CSIs, the new engine for economic growth

CSIs, the new engine for economic growth

A growing niche of entrepreneurs is entering the market and they often take up social issues as mandate.

For instance, while growing waste is a huge challenge for the country and one disposable pad takes around 500 to 600 years to decompose, Zamin Friends Forever is producing eco-friendly sanitary pads to address the issue. It is a first of its kind business under the Cottage and Small Industry (CSI) sector in the country.

Karma Yogini, the founder of Zamin Friends Forever, initiated the idea of eco-friendly pads at a time when waste management is becoming a pressing issue.

Zamin Friends Forever was started in 2018 with funding from Loden Foundation with an initial capital of Nu 800,000.

The sanitary pads are made by prison female inmates under the project ‘work and earn inside jail’, again a first of its kind initiative for inmates spearheaded by Zamin Friends Forever.

The government has identified CSI and Startup for flagship grogram in the 12th FYP. It is designed to provide holistic support covering the entire business phase and the whole entrepreneurship ecosystem.

The CSI sector is considered as the driver of socio-economic growth in the country. In the 12th plan Nu 1.2bn is allocated for CSI flagship program.

The CSI and Startup flagship program is expected to create value addition for 21 selected CSI products, create additional 1,154 CSIs, generate additional 4,231 employees, impact 5,630 youths, benefit 156 Farmers and Cooperatives Group with 4,382 members and benefit 24 Clusters with 926 members.

However, the CSI sector faces challenges of access to finance, access to market and lack of access to land and infrastructure.


Karma Yogini said that she faced financial constraint and acceptance of the products in the market.

“People are not accepting our products in the market and most of the people buy imported products,” said Karma Yogini, adding that they have to compete with foreign brands.

As of now she is creating awareness on her products and she distributes Zamin Friends Forever to institutions and schools across the country and even to nuns.

She added that young girls are ready to switch their pad habits by using eco-friendly pads to save the environment.

She has requested the education ministry to buy the products for schools.

Each pad costs around Nu 75 to Nu 85 and there are two sizes, regular and large.

Similarly, the founder of Miniature Bhutan, Sonam Tashi, said that they face challenges of access to finance, lack of market and payment gateway.

He said that he is selling his products to seven to eight countries however, he faces challenges of payment gateway. “Many people want to buy our products but there is issue about payment how they can make the payment.”

Miniature Bhutan creates high-end handcrafted Bhutanese souvenirs.

Sonam Tashi said that though government provides support to entrepreneurs with facilitating marketing and participating in international and regional fairs, the entrepreneurs require more support from the government.

Entrepreneurs have also formed an association called Bhutan Association of Entrepreneurs (BAEyul). The Association has five board members and more than 60 entrepreneur members.

The vice president of BAEyul and the founder of Mawongpa Water Solution, Sonam Dorji, said that the association wants to guide young startups, educate youth on entrepreneurship and promote entrepreneurship culture in Bhutan.

He said that some of the challenges that entrepreuneurs face are government policy, not having economic growth as a nation’s priority, lack of skills, finance, market, technology and blunt bureaucracy. “Starting from Phuentsholing entrepreneurs faces problems from custom, immigration and taxation,” said the vice president.

He also said that it is a win-win situation, so the government must consider any help provided to entrepreneurs as an investment and not favor. “Till now it was taken that way.”

“We really need the government to understand the relationship between entrepreneurship and potential opportunities in the economy as well as solving current problems,” he said, adding that the government should also be able to distinguish between businessmen and entrepreneurs.

CSI Sector

According to the annual report of DCSI, the total employment contributed by the CSI as of June 15, 2019 is 99,288. CSIs constitute more than 95% of the total industry in Bhutan. As of June 15, 2019, there were 22,064 licensed and operational CSIs in the country as compared to 20,915 as of June 15, 2018.

The Director General (DG) of Department of Cottage and Small Industry, Tandin Tshering, said that the government is coming up with many instruments to address the issue of access to finance. “As of now there are no formal studies carried out on how much CSI sector is contributing to the GDP. However during the flagship period we are going to carry out a study on their contribution of GDP,” said the DG.

The Department is looking after the overall domain of six eco-system of entrepreneurship.

He also mentioned that access to market is a challenge because production is done somewhere and products have to be brought to the market place. “The role of the government is to create logistical services that will enable people to bring the products to market,” said the DG.

DG also mentioned that entrepreneurs have to make use of e-commerce which the government has introduced.

He added that challenges to entrepreneurship include economy of scale,  no product quality, value addition not much done and lack of standardization of products. He said there should be better product packaging and design. “In that way government can facilitate to export market.”

“We want to have CSI retail outlets both within and outside the country that will act as catalyst for promotion of our products,” said the DG, “The government will help in launching the new products in market, have regular CSI fairs and help people to participate in regional and international markets and train them in marketing.”

The DG said that the price of the products should be determined by the customers. “We have to establish the products and then they can set the premium price.”

The Department is also planning to come up with a start-up center – one each in Mongar and Samtse. “We are also opening FDI for the CSI sector; at least foreigners will invest and also help in innovation of new products,” said the DG.

Other than the department, there are many other agencies supporting the CSI sector.


The theme for Bhutan Economic Forum for Innovative Transformation (BEFIT) 2019 was on CSIs and in particular on promoting the ecosystem for CSIs. The CSI policy highlights the interventions needed in the ecosystem. The FDI policy revision is also based on the need to have technology and market access for small industries through FDI.

The officials from Royal Monetary Authority(RMA) of Bhutan said that RMA is looking at a whole range of products and different financing mechanisms. For example, Jabchor is mainly looking for equity and mentorship from “angel investors”.

In-principle approval was given during BEFIT 2019 to REDCL to upgrade as a non-deposit taking CSI bank. After the CSI bank rules and regulations were approved by the RMA in 2018, a three-month application window was given for non-deposit taking CSI bank during which the REDCL applied.

Loden Foundation

Loden Foundation has supported 167 entrepreneurs as of August 2019.

The program officer of Loden Foundation, Lhakpa, said that Loden’s interest free and collateral free scheme is in an effort to supplement the efforts of the government and other stakeholders to provide access to finance.  “Aspiring entrepreneurs may have good practical business ideas but without access to finance to kickstart their business, it becomes difficult and challenging,” he said.

In addition to providing the startup fund, Loden provides mentoring and capacity building for the entrepreneurs so that the success rate of the startup is more. 

Loden Foundation provided basic entrepreneurship trainings, giving them soft loans, regular monitoring is done and then mentors the young entrepreneurs to facilitate them to boost their business.

In addition, Loden is now focusing on student entrepreneurship through Loden SEED program (Student Empowerment Through Entrepreneurship Development) in 17 colleges and TTIs across Bhutan and four integrated youth centers.


DHI provides support to Entrepreneurs in various ways through the DHI Business Acceleration Program (BizAP), DHI has trained 43 Entrepreneurs.

An official from DHI said that to enhance the access to finance, through the DHI Business Acceleration Fund, DHI has funded 29 entrepreneurs with about Nu 14mn. 

The official also said that to enhance the probability of entrepreneurs to take the businesses to their true potential, through the DHI Mentorship Program, DHI selected entrepreneurs who are assigned mentors from the industry under a structured mentorship program of nine months.

The official said that to help secure business, through the DHI Corpus Fund, DHI has supported six entrepreneurs by providing guarantees while bidding for Government works, The Corpus Fund of Nu 5mn is maintained as a fixed deposit in the Bank of Bhutan (BoB) against which bank guarantees are issued on behalf of the entrepreneurs.

DHI provides a maximum amount of Nu 500,000 with an administrative fee of 5% per annum. The funding is interest free and collateral free. Entrepreneurs will be required to repay the principal amount only within a period of five years excluding the gestation period of one year.

The BizAP program has a rigorous and multifaceted selection methodology that ensures that the final pool of entrepreneurs for the cohort can benefit the most from the program.

More than half of the entrepreneurs trained under the BizAP program are under the age of 30. 


The Secretary General of Bhutan Chamber for Commerce and Industry (BCCI), Sangay Dorji, said that BCCI supports entrepreneurs in many ways like Jabchor.

“We identify investors who have resources to invest and guide the young entrepreneurs,” said the Secretary General.

He said that some young brilliant entrepreneurs get stringent at some point and BCCI asks the investors to guide them so that through their experience and resources the business can be scaled up. “We want to help them get equity in order to scale up their business.”

The Secretary General also mentioned that they want to bring entrepreneurs association under one umbrella of BCCI so that they can provide support. “We want to set up an information center and make co-working space in the conference hall of BCCI where the young entrepreneurs can be monitored and provided information on businesses,” said the Secretary General.

The government is supporting the CSI sector through initiatives like crowdfunding, policy, e-commerce platform and Jabchor 

So far two seasons of Jabchor have been conducted and in the two seasons, five investors have invested.

Dechen Dolkar from Thimphu