Economics was one of the most important issues discussed during the 49th Meet the Press, held on April 13, 2023. Beginning from Bhutan’s accession to the World Trade Organization (WTO), graduation from the Least Developed Country (LDC) group, foreign reserves and others, several significant subjects were covered. And it had to be, for we and the world are at a critical point, economically.
Accession to WTO is not something new. Bhutan has been an observer since 1999 and taking into consideration the pros and cons of becoming a member, we decided not to join the WTO. Several studies were conducted too, such as the Diagnostic Trade Integration Study Update 2020, which recommended that Bhutan should join the WTO for better economic coordination and efficiency and domestic trade reforms that must be carried out to become a WTO member and the rights of being one.
As a WTO member, Bhutanese goods would have non-discriminatory access to markets of other member countries. Bhutan can also influence in the formulation of new multilateral trade rules as the WTO is a forum for trade negotiations. And in this globalized world, where data is important, Bhutan will have access to information on the trade regimes of other members. The benefits are huge and there are some disadvantages, too.
The other subject that came up in the Meet the Press concerned revenue and foreign reserves. This could not have come at a better time as the department of revenue and custom’s (DRC)’s latest report states that Nu 34bn was generated from top 10 commodities last year, while import of top ten commodities rose to Nu 118bn, offsetting revenue generated from the exports. As per the report, we export to countries like Italy and import from the South Asian giants like South Korea and Thailand, amongst others.
This means that we have the potential to export and go beyond Asia, which accession to the WTO would help. Similarly, we need to look at commodities that are imported from Third countries. Are these goods essential? Walk along the streets of Thimphu and one will be amazed looking at goods imported and sold, that will never fit in the definition of essentials.
Meanwhile, the Asian Development Bank (ADB) recently released a report that contained the state of the Bhutanese private sector. The report says that Bhutan is facing a significant policy challenge in strengthening the private sector as a partner in economic development.
The report mentions that the private sector is constrained by a regulatory burden and factor market constraints, including burdensome business compliance processes, a shortage of skilled workers, low digitization, crowding out by state-owned enterprises, and poor access to finance. The ADB has said that additional reforms are necessary for the private sector to achieve the government’s ambitious target of a USD $10 billion economy by 2034. The reforms required include creating an environment of policy certainty, promoting the private sector through public-private partnerships, privatizing loss-making state-owned enterprises, and supporting skill development, product innovation, and process innovation.
What is interesting is that everything is related. And such relations make either devising of policies or implementing them easier. There is indeed so much on the plate; but nothing unpalatable.
