Economic Affairs Minister divulges plans to revive the economy

Lyonpo says that the economy revival plans must go hand in hand with the public health safety of the people

In the wake of the economy witnessing a negative growth rate in 2020, the government is currently working on ways to revive the economy under the new normal circumstances, according to Economic Affairs Minister Loknath Sharma.

For this, the minister said there will be plans and programs that can be implemented immediately as well as building on the existing businesses.

“The government is seriously looking at various regulatory reforms to accompany economic support measures,” he said.

Lyonpo shared that the economy revival plans must go hand in hand with the public health safety of the people. “The priority of the government at the moment, given the situation, is the protection of our people from the virus,” he added.

However, since the onset of the COVID-19 pandemic in late 2019, the global economy has plummeted to a record level that the situation was seen as being the worst since the Great Depression of the 1930s. What started as a health emergency has soon transcended to an economic crisis.

And as countries went into lockdown, economic activities were disrupted, leaving millions of people jobless. Global value chains were disrupted, leading to near collapse of the global trading system.

According to the IMF’s World Economic Outlook report of April 2021, global GDP in 2020 slogged to -3.3%. It was only China that reported a positive GDP growth in the same year. As part of the greater global community, Bhutan was no exception to the recession.

“The economic disruption caused by the COVID-19 pandemic has offered a moment of introspection and retrospection, and the need to build economic resilience to withstand external and internal shocks,” Lyonpo Loknath Sharma said.

Lyonpo also shared about opening up spaces for foreign workers inflow as one of the measures though all the demands cannot be met at one go.

“Similarly, businesses must open and let businesses flourish with minimum regulatory burden to contribute to the economy, in particular micro and small businesses which are affected the most,” he added.

Meanwhile, the government will continue to provide support measures that may be required from time to time for the mining and quarrying and the construction sectors as they are the major growth sectors for the economy.

These two sectors are interconnected and therefore follow a similar trajectory. A slowdown in the construction sector will negatively impact the mining and quarrying sector and vice versa.

According to Lyonpo, 2020 saw a dip in the construction sector largely due to the lack of construction workers and supply chain disruption on the input side. The issue was further exacerbated by national lockdowns in the neighboring countries, which made movement of goods and people very difficult.

“In order to address the above issues, the government will, from time to time, review the COVID protocol for import of foreign workers,” Lyonpo said, adding this will largely depend on the national and regional COVID situation. Government will also continue to facilitate import of construction materials.

In addition, the mining sector will be provided support by lifting the conditional moratorium so that it contributes efficiently to the economy.  “We are confident that resolving the worker and input material issues for the construction sector will lead to rebound in the mining and quarrying sector,” Lyonpo said.

The minister explained that the existing MMMR 2002 is being revised wherever required to bring about clarity, address conflicting provisions, and provide investment opportunities that will be ready by October end for implementation.

“The Fiscal Incentive bill is being readied to be passed in the coming parliament that will provide further incentives to industry and manufacturing sectors,” he said.

“For any country trade balance is the key economic balance sought for, as wealth creation directly or indirectly is the surplus we maintain after sale and buy. We are largely an importing country, and during the pandemic also it continued as most essentials had to be imported whereas export depends upon demand elsewhere and even production capacity,” the minister said.

Meanwhile, industries couldn’t produce at its max during the pandemic, thus export declined in actual sense.

“Both export and import are important and we are focusing on enhancing exports which respective task forces are trying hard as well. Import cannot be ignored due to its potential to create businesses and improve the economy,” the minister said.

Kinley Yonten from Thimphu