The biggest weakness in Bhutan’s private sector is not so much the absence of big players as the weakness of its small and medium enterprises (SMEs).
A lot of the economic woes of Bhutan can be traced back to the weakness of this sector. In any country across the world it is the SME that employs the most amount of people, forms the bulk of the GDP, ensures equitable distribution of wealth and is the backbone of the economy.
The lack a strong SME in Bhutan has lead to high youth unemployment and a fundamentally weak economy with a weak export sector. It has also meant that Bhutan has been forced to import most of its consumer goods including agricultural products.
The relative weakness of Bhutan’s big industrial sector can also be explained by the absence of a strong SME.
Post war Japan saw many SME’s starting small with innovative ideas becoming world beating companies.
The absence of a strong SME in Bhutan’s economy has meant that many industries in Bhutan have not had the chance to gradually evolve and become bigger. This in part explains their smaller number and also the numerous problems that beset them.
The lack of SME’s in Bhutan is also leading to a widening gap not only between the rich and the poor but also between the rich and the middle class.
A quick survey of the world’s economies would show that the strongest and most stable economies of the world have strong SMEs that utilize the resources and innovation of its people like USA, Japan, Germany, China, India etc.
In contrast there are also many other countries that depend only one or two minerals like oil or minerals like in the middle east and Africa where despite the high revenue, large portions of the population are poor and backward and the whole economy is unstable.
It is in this light the government’s Business Opportunities and Information Center which offers Nu 1.9 bn in soft loans to SMEs is a welcome step.
If this program is implemented in the right way and if people make use of it effectively then it has the potential to give a boost to the Bhutanese economy.
The soft loan is also welcome because the traditional financial sector of the Bhutanese economy has been geared to finance big projects and not SMEs to the extent that a bank will think nothing of financing hundreds of millions for a big project while it will have a million questions to finance a smaller project which may in fact be more viable.
However, to truly strengthen SME’s in Bhutan, just soft loans will not be enough as it will be important to also provide other policy support, reduce rep tape and provide a friendlier environment in general. SME’s also has to about unlocking the creative and entrepreneurial spirit that is present in the Bhutanese people.
The SME mindset has to start young from schools and colleges where the education system must encourage students to think outside conventional career choices. The government can also do more to help set up one stop service centers and windows for genuine entrepreneurs.
If the SME revolution takes off in Bhutan then it can bring a multitude of benefits from employment, to more exports to stronger economy. It will also be the testing and breeding grounds for the Tashi’s and Lhaki’s of tomorrow. It will ultimately help Bhutan to achieve self sufficiency by not just building large projects but by also ensuring the spread of wealth and opportunities among the people.
In America, small business is a big deal.