Putting the focus back on the Economy

This maybe the umpteenth reminder, but the 2013 elections was largely won and lost on the state of the economy. Therefore, it goes without saying that the focus of the new government should be mainly on the economy.

In reports emanating from the government there seems to be a lot of planning and activity on this front.

The government has already eased the worst of the economic crisis by allowing the opening of housing, car and consumer loans albeit with some conditions to discourage over lending. This couple with the recent launch of the BOIC will go a long way in getting much needed finance and credit into the economy.

The Prime Minister in his annual state of the nation report laid out new roadmap for the country’s economic sector focusing on five jewels of hydropower, agriculture, tourism, small and medium industries and mining and also various other initiatives to make Bhutan more business and investment friendly.

The government also recently unveiled the impressive Eastern Development Initiative targeting the six eastern Dzongkhags in several economic areas.

So far so good but there are still fundamental issues and weaknesses facing the economy, which the government must tackle. A lot of these issues can be seen in the weak and still nascent stage of the private sector which took the worst brunt of the rupee and credit crisis.

One of the easiest things to do in governance is to ignore the small private sector. However, the lessons of the rupee and credit crisis have shown that the only salvation of the country’s economic future lies in the private sector.

A big fundamental problem of the Bhutanese economy is that we import more than we export which can be resolved with the private sector, which can either substitute imports or increase exports.

A major socio-economic problem is unemployment but there is increasingly less seats in the government and corporate sector. Even the 10,000 MW projects on completion by 2020 or beyond will not require more than 7,000 people in total to run it which not even make a dent in the unemployment numbers. Here again, it is only the private sector that can absorb the large numbers, if it is allowed to grow and thrive.

The former government came out with a spate of policies from EDP to FDI and even hired McKinsey to accelerate economic growth. There were new buzzwords like one stop window and doing away with red tape.

However, today Bhutan’s private sector is still stuck with the same problems and issues that it faced five years ago.

The new government of the day is currently coming up with several plans and policies but as always the key will lie in implementation.

One of the biggest headaches for the private sector is red tape and lack of coordination between agencies. The government must take the proverbial bull by the horn, and if need be, knock some sense into the system.

Apart from policies and plans there must be greater urgency in developing economic infrastructure like Industrial Parks and transport and commercial linkage infrastructure.

There is also a great potential for synergy in development between the private sector and agriculture where targeted investments, smart implementation and right incentives can result in transforming the agricultural sector.

Tourism given its revenue, employment and non pollution aspect is still Bhutan’s biggest economic trump card after hydropower and must be nurtured and developed both in terms of variety and geography.

A charge often leveled against the former government is that it refused to listen to the private sector. This government must do things differently and really listen, and see how it can work with the private sector in the larger national interest of strengthening the country’s economy.

We need the private sector to create jobs. If the government could create jobs
Communism would have worked, but it didn’t.
Tim Scott

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