The MDP

The draft Mineral Development Policy is probably the most delayed and contentious Bhutanese economic policy till date. Now running in its sixth year the draft MDP is yet to be finalized.

The MDP became an issue primarily on account of the poorly regulated, controversial and ad-hoc nature of mining in Bhutan. Report after report primarily from the Royal Audit Authority showed the extent of the mismanagement in the mining sector.

Superimpose this with the strong environmentalist stand taken by the previous government mainly on theoretical grounds and the mining sector’s future (except for privileged few) seemed to be dead in the water.

Apart from not receiving priority from the former government the initial versions of the draft MDP were poorly researched and drafted versions. While it attempted to listen to the mining lobby, which had its own interests the drafts did not sufficiently address the key issues facing the mining sector.

The latest attempt at a draft seems to be promising but all will depend on its final form and ultimately its implementation.

Whatever, the final shape the MDP should address some key issues in the sector.

It should be part of a larger strategy to diversify Bhutan’s economic basket which is currently restricted to mainly hydropower and Tourism. It should also be part of a strategy of industrialization that makes use of the upcoming Industrial Estates and hydropower projects.

Coming to the mining sector itself the policy should ensure a fair and level playing field with less red tape and loopholes. One key area would be ensuring that the allocations of mines are done in a fair and transparent manner whereby the state does not lose out on revenue.

It does not matter who owns the mines or how many of them, as long as those who do, get it in a transparent manner, are capable and can run it in a competent manner respecting all the rules and guidelines.

A separate and strong body to monitor mines and ensure compliance is a good idea. A lot of the current problems in mining can be traced to an overburdened and under resourced mining department being unable to adequately monitor the mines and ensure compliance.

The policy should also ensure that while a few members of a local community cannot blackmail a miner it should also strongly protect the genuine interests and grievances of local communities.

On the issue of value addition the government should allow raw export of those minerals which are present in huge deposits but at the same time encourages value addition.

The government should also be clear about mining areas and zones. It cannot allow rat hole mining in every nook and cranny but should instead only allow sound proposals that make economic sense for the nation and now a few individuals.

As shown in RAA reports it is high time that the government revise the currently low royalty rates on minerals so that the country and the people can get a fair share of the mining resources.

Ultimately the government should ensure sensible allocation, good regulation and increased revenue contribution from the mining sector through the MDP.

 

There’s a tremendous gap between public opinion and public policy.

Noam Chomsky

 

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