 to 32 percent of the GDP and by now it must have reached 40 percent and the government would like to spend more and go even beyond 50 percent.

Lyonchhen said that other than the revenue lost because of having no tourist in the country, it is the only thing the government has no control over.

“Annually we earn Nu 14 to 15 bn from tourism and so we have to have a newer mode of earning to replace that. Now we must open the avenue to something that we have not tapped until now so that at least Nu 14 bn or 15 bn a year must be earned and our small economy will improve,” said the PM.

Giving a possible option he said the the government is thinking about the wood based industry.

“Right now by policy we are not allowed but without damaging our green economy and forest coverage there are 110 ways we can do that. If we just go and harvest trees that are drying in the jungle, then that alone can keep our economy afloat for a year or two with forest coverage being maintained at 72 percent.”

The PM said is just a thought at the moment and it has not been deliberated or finalized yet as there are two to three teams working on various options.

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