Private Sector 0 System1

The Bhutan Chamber for Commerce and Industry (BCCI) has traditionally been seen as a preserve of the mainly big business houses representing and lobbying for their interests.

So the question to ask is why the private sector should be concerned about the resignation of the BCCI President.

The first reason is that the BCCI President is stepping down not due to health or other personal reasons but a thinly veiled frustration at not being able to get the government and the system to bring about reforms and reduction of barriers to doing business.

Secondly, BCCI in the last few years has started to include medium and small businesses. One example is its idea of doing away with business taxes for small businesses which was implemented by the new government.

However, the most important reason to worry is that even though BCCI is the biggest and most powerful body representing the private sector it has made little headway in convincing the system to listen and give priority to the private sector.

This is all in the backdrop of the Rupee and Credit crisis of 2012-2013 following which there was a lot of rhetoric from all political parties to strengthen the private sector as the crisis took place precisely because of a weak private sector.

At the same time Bhutan also ranked very low in international business and financial rankings.

The economic troubles showed that no government can afford to give only lip service to the private sector.

Two important things were immediately required. The first and easier one was doing away with red tape and making it easier to do business. This would, however, require government

agencies working together and giving up certain powers and turf areas for the sake of higher speed and efficiency.

However, this appears to be a much bigger challenge than previously thought. Government agencies are still working at cross purposes and the level of red tape is still high. In places red tape has increased like LPG gas books or the Enterprise Registration Bill that requires all business license holders to register.

There has also been strong criticism about the government deciding to get into business through the State Mining Corporation, Construction Development Corporation etc. Given the failure of NRDCL’s quarry business one wonders how the SMC will do.

In short the BCCI is saying it is still difficult to open and do business in Bhutan given the high levels of red tape and barriers.

Another important issue was developing business infrastructure including financial support. The biggest hindrance for doing business is the lack of capital but there are still no ideas and movement on issues like External Commercial Borrowings or listing on foreign stock exchanges.

The overall capacity of the private sector is still very low in areas like construction or cottage industries and manufacturing. There is no adequate training of a workforce to take part in the industrial sector of Bhutan. Important issues like development of Industrial estates are still a long way off and tourism infrastructure is still weak.

Bhutan’s self sufficiency and employment goals only have a chance if the private sector can grow . The noises and indications coming from BCCI show that much more needs to be done. The government should utilize its remaining three years well.

“The way to create jobs is to encourage private sector job creators.” Roy Blunt

 

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