PM says economy recovering and bouncing back

The main focus of Prime Minister Tshering Tobgay’s annual report titled ‘State of the Tsa-Wa-Sum’ focused on the economy. Lyonchhen said that the economy was recovering along with which he laid out various economic activities, plans and priorities.

Lyonchhen reminded the nation that two years ago the country faced unprecedented macro-economic concerns with issues like rupee crisis, no housing and vehicle loans, massive debt, embargo on import of consumer items and as a result of which growth fell to 2.1 percent for 2013.

“I am happy to report that as a result of the various initiatives taken by the government our economy has not only shown positive signs of recovery but is bouncing back as evident from 2.05% in 2013 to 6.8% growth in GDP in 2014,” said the PM.

He said there are many other indicators that suggest a positive trend for the economy. For instance, total trade increased from Nu. 80 bn in 2013 to Nu. 92 bn in 2014 and trade deficit decreased from Nu.21.42 bn to Nu. 21.3 bn during the same period. The suspension on housing and vehicle loans were lifted in 2014 and housing construction loans increased to Nu. 13.82 bn from Nu. 12.031 bn in 2012.

He said commercial borrowings have already increased from Nu. 45.4 bn in 2012 to Nu. 55.3 bn as of June 2014. He said the embargo on import of various consumer goods was also lifted in July 2014. He said inflation has dropped to 6.3%.

He said as of June 2014 non hydropower loans have decreased from Nu.16.9 bn in 2012/13 to Nu.11.2 bn in 2013/14. The PM also said that the rupee situation had also stabilized.

Foreign currency reserves, which declined to US$ 770 million in 2012, have now grown to US$ 834.3 million.

Of this the rupee reserves are at Rs. 10.7 billion as compared to Rs. 1.5 billion in 2012.

Lyonchhen, however, said that despite the achievements there was no room for complacency and so the government was working with the Royal Monetary Authority and other stakeholders on two major issues. One was the negative trade balance and the other was on youth unemployment.

The PM said negative trade balance stands at Nu. 22.4 billion which is 20% of GDP and continues to pose a major risk. He said the only solution is to work hard, diversify the economy by enhancing productivity and boosting domestic production of goods and services for exports. This, he said, needs to be complemented by promoting local products, for which many opportunities exist.

The more critical problem according to the PM is the continued unemployment of youth, which is unacceptable for a small country with a large proportion of young people. He said although youth unemployment decreased from 9.6% in 2013 to 9.4% in 2014, this is not good enough and Bhutan cannot allow youth unemployment. Lyonchhen said the government will continue its support measures to create jobs for our youth.

Five Jewels

The Prime Minister also updated the nation on the achievements and developments on the five jewels of Hydropower, Agriculture, Tourism, Small and Medium Enterprises and Mining.

Hydropower

In hydropower 1,200 MW PHPA I project is 74% complete, the 1,020 MW PHPA II project is 60% complete and the 720 MW Mangdechhu project is 65% complete. Work has also started on the 600 MW Kholongchhu and 118 MW Nikachhu projects. Furthermore, the government has approved the detailed project reports (DPRs) for Wangchhu, Bunakha, Chamkharchhu and Amochhu hydropower projects.

By the end of this year, DGPC would have completed the DPR for the 1230 MW Rotposhong project, the largest project that they have taken on independently.

The Construction Development Corporation Limited has been transferred to DHI with a mandate to build capacity to undertake hydropower construction and promote the standard of construction in the country.

Agriculture

In Agriculture 730.80 km of farm roads have been constructed in the last two years of 2013 and 2014. This year alone, 131 new farm roads measuring 657 km were constructed. More than 100 km of irrigation was built during the last two years. This year 12 schemes of 125 km will benefit 3840 acres for over 1746 households.

Three major irrigation schemes have been renovated to provide water to about 7743 acres of land. Another 145 km is being renovated, which will benefit 1401 households and 4665 acres of land 13 farm machinery hiring units have been established with 89 tractors, 174 power tillers and other machineries. Geowgs will get utility vehicles and

additional power tillers. A total length of 477.17 km of electric fencing has been built across 20 Dzongkhags benefitting more than 3479 households. In the coming year the government will build 485 km more of electric fencing. 176 greenhouses were installed in the past year and in the coming year, 650 more green houses will be established.

Government has already expanded 13 livestock centers. The government will invest Nu. 87.78 mn in the coming fiscal year to further upgrade and expand so that these livestock centers are able to provide inputs like calves,piglets, poultry input (day old chicks) and fingerling to our farmers.

The Bhutan Development Bank (BDB) by the end of June we would have established 50 banks, and by the end of next year, would have established banks in almost every gewog in the country for rural financing.

By the end of the year the government said there will be 74 farm shops for buying farmers produce to improve market access and the shops in turn will sell seeds, fertilizers and farm implements.

The PM said that the Government Performance Management System (GPMS) Annual Performance Agreement (APA) with all dzongkhags focuses mainly on agriculture, given the importance it has for the people in all the dzongkhags.

Tourism

Over 11 new trek routes will be developed during the upcoming fiscal year with a focus in eastern Bhutan to diversify tourism destinations and take its benefits across the country.

The development of facilities such as campsites and other services along the Salt Trek Route in eastern Bhutan have already been initiated. Community-Based Tourism Models are also being explored to benefit local communities. The Tourism Council of Bhutan is developing packages to promote domestic tourism. The PM said that more needs to be done for tourism to be spread in eastern Bhutan and additional products being developed should take it there. The PM

reported that there has been a strong increase in the number of tourists coming in 2015.

The government said its support has already resulted in an increase in private investments in the hotel sector, increasing hotel capacity from 1,619 rooms in 2013 to 2,186 rooms in 2014.

The Royal Institute of Tourism and Hospitality is complete and will strengthen capacity development in the tourism sector. The adoption of tourism rules and regulations will provide an enabling policy environment and the government plans to introduce helicopter services this year said the PM.

Small and Medium Enterprises

2,645 new enterprises were established in 2014 creating jobs for more than 7,500 Bhutanese. He said the BOiC alone approved 589 projects across Bhutan.

To promote this vital sector of the economy, the government has granted tax exemptions for micro and small businesses in the rural areas under which 10,254 enterprises were exempted from taxes amounting to Nu. 14.315 million till April 2015.

The 110-acre Bondeyma industrial estate at Mongar is being developed to largely focus on small and medium enterprises.

Services will be taken to the people through ICT to reduce administrative burden and enhance service delivery. Entrepreneurship development programs targeting unemployed graduates will be initiated. A business incubator at the Changzamtog service center to support small business startups is expected to be completed by 2017.

Mining

The sector registered a real growth of 32.2% in 35 2013-2014, a marked improvement from the negative growth of 2.2% in the previous year.

Though mining is only 2.8% of GDP, mines contributed Nu. 282.4 million in license fee and royalty in 2014. The government is in the final stages of developing a Mineral Development Policy which will be ready for implementation by this year and will resolve issues related to allocation of mines, value addition, compliance monitoring, environmental and social concerns and maximize returns.

Enabling Environment

The PM said a multi-sectoral Doing Business Task Force has been established to improve Bhutan’s ranking in the World Bank ease of doing business index and the government is working towards getting to the top 100 this year.

The Foreign Development Investment Policy 2010 has been revised. In the last two years, 16 projects worth Nu. 5.13 billion have been approved.

The Economic Development Policy of 2010 is being reviewed to provide the highest level of “strategic direction”, and to ensure that economy takes the centre stage of our development initiatives. The new policy will by the end of the year.

Lyonchhen said to promote strong public private partnerships the Better Business Council has been established. The Council will soon review the private sector development plan, which has been completed as announced last year. It is currently helping 15 enterprises resolve various issues related to doing business and more have shown interest.

The government said four Industrial Estates will be established and both road and telecom connectivity will be improved across Bhutan.

The government is exploring new routes and Air Service Agreements with Myanmar and Sri Lanka are being processed that will further enhance international connectivity. The government is also working on getting all three domestic airports functioning. Bumthang and Gelephu airport terminals are ready and Yongphula will be ready by next year.

 

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