Finance Minister Namgay Tshering

Moving forward the Performance Based Variable Incentive (PBVI) will be based strictly on company’s performance: Finance Minister

Performance Based Variable incentive (PBVI), is part of the pay hike restructuring for State Owned Enterprise (SOE) in 2019, where if an SOEs performance is evaluated as ‘excellent’ the PBVI payout is 50 percent of the basic salary. A performance rated “very good” would amount to a PBVI of 35 percent, 25 percent for “good” and 15 percent for “satisfactory”.

Finance Minister, Namgay Tshering said that the corporate employees shouldn’t be thinking that the government is going to do away with the PBVI, as the government has approved 15% PBVI for the income year 2020 in respect of all SOEs considering the impact of the pandemic and efforts made by the SOEs to remain in business.

Lyonpo said that since 2020 has been unprecedented year due to COVID  pandemic ; even though the SOE’s (except Kuensel) have entered into annual performance agreement with the government, and the performance of the SOEs like any other business entities and government agencies have been directly or indirectly impacted by the pandemic.

 “There are also SOEs favored by the situation and most of these SOEs are the ones with social mandates, hence for the year 2020, we cannot really ascertain the performance of the SOE’s merely based on their annual compact agreement due to force majeure events (COVID containment measures), therefore, recognizing the contributions of the SOE’s during the difficult times and to establish a foundation for PBVI the government have approved 15% of the PBVI, which translates to 1.8 months Basic pay to all SOE’s,” said Lyonpo.

Administration Officer of Green Bhutan Corporation Limited, Kinley Tshering said that SOEs are supposed to be self sustainable. “We have been giving salaries to our staffs as usual even during the pandemic so receiving 15% PBVI is like being recognized by the government and we are really grateful,” said Kinley.

 “Even during the pandemic we have been performing very well,” said Namgay Wangmo, Company Secretary of Royal Bhutan Helicopter Service Limited.

General Manager of Bhutan Duty Free Limited, Ugyen Thinley said that as per the annual performance compact they could not meet the target they have set due to the pandemic but compared to other SOEs he added that they have managed to generate some profit in terms of sales by selling Tobacco that helped the company to meet their target to a certain extent.

Sangay Chophel, the host of Nazhoen Express of Bhutan Broadcasting Service (BBS) said, “Since the nation is going through the COVID-19 situation and the economic situation is not stable, generally people are fine with the 15%PBVI and we BBS are doing well as an SOE.”

Some SOEs officials who wish to remain anonymous said 15% of PBVI is fair for those who could not perform well during the pandemic but for those who have performed very well they should at least get a bonus or else the hardship they have put is not been recognized. The concern also is if the situation remains the same in coming years.

To this Lyonpo answered that the pandemic is unlikely to ease anytime soon, however, Lyonpo said that there are activities that SOE’s can do within their mandate even if the situation doesn’t improve.

 “Therefore, moving forward the PBVI will be strictly based on company’s performance, otherwise the sole purpose of PBVI will be defeated. The payment of 15% PBVI to all SOE’s irrespective of their performance for 2020 is to basically to acknowledge their contributions and also to embrace the very principle of PBVI,” said Lyonpo.

 Lyonpo said they cannot establish the performance purely based on revenue generated by the SOE’s; as most of the SOE’s under Ministry of Finance are social mandate oriented and profit making is not only the desired outcome.

“SOE’s need to evolve befitting the changing situation; embracing change and thinking out of box seem to be the only strategy for SOE’s survival. SOE’s are not established to compete with the private sector, they must take up newer ventures that private sector are not in position to take up. SOEs must set standards and show examples in corporate governance; one major reform in SOE’s will include divestment of share to promote broad based ownership in SOEs,” said Lyonpo.

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