Relief measures saved the Private sector from Financial collapse and job losses

Sector specific issues remain due to the larger COVID-19 impact

The Private Sector COVID-19 Task Force since April has been meeting various business associations and business representatives in the Dzongkhags and the outlook was grim.

Though every association and business came up with a host of issues unique to their business, the main underlying theme was that many of them would run out of funds by the end of June if something was not done.

It was found that many private businesses held on to their staff and business due to income from before and also the first round of previous interest waiver, loan deferral and half the income being supplemented by the Druk Gyalpo Relief Kidu.

BCCI Secretary General and member of the task force, Sangay Dorji said that three main requests came to the fore as cross cutting issues.

The first was loan deferment as there was no income or reduced income, the second was on request for soft loans to continue business operations and pay salaries and the third cross cutting issue was on house rent waiver.

Sangay said that on the house rent part the government said that it cannot interfere as this is private property, but the Prime Minister Dr Lotay Tshering did put out a request in the media. Though initially many businesses reported not getting rent waivers but gradually most businesses reported getting waiver from 30 percent (which is the interest component) to higher rates.

The taskforce found without addressing the loan deferment and soft loan issue many businesses would have shut down by June end and let go off a large number of staff.

However, the situation dramatically changed for the better as the Prime Minister announced that under His Majesty’s Kidu, loan interest is waived off for 3 months and there would be 50 percent interest waiver for another six months. The 12-month loan deferral also came as a major boost.

The other major relief was the provision of soft loans of 5 percent for four years tenure for CIT and BIT filing business entities, and 2 percent and 4 percent soft loan for agriculture and cottage and small industries respectively to be extended by another 12 months.

In terms of salary payment, a big relief that came was extension of the Druk Gyalpo’s Kidu Relief as this would firstly help the many businesses who can only pay half or reduced wages and secondly for those who lost all income in the private sector.

According to the COVID-19 Private sector taskforce the combination of interest waiver, loan deferral, soft loans and extension of the Druk Gyalpo’s Kidu Relief not only saved large sections of the private sector from sure collapse, but also thousands of jobs in the process.

However, while the major issues have been resolved for now some sector specific challenges remain due to the very nature of the COVID-19’s impact on the economy.

Almost all the sectors mentioned rent waiver, loan deferral and need for soft loans and quite a few also mentioned the need to continue the Druk Gyalpo Relief Kidu.

Also, most of the sectors mentioned a period till the end of June for government action or relief after which they would have to close or let go of staff.

These are not being mentioned below to avoid repetition.

Construction

The construction sector said it is not able to carry out new construction works due to unavailability of construction workers (both skilled and unskilled) and construction materials. Similarly, the ongoing construction works are also affected.

With the lockdown in India open many are heading back and many more want to head back to their families.

The sector wants the government to create a labour bank where all the contractors can take workers including skilled labour.

In order for the contractors to continuously carry out the works, it recommended that the procuring agencies should try and absorb the cost escalation as a result of employing local labourers.

The sector recommended that the government should appoint a few hardware suppliers in the country and from across the border who could supply construction materials after disinfecting at least for the COVID 19 period.

It also recommended that construction materials need to be replaced with local materials as far as possible and the procuring agency should bear the cost difference.

Hotels and Restaurants

The Hotel and Restaurant Association of Bhutan (HRAB) said that employees have been sent on leave without pay from April with assurance to call them back when the situation improves.

About 55 hotels in Thimphu, Paro, Punakha and Phuentsholing are on lease which requires rent to be paid.

The budget hotel owners requested if the government could suspend implementation of SDF till the tourism industry is restored. They also requested if Govt could look into imposing the SDF as regulation but not as tariff.

There is about an 80 % drop of customers in restaurants and fast food outlets after the COVID-19 outbreak.

The Bhutanese market has been facing acute shortage/non availability of raw materials for the bakeries, hotels and restaurants.

There is a request for opening up of the local economy depending on the situation.

The HRAB asked if Thimphu Thromde, BEA and BPC could provide free basic amenities such as water and electricity in quarantine centers at least during this difficult time to show solidarity.

ABTO, Ticketing agents and Handicraft

The Association of Bhutanese Tour Operators (ABTO) requested for time extension for working capital as the Tourism industry will take a longer time to bounce back to recovery and also if the requirement of collateral can be relaxed.

They made a request to DRC for deferment or waiver of BIT and CIT for the year 2019 to meet the operational cost.

ABTO was to come up with its own detailed long term plan.

The Handicraft sector asked for the possibilities of facilitating loan for handicraft sector as well which the Government has provided to the Tourism sector.

Artisans expressed their inability to get loan from National CSI Development Bank and feel that currently the bank caters only to the Agricultural sector. There was a request for facilitating loans for them.

Private Schools, Colleges, ECCDS and Training institutions

Since most private schools follow the modality of collecting tuition fees for two semesters at the beginning of the year, they seem comfortable till June 2020. However, if the situation persists or worsens, they may not be able to pay the staff as the parents may not pay fees for the next two semesters.

On the other hand, the parents have already started expressing the inability to pay tuition fees going forward due to loss of income and most even feel that its not fair for the schools to demand full tuition fees as long as the schools remain closed.

Some of the ECCDs have closed down for good and as a result, their staff had to register for HM’s Kidu Relief Fund.

Many parents have also expressed doubts over the effectiveness of e-learning and feel that perhaps an alternative should be explored by the schools or colleges for educating children.

The schools and colleges are unclear if the students are to be promoted to the next grade based on the present system of education. If so, how will they be assessed.

Automobile sector

With the restriction of import of spare parts momentarily, the workshop operators expressed concern over the depleting stockpile of their spare parts.

If the spare parts are exhausted, the workshops will be left without work which would ultimately result in laying off their workers and some would even have to consider shutting down their business if the current situation persist.

Most of the skilled workers went home for vacation and are unable to return for work given the current scenario.

Their request is permit the entry of skilled workers into Bhutan once the lockdown ends in India However, due process has to be followed and the workshop proprietors are willing to bear the quarantine expenses for their worker.

The vehicle dealers have asked to apply BST on the discounted or cost price and not the gross price.

They have requested the government to develop clear SOP on if the import of vehicles/spare parts is allowed and also if the financial institutions can relook at the collateral and equity requirements for Vehicle loans so the dealers can sustain their businesses without lay off of employees.

Pharmacies and Diagnostic Centers

Most medical supplies and equipments are put under export restriction list in India which makes it very difficult for Pharmacies and suppliers to import those items and so they face a shortage of medical supplies.

Diagnostic centers have asked for clear guidelines or directives from the government on whether to operate or close for the period as the numbers of patients have increased and they do not want to be blamed for community transmission.

Private diagnostics pointed out that the government hospitals were not willing to issue medicines prescribed to the patients visiting private clinics. Prescription from private clinics were disregarded.

Media Houses and Printers

There is a 70 to 80 % decrease in government advertisement and no advertisement from the Private sector.

The printing business is impacted since the printing materials are exhausted.

The request to the government is to award the COVID-19 awareness advertisements to the private media, provide direct block grant to private media houses and grant 100% printing subsidy.

Karaoke and Drayangs

If the COVID-19 situation persists Drayangs and Karaoke’s have requested  for opening up of the business with limitation of customers maintaining social distancing at least to meet some percentage of the operational cost.

There is also a request for taking in private sector employees to the Dessung programs and also to lease lands for agriculture businesses.

Trading, Beauty Salon, Tailors and Fitness

Some traders requested if the government could exempt BIT for 2020 and they also mentioned import difficulties.

Freelance Gym trainers are left without work as most of their clients have withdrawn their training.

The request is to also allow opening of beauty salons with social distancing and precautions.

Tailors have requested to award the contract for Desuup and other government agencies uniforms to the local tailors and garment manufacturing houses.

An idea is to train the local tailors on western garments stitching during the period

Film Association

The supporting staff like crews and technical staffs have been laid off due to restriction on screening, shooting and producing movies.

Absence of streaming services platform for screening movies during the pandemic crises has affected the movie industries.

The request is to award direct contract without floating the tender quotation particularly for advocacy, promotional and awareness videos and materials to FAB, whereby the Association will allocate the job to its members which will benefit the employees working in the industry.

They said the government could allow them to shoot short films and documentary films involving small gathering and to purchase those movies to screen in the national and local channels. This could help in involving these laid off employees.

ICT

The ICT sector are facing problems to import the ICT goods from India as well as from third countries wherein they are not being able to meet the supplies even for the government supplies.

They face problems not only with the software but also with the ICT hardware.

With the inflation of the USD, the procurement price for the ICT goods has also inflated whereby it is difficult to supply particularly the government supplies at the tender price.

They requested the government for re-considering penalties for delayed supplies.

Young Entrepreneurs

Entrepreneurs said the main issue is no loan avenue for service sectors such as for training institutes from CSI and other banks.

They asked that equal opportunity should be given for urban startups as most of the perks like working capital loans are given to rural sectors where there is limited startups.

Cable Operators

With the increasing demand for new cable TV connections to access information in times of pandemic crisis and issues around its maintenance and with the import restrictions, the cable operators are facing severe shortage of critical equipment and accessories as it is not listed in the essential items to provide uninterrupted service as per the directive from BICMA.

Penalties are also imposed by DRC on BST for those subscribers whose monthly subscription fees are due.

They requested the government, for the All Dialect Self Supporting (ADSS) facility to transmit cable TV signals especially to far flunk gewogs and chiwogs so the cable operators will benefit and there is effective service delivery.

 

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