The Bhutanese Leading the way.
While Brand Bhutan enjoys a lot of goodwill across the world, Bhutan has not been able to commercially capitalize on it except in tourism and Tashi’s Druk Jam and Pickles products in the region.
Bhutan’s fledgling Cottage and Small Industries (CSI) are trying, but the issue is scale, marketing, bottlenecks and resources. As a result, most efforts to promote Bhutanese agricultural and forest-based products has been small-scale and like scattershot, and frequently unable to cross the border.
The One Gewog One Product (OGOP) project, launched as a Royal Initiative under the Queen’s Project Office on 11th November 2015, is aiming to change that by switching from the current small-scale production model to a more commercial industrial-scale manufacturing and market-driven approach.
This shift aims to enhance Bhutan’s production, processing, and marketing systems by identifying and addressing bottlenecks and fostering an environment conducive to invest in value-chain development.
To this end OGOP has formulated the “Framework for Engagement and Investments” to upscale the OGOP Project seeking investments and partnerships from the private sector, entrepreneurs, foreign investors, farmers, youths, DeSuups and Gyalsups.
The “Framework for Engagement and Investments” will be the most critical component of upscaling OGOP project to open up the sector for production of authentic Bhutanese goods by creating an enabling ecosystem.
Projects will be implemented under the framework in entrepreneurship mode as new business ventures. Among the most important considerations for development of new business ventures is the compliance to international norms to enhance product quality standards both in-country and for export.
Instead of creating another SOE, OGOP wants more efficient and dynamic project implementation system that is efficiency and production driven.
One is the joint venture model that will establish partnerships with private sector entities, and start-up entrepreneurs. In this model, two or more parties can partner with OGOP to invest and create a new entity as per the Companies Act of Bhutan, 2016 but OGOP will own at least 51% as the majority shareholder.
OGOP says through the model, there is huge potential to transform farmers and home-based producers into entrepreneurs.
The OGOP project, in the long run, will also explore FDI investment opportunities through engagement of foreign investors with the objective of boosting local production by investing in improved agricultural practices, processing technology and quality control.
The aim is also developing international markets for OGOP products through improved marketing, branding and distribution strategies and investing in innovative products.
The aim is also to boost local income and maintain Bhutan’s cultural identity and ecological sustainability.
In accordance with the FDI Policy 2019 of the Royal Government of Bhutan, OGOP shall allow FDI with a minimum foreign equity of 20% and up to a maximum of 49% equity. FDI in agro-based production will be allowed with a total minimum project cost of Nu 20 million while in other manufacturing including forest based production, a minimum project cost of Nu 50 million is required.
Some of the projects will be implemented as youth, DeSuup, or Gyalsup engagement and earning initiatives. Such initiatives will not only promote innovation, but also create employment and income generating opportunities.
A Project Management Unit under OGOP will provide guidance and investment support during construction and initial operation of the project. The investment will be ploughed back once the project starts generating profit.
Under a model for farmers and entrepreneurs, OGOP plans to enhance the youth, women, farmers, start-ups, production houses, and small scale industries via project proposals for sustainable initiatives with good return on investments. It will also support the farmers technically in coordination with relevant partner agencies.
OGOP will invest maximum of 70% of the project cost, and OGOP shall maintain co-ownership of the farm in terms of operations, directions, and management. The investment will need to be ploughed-back to OGOP once the project becomes operational and generates income and profit.
Projects that may not be attractive for private sector or foreign investments due to long gestation period or low returns, but are critical for socio-economic development for the people are considered under the Project Lead Model.
Under the model, OGOP identifies key areas for strategic investments and develops projects requiring the formation of a company, its construction, establishment, and operation.
To implement the project, OGOP will recruit a Project Leader on time-bound contract or on deputation with the required aptitude, qualification, and experience.
The remuneration for the Project Leader will be set based on his/her qualification and work experience. Once the project becomes operational, the salary will be tied to the performance of the project on a basic-plus-plus model.
The overall focus areas for OGOP are identification of key areas or products that need upscaling, adopt investment models, strengthen management structure, support farmers and entrepreneurs in collection, value addition and marketing, provide training and support for efficient and quality production and processing techniques, enhance skills and capability for industrial scale operations with global standards, innovative designs to make products more appealing and ensure quality and safety standards enhancing overall standards of Bhutanese products.
