There have been two things that the government has been doing enthusiastically for quite some time, and both of them are bad for the private sector.
One, is that it is starting to get into an array of activities meant for the private sector, and the other is that it has been passing a plethora of laws and coming up with even more detailed rules.
The government getting into an array of businesses like mining, construction, etc betrays both a ‘government knows best’ mindset and also a deep distrust of the private sector.
The main aim of any elected government is not to do business that it is not suited for but it should instead create the right policies and environment for business to flow. There is no doubt that the private sector can cut corners and become corrupt, but it can only do so in the face of lax regulations and monitoring by the government.
The government should put its energies to use by cutting down on red tape, creating a business and investment friendly climate and supporting genuine commercial activities.
Bhutan’s private sector is also to blame. The tendency to go for short term commercial pursuits like ‘fronting’ has hit them financially, limited their growth and undermined their credibility.
In fact today when a factory asks the government for a bailout the government does not know whether it is bailing out a genuine Bhutanese business or an Indian merchant across the border. The private sector should realize that people will only start taking it seriously once it takes itself seriously.
The other issue that will become a major problem, especially in the long run, is the number of legislation and rules coming into place. One good example is how the Indian manufacturing industry was strangled in the 1970’s and 1980’s due to a ‘license raj’ or excessive red tape in the form of multiple laws and rules.
Both the government and the Parliament have to be clearly aware of the necessity and implications of their various laws and the subsequent rules that come in.
At the end of the day Bhutan can only be truly self sufficient with a strong private sector.
We need the private sector to create jobs. If the government could create jobs Communism would have worked, but it didn’t.