A big surprise in this Parliament session for the small business community who make up the majority of the 40,000 business licenses in Bhutan was fronting being added as a Fourth Degree felony which means imprisonment from three to four years without the possibility of paying Thrim-thue.
There was outrage in the small business community across the country as they were neither consulted on such a section now aware that such a tough section would be brought in.
This is because while fronting is supposed to target non-nationals operating at the border areas it’s current definition would also cover a large number of Bhutanese run businesses who have borrowed and lent licenses, including within the family.
Concerns to this effect was expressed by many MPs in the Parliament, many of whom compared it to the draconian Tobacco Amendment Bill, which is why this section was pushed to the winter session.
It now emerges that the BCCI headquarters secretariat in Thimphu supported the strong fronting amendment without even consulting the business community or even its own BCCI Theumis.
The BCCI Thimphu Theumi, Bumthang Theumi, Phuentsholing Theumi and the Theumi for Mongar, Trashigang and Lhuntse like their counterparts were all unaware at the time.
All the Theumis (with the exception of the Phuentsholing one who declined to share his views) were against the fronting clause and said it would harm innocent Bhutanese.
General Secretary of BCCI, Sangay Dorji, said that the consultation meeting on fronting was held all of a sudden after receiving a call from a NC Member.
He also added that the meeting on fronting will be discussed during the annual general meeting of BCCI only if a majority of the members decide to include this in the agenda.
He mentioned that fronting is a serious issue and stated, ‘’More than anything during the consultation meeting, I said the same thing to NC member that if we are not careful about fronting, more than the negative impacts that are there on our own small business owners, I think our economic sovereignty is at stake so I think that in itself is a huge danger.”
He said the people who are involved in fronting, first of all, could be doing so because of a lack of knowledge.
“Our people must have thought it’s easy money, and for that matter, someone not educated enough to understand the implications of all that gets into such things so from government’s side even if they ask us, we are happy to elaborate on this. We should create awareness which is lacking.’’
However, the understanding and view of BCCI headquarters is in stark contrast to that of its members.
Few shopkeepers owning micro businesses around Thimphu town had no idea about fronting or even about the possible imposition of punishment a fourth degree felony.
The Thimphu Theumi had earlier said that many business owners in Thimphu lent and borrowed licenses even among family members and there are no non-nationals involved.
Some of the BCCI members of their respective dzongkhags in BCCI told The Bhutanese that they were not told about the consultation meetings held among various stakeholders and the committee from NA and NC.
One of the executive members from Mongar, Karma Chophel, who also represents Trashigang and Lhuentse said, “We were supposed to conduct our annual general meeting to talk about fronting, but we could not hold the meeting due to lack of budget from BCCI to initiate the meeting.”
He said that if fronting gets approved in the winter session, major harm will be caused to the small business owners unlike the major companies. He had earlier said that a large number of innocent Bhutanese in the three Dzongkhags had borrowed and lent licenses to each other.
“If this new section gets implemented, a lot of innocent people will be behind the bars and I think it sounds unreasonable to me. In fact, seizing of business license is more than enough in my opinion,” he added.
BCCI Theumi from Bumthang, Phurpa, said that it is the responsibility of Ministry of Economic Affairs to make sure business licenses acquiring procedure should not be complicated and it should be made easier because if the procedure to acquire licenses is made less difficult, the fronting issue won’t even arise.
He added that the real reason for the introduction of fronting must have been to prevent foreign nationals from establishing businesses in Bhutan illegally by using Bhutanese licenses.
“Nevertheless, there are also many small Bhutanese business owners sustaining their livelihood on borrowed licenses and they will be the main section of society who will suffer the most -as the punishment is heavy,” he said.
According to him, there won’t be any harm to major business owners.
This glaring lack of connect between BCCI and the majority small business community it claims to represent raises fresh questions on BCCI in the backdrop of critical observations by both the Royal Audit Authority and the National Assembly on BCCI.
The main charge against BCCI, since its inception, is that while it claims to represent all businesses in Bhutan it is essentially a lobby group for big business and industries only and the majority of its activities are focused on such issues.
Its inability to even understand or consult its vast majority of members on a critical legislation gives credence to such allegations.
On the issue of BCCI being a lobby group for big business houses, Sangay Dorji said that he has been getting the same feedback from many individuals and this could be because there have not been enough dialogues carried out with the traders.
“The chamber has done a lot for small business owners including a group loan system for the sake of small traders in collaboration with BDBL and REDCL.”
He said loan at 4 percent interest and revolving fund 1 and 2 was made possible where small business people, villagers and informal roadside sellers can get a loan up to Nu 500,000 instead of Nu 100,000.
“In the recent boulder issue also, we collaborated with the people in Phuentsholing and Gelephu and together, we developed 19 points which was then submitted to the government and it all came true but at the end when the government actually said it, it looked as if the government did all these things,” he said.
However, the boulder issue primarily affected big business houses and contractors who already have a strong say within BCCI.
He said BCCI lobbies at a policy level and government level.
The BCCI Secretary general stated that major businesses like the industries in Phuentsholing and bigger business houses have people who are educated, so they know the role of the chamber and they often make use of the chamber to get their work done.
He said small business owners thinking that the chamber only represents major business owners is not true. ‘In fact my main focus is on the informal sector and small sectors in the businesses to change this perception.’
Meanwhile, BCCI states there is no problem with imposing fourth degree felony and seizure of license if people are involved in fronting intentionally and knowingly since the country’s sovereignty could also be at stake.
Shop owners in and around Thimphu say that BCCI has not bothered to help them and has merrily accepted the fronting amendment.
They said BCCI is unable to distinguish between fronting by non-nationals that harm the economy and the harmless practice of borrowing or passing down business licenses within Bhutanese families and communities.
Whatever the views, the fronting amendment has brought more controversy for an organization which is already under a cloud.