The National Land Commission’s decision to not allot land to the Bhutan Education City project, over the legality of the land and the Cabinet’s subsequent decision to not get involved in anything illegal, has triggered a lot of discussion on the issue.
The Opposition party and its various supporters have aligned themselves to support the project which has now added a political color to the whole issue.
However, irrespective of whether one is in the opposition or government, it is important to ensure that the issue is given an in depth look.
The best place to start would be the projects very own Detailed Project Report (DPR) that has raised some pertinent issues. The DPR, itself, questions if the project is actually a real estate project disguised as an Education City project. This is because the developers have proposed to build 699 villas, with an approximate area of 50 decimals to an acre each, to be sold to rich tourists.
The report also mentions that the project has the flexibility to increase the commercial space beyond the 30 percent area. This is important to note because many international bidders requested for the same flexibility prior to bidding, but withdrew after it was not granted. It now appears this flexibility was granted after the project was allotted to the current bidders.
The above issue leads to another issue which is the actual viability of the project as an Education City.
For a project which has been in the works and public spotlight since 2010, there has been no single legal agreement to actually build a university of colleges in the city. A few ‘expressions of interest’ and MoUs have been there for years, but these are exploratory and limited in scope, mainly to having a few classes or a look at the project. Ironically, a project formed with the promise of getting world class Ivy League colleges and institutions is now targeting some little known institutions with no proven track record.
Another issue is that when the Education City bill first came to Parliament, it had proposed 90- year leasehold that was reduced to 30 years in line with the Land Act 2007. However, it now seems that the 30-year lease has been overridden by granting two near automatic extensions resulting in a virtual 90-year lease.
Obvious questions must also be asked in terms of how the government would benefit from the project. The actual benefit, if looked at very closely, is very minimal.
The project originally envisioned approximately 30 percent equity for the government since the government was investing 1,000 acre land. The project was supposed to be built and developed entirely by the developers.
However, under the current agreement, the government will not get any equity and instead only a 2 percent of the revenue which is almost a token amount. To compound matters, the former government approved around Nu 470 mn of government funds to build infrastructure of the project. There would also be no tax revenue as the project has been given a generous tax holiday till 2030.
The project also begs some serious questions about conflict of interest. The project location will lead to an increase in the land value of some former ministers who have land within the vicinity. The two main promoters of the project are related to a former minister.
The BEC office is located in the building of a former minister, the site office is located in the building of a senior official related to a former ministers and some private land of a senior official related to a former minister has been given on rent to help with the project construction. The construction equipment to be supplied for the actual city construction will be supplied by a former minister’s relative, etc.
Bhutan should always target foreign investment and create a healthy and conducive business environment. However, the two biggest road blocks to it in Bhutan are the unbelievable red tape and obstacles for ordinary people, and crony capitalism for the connected few where all kinds of exceptions are made. As one examines the project in detail, instead of just getting swept away by tall claims or political loyalties, the Education City project is not what it was projected to be.
“Men are so simple of mind, and so much dominated by their immediate needs, that a
deceitful man will always find plenty who are ready to be deceived.”