Currently, the biggest challenge that Bhutan faces is the state of the economy. It is of no coincidence that the economy became one of the biggest election issues, and in the end helped decide the electoral outcome.
Some may be satisfied in voting out the previous government, which was either seen as being the cause of the problems or not being able to tackle the economic problems effectively enough.
However, the reality is that we are bound to repeat history if we first don’t recognize the true nature of our problems and then carry out deep and far-reaching reform measures to tackle them.
Ever since the start of the economic crisis in Bhutan in 2011, Bhutan’s collective response has evolved from an ostrich burying its head in the sand to finally a deer caught in the headlights.
As a nation, if we want to move forward and take our rightful place among the success stories of the international community, we have to start changing way we do business.
The reason our Bhutanese economy has been brought to its knees is due to a combination of factors.
The first elephant that must be addressed in the room is the very lack of a Bhutanese economy.
A collection of few fronting industries, some big business monopolies, and urban areas with thousands of shops all selling the same things cannot be called a healthy economy by any stretch of the imagination.
The recent economic crisis has shown that Bhutan can no longer depend solely on the grants and aid from generous developmental partners to run its economy. Instead, we have to become self- sufficient and that too at a fast pace for our own economic future. Also, as shown with the recent delays in the P-1 project that could lead to billions in revenue losses for the government, we cannot put all our economic eggs in one hydro basket.
Bhutan lacks the very basics of a manufacturing base that in most industrialized countries is the initial bedrock of economic development. Many of the economic powerhouses of the world have started off with exploiting their natural resources to the hilt, which included ‘dirty manufacturing industries’. Then they climbed up the ladder to more advanced products.
Bhutan cannot just rely on the sale of raw hydropower to India for revenue, but we must use our large generating potential to develop a strong and genuine manufacturing base with large manufacturing industries. With proper regulation and supervision, it should be possible to ensure that these industries also follow proper anti-pollution measures like chimney filters or safe dump sites.
Bhutan has a huge potential in the mining sector whose exploitation, so far, has been riddled with controversy. There is no doubt that local people must benefit from the mining activity that will affect them, and environmental destruction should be minimized. However, the sector should also be explored to ensure that the nation earn export revenue.
Mineral based exports already constitute one of Bhutan’s largest export items. Instead of having small and damaging quarries opening up in every valley the government should get together with the private sector and foreign investors and explore large scale mining done in a clean and professional manner with minimal harm or impact on the environment.
Bhutanese agriculture which employs the bulk of the nation’s rural population is still backwards and subsistence in nature. The transformation of this import dependant farming sector into an exporting power house will go a long way in ensuring national food security and lifting many out of poverty.
In a snapshot, the Bhutanese economy is a farmer who cannot produce enough to sustain his family, a shop that sells everything that everybody else is selling with low sales and profit margins, a factory whose Bhutanese front partner earns in commissions, a private sector employee barely making ends meet, and a relatively privileged government employee forever pining for higher pay packages.
Then, one would have to meet the average middle and upper middle class Bhutanese consumer who has a poor savings culture, and an exorbitant and unsustainable lifestyle financed by bank loans.
This is all in the context of the government machinery that, for all intent and purpose, is satisfied in implementing some donor grants and programs. Bhutan needs a fundamental change in the style and substance of governance that can help lift the country out of its most serious economic crisis till date.
Big and high sounding policies and visions will mean nothing if the basics are not addressed in recreating and strengthening the Bhutanese economy.
There can be economy only where there is efficiency.