HRAB to make submissions to the government

With submissions made to the Prime Minister, Royal Authority Monetary (RMA), the financial institution association of Bhutan (FIAB), Ministry of Finance (MoF) and Ministry of Foreign Affairs (MoFa.), falling on deaf ears, the Hotel and Restaurant Association of Bhutan (HRAB), is once again planning to make the same submissions through the Bhutan Chamber of Commerce and Industry (BCCI) and other private sectors. Submissions made include issues on non performing loans (NPL), reduction in interest rate and tax holidays, amongst others.

A hotelier, who did not want to be named said that the hard-hit hotel industry may take a while to bounce back to its pre-pandemic normal and that the ongoing relaxations and fourth phase of monetary measures have given the sector hope for revival. “However, the situation is not the same for all hotels, particularly those that have non-performing loans (NPL) as a result of the COVID-19 pandemic’s two-year total business closure,” he said.

Hotels and restaurants, both standard and budget were categorized under the high-risk sector and given a deferment of loan repayment for up to two years and an option of partial loan repayment of 50% installment for up to two years during the release of the fourth phase of monetary measures by the Royal Monetary Authority (RMA) in June this year. However, the hotels under the NPL were not considered for deferment. Following this, HRAB made a series of requests to the government.

According to HRAB Executive Director Sangita Rana, “The first submission was to consider NPL hotels for the two years loan deferment.”

She also added that the two years deferment term has been provided by the government for all the hotels. However, hotels under NPL are not entitled to it. “So, that could be given to those hotels under NPL also,” she said,

She further mentioned that the second submission from the HRAB was to reduce the loan interest rate from 10% to 7%.

She said they have requested a 7% interest rate across the board for all the hotels during the deferment period as there were no tourists at all in the country. “A few months ago, before the reopening of tourism, we wanted the 10 % interest rate to be reduced to 5% but it was rejected by the government saying that there will be lots of tourists after the reopening but now that is not the scenario. We can hardly see any tourists in the country,” she said,

Another request from HRAB for the government from HRAB is to extend the tax holiday period. According to the Economic Development policy 2016, hotels will enjoy a 10-year income tax holiday from the date of commencing commercial operations.

However, the two years under COVID 19 pandemic has also been counted as part of the 10-year tax holiday for hotels.

Additionally, the President of Bhutan Chamber and Commerce Industry, Tandy Wangchuk said, “During the release of the Fourth Phase of Monetary Measure (MMIV) by the RMA, the hotels which have entered NPL have not been given the deferment. It would be very beneficial if the government can provide the deferment for them also like other hotels.”

He also said that the 7% interest rate which the hoteliers are requesting is also reasonable as hoteliers were only asking “for just a 3% interest waiver, and are willing to pay 7%.”

However, he also shared that if the hotels entered NPL prior to the COVID 19 pandemic, they will not ask for consideration. “But those hotels which have entered NPL as a result of the Pandemic, should be considered as their situation will further worsen,” he said.

Tshering Pelden from Thimphu