The Bhutanese Leading the way.
In a bid to reduce imports and promote local products, the Ministry of Economic Affairs (MoEA) has come up with an Import Substitution Report that looks at supporting viable local products that can contribute to import substitution.
“The import substitution report will be a guiding document for the private sector to look into to see which are the most imported items and if they could establish industries based on those high imports so that we have import substitution,” said MoEA Lyonpo Loknath Sharma.
“I would also want government bodies and SOEs to look into it and see if they can venture into items which are highly imported as these are the items which we are not able to substitute,” said the minister.
However, unlike past attempts to try and replace the big imports the focus is more on items that are being produced in Bhutan.
Import substitution looks into what Bhutan has been importing and which are the sectors where the import has been increasing and which are the sectors where the import has been decreasing.
“So at least in those sectors where import has been decreasing we are building our own capacity. If that is so we should give thrust in those areas and at least support it because that means it is workable,” said Lyonpo.
“What I am trying to do is to look into the 10 most viable items which we already have and if we have to increase the production or do something else. The rest will be done in a phase wise manner,” said the minister.
The minister said the items does not include things like meat as they would not go for those things which are not possible.
“So the 10 things will be the really viable ones and then we can submit it to the government saying that these are the most viable,” said Lyonpo.
He said that there could be many such products in the report like wooden furniture, bricks, khabsey, noodles, toilet papers, sanitary pads etc.
He said the 10 most viable products would get support in terms of some kind of fiscal incentives. He said that GST would also be free for import substitution products.
Lyonpo said that with the incentives the products being manufactured here would become more competitive.
“People could still import but that would be more expensive than what is produced here. That is the only alternative. We can’t ban because banning is not good but slowly we should work on import substitution,” said Lyonpo.
Lyonpo said after the import substitution report comes out with the 10 viable items then they would also like to suggest to the government agencies to support them. “I was even thinking of requesting that Druk Air and others to serve our local items and not imported ones,” said Lyonpo.
Lyonpo said that in the 2019 updated procurement manual local Bhutanese products and services already get a 10 percent weightage.
The Department of National Properties under the Ministry of Finance is currently working on ensuring that this rule can be implemented by procurement agencies by looking at clearing implementation issues around this like procedure, documentation and sensitization.
“We should go towards import substitution not at one go but slowly and this is my humble submission which is why we have come with this report,” said Lyonpo.
Lyonpo said that areas where import is increasing must also be addressed.
Apart from incentives and taxes there will support for import substitution in terms of industrial space.
Lyonpo said that the Samtse Industrial Estate would focus on import substitution.
“We are also thinking to have small Industrial Estates in Dzongkhags for CSIs and so these will be the focus for them,” said Lyonpo.
He clarified that the Motanga and Jigmeling industrial estates are large and so one cannot say for large industries as their focus may be on exports which is also important.
Lyonpo said that apart from the report he in his own ministry he has been saying that the ministry should use Bhutanese products for dinners, snacks and other items. He said that whenever he goes out of the country he always takes Bhutanese products from local Cottage and Small Industries (CSIs).
