Thimphu Tech Park turns into a White Elephant

 

The management is optimistic but with little or no commercial takers at all the country’s first IT Park continues to remain vacant

The future of the thirteen month old Nu 285mn worth Thimphu TechPark Pvt. Ltd. (TTPL) still looks bleak as it has failed to attract big companies from outside and domestic business houses to rent space at the park.

The Mega IT Park is quickly realizing that Bhutan lacks the economies of scale and skills that giant companies seek and domestic companies cannot afford the facility or is least bothered about it.

Chief Operating Officer, Tshering Cigay Dorji said the Park is facing “cash flow challenges” which means it isn’t making money but incurs expenses on a monthly basis. “It is obvious because the commercial spaces are not fully filled up,” he said.

Local IT companies and vendors who could have been its hope say that they are not interested as they were not consulted when the Park was set up. BCCI vice president Chenchen Dorji who also owns an IT institute said “none of the members of the ICT association of Bhutan is interested in the tech park because when the park was developed and many things happened there, the ICT association was never consulted.”

The project is located in Thimphu, Bhutan’s capital and is being developed as a 250,000 square feet (SFT) IT-focused mixed use development spread over 18 acres.

The facility has been designed to world-class standards, LEED Platinum pre-certified, with redundant international telecom connectivity and dual-feed green cheap power supply, for 24×7 business operations.

 

Tenancy progress at snail’s pace so far

While the government’s effort to rope in major multinationals have not yet paid off and is still underway, two comparatively smaller US registered companies, ScanCafe and Shaun Communications have rented space at the IT Park.

Shaun Communications is a business processes outsourcing (BPO) limited liability company (LLC), registered in the US but operating as an independent company in Bhutan under the name, Shaun Communications Bhutan Private Limited (SCBPL).

Shaun Communications LLC specializes in voice BPO, also referred to as a call centre.

SCBPL’s operations manager of Prodipto Mukherjee said the company isn’t faring well at the moment. He said “sometime in mid-October this year, we went live once with 58 selected agents but when our clients from the UK listened to the recordings, they rejected it saying it was not up to the quality standards. “Everything starting from employee’s incentive plan is up to the clients,” he said.

“Everything is now put on hold and we plan to resume after we get about 200 agents,” he said. Shaun Communications, Prodipto said is now working with the labor ministry to provide intensive trainings to selected candidates. “We have asked the ministry to assist us by taking care of the trainees’ stipend as our company is also running on a loss,” he said.

He said, if the ministry assists the company with funds for the training, it will benefit the youth and at the same time provide longer duration and quality trainings before the agents hit the floor to take calls.

“The company has invested a lot of money out here to the tune of more than Nu 65mn since we opened shop on November this year but the results you can say is zero at the moment. In the meantime there are overhead and running costs,” he said.

He said, from his own observation “people here are not used to or habituated to the BPO scenario. While the experienced ones are not sound with telemarketing, others have tough time picking up. It’s important that the youth take it up and benefit from it.”

ScanCafe, which operates in the US, Switzerland, and India specializes in digitalizing and editing older formats of photography and video and has plans to initially employ between 100-150 Bhutanese but has not confirmed the investment especially after the experience of Shaun Communications.

 

BITC is a burden for TTPL

The first phase of the project which became operational from May 2012 comprises 50,000 SFT of IT office and data centre space. The government has also leased from TTPL 10,000 SFT of warm shell space for 90 years at US $ 2mn to house Bhutan Innovation and Technology Centre (BITC) within the IT Park.

However, with no bidders coming forward to manage it, BITC administration was outsourced to TTPL. The government provided a fund of Nu 42.725mn to TTPL for operations including furnishing of the commercial space. Of the total amount Nu 4.5mn was meant for operation costs.

Tshering Cigay Dorji said, while the BITC is successful in facilitating private businesses, the management “is losing money by running it”. “The rent paid by the incubates isn’t even enough to cover for electricity bills,” he said.

He said one mistake of TTPL may have been “overspending” on infrastructure of the BITC.

TTPL as per the contract are bound to manage BITC till 2016 with the initially allocated fund. “It is difficult and not possible to operate for five years with Nu 4.5mn,” he added.

BITC was inaugurated on 7, May 2012 and its operations have started thereafter. It supports 8 companies within BITC as incubates and one as a virtual incubate. It conducted the first Business Idea Competition of Bhutan 2012 (BICOB 2012) which received 49 entries.

BITC also signed a strategic partnership agreement with Bhutan+Partners of the Netherlands.

Tshering Cigay Dorji said the viability of the project in the longer term is good. He however added that the country’s internet connectivity or redundancy may pose as a problem if big multinationals come in future.

 

No takers for Data Center

Tshering Cigay Dorji said, earlier it was perceived that the Data Service Centre (DCS) jointly developed by a local IT firm, New Edge Technologies Private Limited and Burland Technology Solutions Limited (BTSL), a UK based IT company would make up for increased expenses.

However, the data center that initially boasted of world-class design and multi-tier 2 facilities up to 10,000 SFT support space and 8,000 SFT server room hasn’t caught up yet as it is the first of its kind in the country.

Design Problems

Another key issue currently faced by the park is in developing the interiors of the commercial space for potential tenants because it was originally planned that the commercial space need not be fully developed by the developer.

This, Chief Operating Officer, Tshering Cigay Dorji said is because it was expected that if a big BPO company like Wipro were to come, they would have their own design requirements for developing the interiors of the commercial space. “In the beginning, a lot of big companies were expected to rent space but it turns out there are none and the ones interested intend to manage with whatever interior we have,” he said.

“The developer is Thimphu Tech Park Pvt Ltd (TTPL), the private partner in the PPP model. We are discussing with the stakeholders including the government to resolve this and move forward and things are looking positive,” Tshering Cigay Dorji added.

 

PPP Model

The IT Park has been developed based on a DBFOOT (Design, Build, Finance, Own, Operate and Transfer) Public Private Partnership (PPP) Model.  “Such PPP model is good because it shares the risks as well as the benefits between the public and private partners,” Tshering Cigay Dorji said.

TTPL boasted to be the flagship IT development in the Kingdom, is the country’s first IT Park and is promoted by the Department of Information Technology & Telecom (DITT), Ministry of Information & Communications (MoIC), Royal Government of Bhutan. It is supported by the World Bank and developed by TTPL which is a joint venture between Assetz Property Group (APG) of Singapore and Druk Holdings & Investments (DHI).The Public sector is represented by the DITT, MoIC and the Private part y is represented by TTPL.

Under the PPP model, the government has leased five  acres of land at Babesa,  to TTPL for the IT Park and the World Bank support, has provided ancillary facilities such as roads, fiber-optic connectivity, sewage plant and water supply among others.

On the DBFOOT basis, TTPL designed, built and financed the construction of the park building and its premises. The operation and ownership of the IT Park will be with TTPL for 90 years, after which the ownership will be transferred back to the government.

 

TTPL is optimistic

However, the management is optimistic and believes the park is achieving its objectives. “The main objective of the IT Park is to create employment for our youth and two companies, both registered in the US, are already piloting at the IT Park. They are already here, alive and kicking. They have plans to scale up their operations and employ around 200 people each before the end of 2013,” Tshering Cigay Dorji said.

He said the introduction of Bhutan Innovation and Technology Centre (BITC) is also a sign of achieving one milestone for the IT Park. BITC is an initiative of the Government to promote and support innovation and entrepreneurship in the country to create more jobs and fuel economic development.

He said BITC has achieved a lot of milestones within a very short span of over two months.

“What we should also understand is that a completely new kind of project such as this one would naturally face difficulties in the beginning. But with determination and sustained effort and support from the stakeholders, it can and will succeed.  Rome was not built in a day. It is better to begin something with a vision than not attempt at all. If our leaders had never dared to do new things in the past, Bhutan would not be where it is now,” he said.