The Bhutanese Leading the way.
In the Nu 15 billion (bn) Economic Stimulus Fund the main question is on what areas will be used in terms of its break up and how can people access it. The full 15 bn is expected to come in 1 year and a half with 2.5 bn already here.
The government is shy to give an exact break up as the situation is still fluid but of the 15 bn so far around 2 bn will be given for Desuung reskilling project, around 2.5 bn to banks for liquidity, 2 bn to tourism, 2 bn to 1.5 bn to Agriculture and funds for CSI, OGOP, digital and creative industries etc. Amounts may change.
Funds sizes are 500 mn, 1 bn, 1.5 bn, 2 bn and 2.5 bn.
The money that will be given to banks will be around 2.5 bn but to avoid moral hazards the RMA will administer it. This money will be used for a ‘Reinvigoration Fund’ for businesses not able to pay back due to their growth being impacted due to liquidity or having a good business model but their growth is hampered by a lack of funds. Banks will have to do good due diligence.
An official said that Agriculture in Bhutan so far is input driven as in giving bean seeds but there is no monitoring. In the past garlic seeds were given but these were eaten.
“We are trying to shift away from input subsidy to output subsidy. The focus will be on producing priority crops like rice, wheat which can alternate with paddy in winter, maize as large parts of the east grows and depend on this crop and quinoa.”
There will be an assured market as farmers will know there is an income due to price support.
The aggregator SOEs will value add. The aim of the above is to achieve food self-sufficiency. The farmer will be the major supplier and SOEs will collect and value add.
Bhutan Livestock Development Corporation (BLDC) will be decentralised to enable it to buy farmer’s products.
These crops are chosen as they will last longer and there is no scheme for vegetables as they are perishable and the aim for now is for these programs to have success. Cash crops will not be involved.
The money for this important sector is around 1.5 bn to 2 bn.
ESP is trying bigger projects by revamping FMCL and as aggregators (collectors) in food self-sufficiency.
BLDC will play a key but low-key role in ramping up meat production through farmers. There are FMCL farms and investments have been made in Samrang in the past.
In terms of meat the push will be in the south and the focus will be on pork, poultry and fish. Beef is not being done for religious sensitivity in the south.
When the above SOEs were set up they were not capitalized well and so they could not equip themselves well and so the ESP will help them
CSIs will get major support and especially for entrepreneurs and here the Department of Industry is looking at it. One of areas that could be linked to food is like processing ginger or pickling it.
There is craft bazar for arts and crafts and the aim is to link it back to the producers.
The MoICE will be supporting creative and digital industries too.
OGOP will focus on high value food and so will get funds too. Tourism will get 2 bn for promoting it and developing facilities and tourism products.
In terms of loans the farmer will need loans to produce.
One model being looked at is subsiding lower interest rates instead of giving funds to make the fund last. There needs to be no Kidu mind-set as a previous CSI Bank loan of 2% interest rate was seen as kid money due to the loan rate.
Of the 15 bn ESP money Finance Minister Lyonpo Lekey Dorji said Bhutan has received Nu 2.5 bn as the first tranche.
“Our main aim is to improve and achieve macro-economic framework goals, increase domestic production within, create more job opportunities, help tourism sector which aims to get 300,000 tourists a year, help entrepreneurs with new businesses and help cottage and small industries.”
Lyonpo said the fund will also be used for national skilling programs for employment generation, need to improve liquidity in the banks and help with loan deferments and NPLs, increase exports, have import substitution and the main aim is to awake a sleeping economy.
He said there is an ESP Secretariat in the PMO and the ESP Steering Committee will be chaired by the PM. The committee will review projects and proposals.
People who will be eligible for the ESP are all Bhutanese who are genuinely keen to start businesses, create jobs, make products for export and put projects.
All ESP funds for loans will be released to the Financial Institutions and it will be monitored on how the money is used.
ESP Secretariat will come out with more details as it is rolled out.
