The last few months saw the incumbent DPT government highlighting its various achievements during the last five years, like progress in the minimum programs like roads, water, electricity to lowered poverty rates.
This was also faithfully highlighted and reported by all media including this paper. However, there are also several other areas where the incumbent DPT government has either failed to deliver or made mistakes in.
These areas include the economy, corruption, controversies, democracy, foreign policy, relation with the Monarchy, and various other issues. Some of these issues combined, have the capacity to unseat the incumbent DPT government, and bring a new party to power.
While it is true that the better than average chances of a DPT win in 2013 is due to its minimum programs in the rural areas, however, its biggest adversary is also economic in nature. The twin problems of the Rupee Crisis and Credit Shortage- combined with other economic problems could be the main reason for worry.
For example, the public anger over the Prado issue is not so much as the ministers taking their duty Prados- as done in the past, but more so because it is being done during an economically tough time.
Rupee and Credit Crises
Rupee borrowings have reached Nu 21 bn till date, and it is expected to touch Nu 38 bn by 2014 and 2015. However, more important than the figures is the issue of accountability. When the rupee problem first emerged in the latter part of 2011, both the government and the Royal Monetary Authority (RMA) responded by saying that it was a longstanding problem, and blamed the Bhutanese citizens for excessive consumption.
However, the government’s own report said, the government spending pushes up aggregate demand in the economy. A Bhutan Chambers of Commerce and Industry (BCCI) report states, the irresponsible government expenditure from 2009 onwards, and poor reserve management were the main causes behind the rupee crisis. A National Council report held both the government and the RMA responsible.
The Rupee Crisis, more damagingly, for the first time showed a government unprepared and even helpless in the face of a major economic problem affecting Bhutanese households.
A story by this paper found that the cabinet had not implemented most reform measures that were proposed by the Ministry of Economic Affairs (MoEA) to the cabinet about a year ago on 4th May 2012, to deal with the Rupee Crisis.
Many ministries and agencies, on the instructions of the cabinet, were supposed to respond to the proposal by 31st May 2012, did so only over a period of an entire year.
Of around 32 recommendations in the report, only three have been completely done while only six have been partly done.
One major offshoot of the Rupee Crisis was the Credit Shortage, which emerged from April 2012, and in many ways was more damaging than the Rupee Crisis, as a variety of popular loans like housing, car and even business loans had to be stopped. Many businesses, big and small were badly hit, as credit is the lifeblood of any business.
This was accompanied by a host of import restrictions on vehicles and various other goods that had an impact on the flow of business and consumers in Bhutan. The import restrictions in place for more than a year, has failed to stop or solve the growing Rupee Crisis.
Bhutanese, who travel aboard get only USD1, 000 a year compared to USD 3,000 dollars in previous years, for going abroad in order to save the limited dollar reserves.
Both of the above crises combined have led to the private sector shrinking, job layoffs and a considerable economic pain and uncertainty.
EDP and FDI
In line with its comprehensive 2008 manifesto, the DPT government in 2010 unveiled its economic vision and policy for the nation through the umbrella economic policy of the Economic Development Policy (EDP).
The mainstay of the policy was to make it easier and friendlier to do business in Bhutan by reducing the red tape, providing various incentives, and thus promoting investments and creating jobs. The main aim of the policy was to make Bhutan, a hub for various economic activities like medical tourism, financial services, and a services hub in general. One of the key features of the policy was that within 45 days of anyone applying for a valid license, one would get one.
However, three years later, the EDP has been a failure and one of the reasons as to why we now face a Rupee and Credit Crisis.
As per the World Bank’s ease of doing business index, Bhutan, which was ranked at 124 in 2008, has now fallen by more than 24 places to 148 in 2012. This is not very far from the ranking of war torn Afghanistan. The red tape is the same, if not worse, as BCCI members report that it still takes up to six months to get business licenses and not 45 days as boldly stated.
Bhutan has not become a medical hub, financial hub or services hub of any kind. One of the projects to make Bhutan an IT hub, was the IT Park, which has turned into a white elephant with most commercial spaces vacant, and the government still provides budgetary support to it. Two small investors have hung on, despite some early hardships after the government pumped in some more money.
The only limited success has been in tourism, with some rise in dollar paying tourists, but the majority of the achievements have been achieved by cleverly changing the definition of tourists from dollar paying ones to any South Asian flying in through Druk Air.
The Foreign Direct Investment Policy (FDI) 2010 has also not been a success with even the MoEA minister admitting to the same in a recent interview with the media. A study found that the policy was too restrictive and not focused on lucrative areas like, hydropower and mining to attract investment. The government has not done anything to make the policy less restrictive.
With the government’s obsessive focus on promoting GNH, both policies that could have done a lot for Bhutan have failed to deliver.
Though the government claims to have halved poverty rate from 24 to 12 percent, what has intrigued the economists and economic experts in Bhutan, is that Bhutan’s poverty rates have fallen so sharply in the face of record inflation. Generally the higher inflation rates leads to higher poverty rates in most economic models.
From 2008 to 2012, Bhutan had an inflation rate of around 40 percent or an average of 10 percent every year, which is the highest ever inflation levels ever experienced in Bhutan. It resulted in Nu 100 in 2008 falling down to a buying power of Nu 75.
Also, contrary to popular opinion the National Statistical Bureau (NSB) found that in 2012 the majority of Bhutan’s inflation was not due to imported goods, but due to home grown and domestic goods and services.
The NSB found that 54.24 percent of inflation in 2012 was caused by domestic factors like house rents, services, etc., while imported food, goods and services made up only 45.58 percent.
The government, in short, could have taken measures to combat the domestic aspect of inflation but did not.
With the youth compromising of 60 percent of the population, and 30 percent of the electorate, the youth unemployment issue could be one of the biggest challenges for the DPT government. Though the official unemployment figure is 2.1 percent, the youth unemployment rate is much higher. The measurement of employed people are also flawed as many educated youth doing some temporary farm work to help their parents, but still looking for a job have been recorded as being employed.
Though the government gave agriculture more focus after the Rupee Crisis, agriculture still remains a largely neglected sector. Bhutanese agriculture is the least subsidized and least supported budget wise, as compared to other nations in the South Asia. The plans for winter vegetable productions, increasing food production, and distribution in a big way have not really taken off. Farmers still complain that even if they do produce food crop, a lot of it either rots before being sold or goes to waste.
One key focus of the government’s minimum programs have been in keeping the people back in the villages, but the unchecked rural- urban migration has shown that only providing basic infrastructure is only half the job, as it is equally important to improve their productive capacity to earn a living.
There are also increasing reports on the poor quality of farm roads, and rural water supply schemes, many of which are showing strain within the first few monsoons showers.
Debt and Trade Deficit
With around Nu 80 bn in debt, accounting for around 80 percent of the country’s Gross Domestic Product, and in addition to hydropower loans the government towards the end of its term took a slew of budgetary support loans from international financial institutions furthering the increasing debt burden.
With around 70 percent of the funding of Bhutan’s Nu 700 bn to 750 bn budget for 10,000 MW projects coming from loans, a major chunk of Bhutan’s loans will be the hydropower loans. However, recent and also avoidable cost escalations in hydro-projects have shown that Bhutan’s debt burden will be far more than it’s been forecast.
What makes Bhutan’s debt a matter of concern is that unlike many developed countries, it is primarily external debt, and we are banking solely on one sector, hydropower, to pay off the debts.
Currently, Bhutan’s trade deficit is at Nu 20 bn or this is the amount by which our imports surpass our exports. This is expected to double to Nu 42 bn by around 2014. This figure also reflects the inability of the government to both increase exports by revitalizing the private sector, and also reflects the failure to go for import substitutes.
Corruption and Controversy
Apart from economic problems, a second major factor that could affect the chances of the DPT could be the multiple scams and controversies that have dogged it in the last five years. In some cases, past skeletons have come to haunt the government, while in other cases more current developments have posed a problem.
The Gyelpozhing case, which occurred between 2001 and 2003, essentially saw the former National Assembly Speaker Jigme Tshultim and former Home Minister Lyonpo Minjur Dorji allotting plots illegally to a variety of influential people. Some of the recipients were Lyonchhen Jigmi Y Thinley, Lyonpo Yeshey Zimba and Lyonpo Wangdi Norbu who served in the incumbent cabinet. The allocation was made in violation of various laws, including the Royal Kashos on land.
Days after the ACC announced that it would look into the case, the Prime Minister’s Office also asked for an investigation. However, the real damage of the case is not so much the actual case, but it was the repeated assertions of the Prime Minister and his ministers, that they were innocent, only to be proved wrong by the ACC report, and the Mongar District Court verdict. What has further damaged the credibility of the government was the blatant use of the OAG to try and discredit, and sabotage the ACC investigation.
Chang Ugyen case
This paper in its first issue brought to light the fact that the former DPT Vice President, in his past capacity as a Gup was involved in grabbing around 10 acres of government and community land in Thimphu. Here again, what became more controversial was the Prime Minister’s astute defence of him, and also the letter from his office to the National Land Commission comprised mainly of government secretary’s pleading Chang Ugyen’s case.
The NLC, in line with a High Court verdict, asked Chang Ugyen to replace the land. However, controversially Chang Ugyen was allowed to replace the land from other Dzongkhags by the NLC.
In what was a case of conflict of interest, and violation of rules the cabinet gave higher rates for compensation for buying rural land to establish the Denchi town. The maximum land there was owned by the Prime Ministers Aunty. The Prime Minister’s office in defense said that Denchi was declared a Dzongkhag Thromde by Parliament and was eligible for PAVA rates. However, if that was case then people whose land was taken for the township of Duksum in Trashiyangtse were not given commercial rates as per PAVA. PAVA officials told this paper that the PAVA commercial rates are for commercially developed land like in Thimphu and not buying rural land to make commercial land which was the case in Denchi.
A special Royal Audit Authority report asked for by the government confirmed the Bhutan Lottery scam. The report found massive corruption and illegalities in Bhutan Lottery and also that Bhutan was getting only a tiny portion of a pie that in around 2007 alone was worth around Nu 260 bn a year. The report also showed complicity by lottery officials. The report also confirmed that the current Finance Ministry had given favorable terms to the Lottery Don and arbitrarily reduced the annual fee from around Nu 400 mn to less than Nu 200 mn. The Prime Minister who had initially promised an ACC probe instead shut down the lottery business and nobody was held accountable.
The Ministry of Works and Human Settlement’s Lyonpo Yeshey Zimba’s proposal to sell the Trowa theater land to the in laws of the Prime Minister was seen as a conflict of interest. The National Council forwarded the case to ACC to be investigated as a case of policy corruption. The Land Commission rejected the government’s proposal to sell the land while the ACC report noted serious administrative lapses.
Though the Ministry of Health procurement scam was going on for years before the current government the scam was allowed to go on unchecked until the ACC and the RAA stepped in based on the media’s investigative reports.
The RAA report covering July 2008 to June 2009 found Nu 88 mn in irregularities in procurement of drugs. ACC report covering this government’s tenure also found massive corruption in procurement of medical equipment.
The Health Secretary who resigned on moral grounds has joined the DPT as a probable ministerial candidate which could drive the MoH procurement scam tag further into DPT.
City Bus case
The Nu 45 mn city bus procurement was introduced in the backdrop of the Pedestrian day to improve public transport. However, the tender ran into major controversy when the lowest bidder Samdhen who fulfilled all technical qualifications was disqualified by Bhutan Post which had violated the procurement rules in doing so. The bid was then controversially awarded to the son-in-laws of the Prime Minister and the MoIC Minister who had bid jointly.
Domestic Airports issue
Even as per latest and final Audit reports, almost 50% of funds have been misused or over paid. The RAA report says that given the poor quality of the airports the life of passengers and safety of aircrafts are at risk. RAA also forwarded report to ACC for investigation. The MoIC Minister who violated procurement rules to take decisions in the procurement committee has around 7 audit memos pending against him.
The shaky and ad hoc nature of the project, the involvement of the Prime Ministers nephew and son, and the enthusiastic government support for it lead to questions of conflict of interest in the project. These questions still stand today as the government after pumping in 1,000 acres of land and close to Nu 500 mn for the next three years for site connectivity will not be taking any shares in the project as was originally planned. It will only be collecting a nominal lease fee.
The Prime Minister in a BCCI meeting took a strong and public stand against mining. He said it was anti-GNH, needs to be strictly controlled and only a rich few benefitted. However, this paper found that his family members had got, expanded and applied for multiple mines under the tenure of the incumbent government.
Though not a corruption issue, it was a hugely unpopular move as the Prime Minister approached His Majesty the King for Prados for his ministers and a Land Cruiser for himself. Apart from the Prados the ministers gifted themselves office desktops, laptops, i-pads, printers and even phones.
One of the main reasons behind the poor implementation of the Tenancy Act came to the fore in 2009, when an investigation by the media showed that the Tenancy Act was being violated in letter and spirit by ministers and secretaries in the government who were actually supposed to ensure its implementation. Notable among them were Lyonpo Yeshey Zimba and Lyonpo Wangdi Norbu.
Foreign family Trips
The Prime Minister’s frequent trips abroad apart from generating its own questions also raised eyebrows when family members, party members and business supporters frequently accompanied him as part of the business delegation.
While the government claims that the successful transition to a democracy is among its strong points there are many who would also differ. One of the key weak points of the government was operating in a democratic environment with the mindset of the old system that led to charges of Autocracy. Bhutan is also yet to see the successful evolution of a democratic culture.
Sour relations with Constitutional bodies
The government since its inception has been engaged in an invisible and at times visible struggle with democratic institutions. One visible sign was an open letter from the Prime Minister sent to all media houses publicly berating the Chief Election Commissioner and telling him to do his job. The ACC which saw several of its anti corruption initiatives receiving little or no support even saw its Act being watered down. The government also attempted to undermine the ACC using the OAG in the Gyelpozhing case. The latest was filing a complaint against the ACC for its corruption awareness advertisement. The judiciary was at the receiving end after the tax verdict where the government accused the judiciary of stopping development in its 20 Dzongkhag mid plan tour.
Freedom of Press
The MoIC’s infamous circular of April 2012 against this paper sent the message loud and clear to all media houses that criticism of the government or investigation of its misdeeds would be rewarded with an economic blockade. The MoIC under the incumbent MoIC minister also drafted a Media Bill which enhances the powers of politicians and the MoIC over the Media.
Tobacco Act and Pedestrian day
The draconian Tobacco Act drafted by the Parliament and implemented under a Prime Minister who called it worse than drugs saw dozens of innocent Bhutanese being locked up for three years each. Draconian provisions were only amended after a turn in public opinion though some still remain.
The Pedestrian Day which started in June 2012 like many other decisions, was done without proper consultation generated mixed feelings in the beginning but as its impact was felt on national productivity and convenience, it became hugely unpopular. The government, however, stuck and only changed it to once a month a few months back.
Right to Information
The RTI is an act that not only helps to empower ordinary Bhutanese citizens with information, but also is important to fight corruption in Bhutan. What is more is that it is given in the constitution as a fundamental right. The government which promised an RTI Act before the end of its term failed to fulfill its promise.
Among the few bright spots for the government is its claim that it considerably strengthened Bhutan’s international profile and in doing so its sovereignty but here to there are notable misses.
The Security Council Fiasco
In what became one of the biggest letdowns Bhutan after much time and resources got one of the lowest votes in UN history in its campaign for the UN Security Council. Getting just 20 out of 193 votes Bhutan fell far behind second place Cambodia and the winner South Korea. Matters were made worse when the government stubbornly refused to share the details of the expenses and the OL was called a near traitor for questioning the bid.
Relations with India
Ironically though the government claims that strengthening relations with India was one of its achievements the reality is that Bhutan-India relations which was at its highest peak before the government came in hit rock bottom under the tenure of this government. Aid from India suddenly slowed and there were more excuses then rupees coming from New Delhi. A rescue act from none other than His Majesty the King brought relations back to an even keel.
Bhutan’s new friends
One of the cornerstones of the government’s claims of foreign policy success is doubling the diplomatic relations from around 21 countries to more than 50 countries. However, a closer look will reveal that qualitatively most of Bhutan’s new friends have no economic, geographical, cultural, social and diplomatic relevance for Bhutan with most of them being irrelevant players on the global or regional stage.
Society and Security
Despite having a GNH policy of governance the government has failed to effectively deal with several social issues
In what could be the true indicator for employment the last few years have seen increasing instances of youth delinquency. Urban and in some cases even rural areas have become unsafe by night as there are more and more daring cases of crime. Gang fights, vandalism, theft and battery all are on the rise. More seriously the safety of women in Bhutan is under question as rape cases have doubled from 2008 to 2012. In 2008 there were 21 rape cases reported for the year but in 2012 there were 51 rape cases reported.
A 2010 GNH survey found that around 21,000 people are obese in Bhutan with 100,000 being overweight and the figures are increasing every year. There is also Ministry of Health data to show the rapid rise in lifestyle diseases like diabetes, hypertension and even cancer. The government which could have promoted healthy diets and lifestyles and also created more public space for children and adults has failed to do so.
Drug and Alcohol abuse
The government has not been able to effectively tackle the scourge of drugs and alcohol abuse. While drug smuggling is one the rise with more addicts joining the group there has been little attention and resources spent on the issue. Alcohol abuse which is Bhutan’s most destructive social problem also has not received enough efforts and resources from the government. An attempt at taxation did not pass through the National Assembly.
Where DPT failed
Rupee and Credit Crises
EDP and FDI
Debt and Trade Deficit
Corruption and Controversy
Chang Ugyen case
MoH scam 2008 and 2009
Sour relation with constitutional bodies
Freedom of Press
Pedestrian Day and Tobacco Act
Right to Information
Security Council Fiasco
Relations with India
Quantity over Quality diplomacy
Alcohol and Drug abuse
Tenzing Lamsang / Thimphu