Govt. aspires for private sector-driven economy by 2023

Govt. aspires for private sector-driven economy by 2023

Considering the private-sector growth in the country, the government aspires to grow into a private sector-led economy as the nation graduates from Least Developed Country by 2023.

This was affirmed in the newly launched annual magazine, “The Executive” marking the government’s completion of its first year since it assumed office on November 7, 2018.

The private sector development, revision of business policies and enhancing bilateral trade highlights the government’s major key reforms in building  stronger economy for the past year.

To concretize the vision, a Private Sector Development Committee (PSDC) was set up in Bhutan Chamber of Commerce and Industry chaired by the economic minister, four representatives from the government, and seven from the private sector.

The PSDC serves as the highest forum for public private dialogue and the channel to address issues, pursue reforms, and solicit feedback on economic matters.

The government identified that the private sector suffers from legal constraints, lack of policy coordination, lengthy bureaucratic procedures, and finance, among other. The government revised two policies, the Foreign Direct Investment (FDI) policy and Cottage and Small Industry (CSI) policy in July 2019.

The new FDI policy allows FDI in small scale and manufacturing sectors and also focuses on harnessing technological knowledge, market, financing gap and skills from high-quality foreign investment.

Additionally, the government marks CSI as a flagship program with more intentions to startups to encourage innovation and production as CSIs account for more than 95% of industries with economic diversification.

Encouraging local entrepreneurs and business ideas, Bhutan Economic Forum for Innovative Transformation (BEFIT) was held in July, where more than 50 entrepreneurs exhibited their products.

The government also launched the guidelines on e-commerce in July 2019 that would regulate online transactions on issuance of licenses against e-commerce setups and related trade and other opportunities. 

 “Moving forward, the focus will be on economic diversification and structural transformation by working towards promoting an enterprising nation, stated the economic minister, Loknath Sharma in the annual magazine. 

Additionally, Lyonpo said the key initiative aim is to boost farm economies and build sustainable trade and industry links with urban areas.

The commissioning of 720MW Mangdechhu Hydropower Project on August 17, last year was a milestone for Bhutan. Within two months of the project’s two units (of the four) coming into operation, it contributed Nu 1.3bn to the national revenue. The project is expected to generate Nu 12bn on its full capacity of operation.

The Druk Green Power Corporation and Power Trading Corporation, India signed Power Purchase Agreement for Mangdechhu which was settled at Nu 4.12 a Kilowatt-hour.

The year adopted the Hydropower Development Strategy report on March 19 to in view of time and cost overruns and macro-economic imbalances emerging from accelerated mode of implementing the 10,000 MW initiatives.

The government also approved domestic electricity tariff, in which the government granted subsidy to low and medium voltage consumers to encourage use of electricity cookers and appliances to replace non-renewable energy sources like the LPG and wood-based ones.

A significant bargain in the domestic electricity tariff (2019/20-2021/22) revision for average urban Bhutanese user was the additional 200 units of electricity from existing 300 at prevailing tariff rate.

For low and medium voltage consumers, the government, in keeping with its narrowing the gap slogan, granted a subsidy of more than Nu 1,400mn a year.

The year also saw the first consignment of goods arrive from Bangladesh to Bhutan using inland waterways on July 2019, three months after the two nations signed an agreement on the use of inland waterways to transport bilateral trade and transit cargoes between the two countries.

The government also approved Energy Efficiency and Conservation Policy (EECP), 2019 to enable various actors in the economy such as building, industry, and transport sectors to adopt EECP measures and create enabling environment for private sector participation in adopting EECP measures.

The Mines and Minerals Management Bill is expected to be completed or submitted by June 2020.

Gracing one year in office, Prime Minister Dr Lotay Tshering said the government would ensure the bill is mutually beneficial to the government, businesses entities and natural resources to be sustained for the future generations.

On the other hand, the government has carried out study and review of taxation policy and system including Goods and Services Tax (GST) and it is likely to get endorsed during winter parliament session.

Lyonchhen said the government would review the taxation policy as some businesses evade the tax and government would support bigger businesses that pay higher tax to grow and add to the government revenue.

Additionally, he said these taxes would be allocated for the socio-economic development of the country.

The country’s economy saw an average growth of 7.4% over the past two decades while the growth rate was 4.6% in the financial year 2018-19 and is projected to grow by 6% during 12th five-year plan.

Thukten Zangpo from Thimphu