The 10th session of the Third Parliament’s business session began with the Minister of Finance presenting implementation status and review on the non-performing state-owned enterprises (SoEs), considering exorbitant financial deficits, and measures adopted through the retrenchment of supplementary budgets for SoE’s by the Government.
The Finance Minister said that the Government, cognizant of the increasing fiscal deficit and increasing national debt level has continuously reviewed the performance of the State-Owned Enterprises, and has adopted various cost-saving measures to achieve efficiency gains.
For efficiency gains through regular review and Business remodeling, the MoF is also carrying out a series of business reviews in collaboration with external experts to turn SOEs into assets for the Country in the long run. The reviews are also aimed at enhancing operational efficiency of the SOEs including business remodeling. For example, recently, the business of the Bhutan Livestock Development Corporation (BLDC) has been remodeled to a dealership one.
The minister also spoke about mergers and acquisitions saying the MoF has initiated a series of mergers and acquisitions of the existing SOEs for efficiency gains. For example, Royal Bhutan Helicopter Service (RBHS) has been transferred to the Drukair Corporation (Drukair) considering the strategic fit of business. Similarly, the Government has approved the amalgamation of National CSI Development Bank Limited (NCSIDBL) with the Bhutan Development Bank Limited (BDBL) to strengthen the lending capacity of BDBL that predominantly caters to the rural populace. The mergers will also save corporate governance and management associated costs in addition to benefits from synergies. The mergers have, however, ensured that the interests of shareholders, customers, employees, and other stakeholders are protected.
Speaking further on outsourcing through privatization and Public-Private Partnerships (PPP), the Minister said that SOEs were initially created to undertake commercial activities which were not catered for by the private sector and for social policy. With the growth of the private sector, the MoF is considering privatization of the non-strategic SOEs. The MoF is also exploring opportunities to engage the private sector through innovative financing such as PPPs. PPPs can not only enhance government performance from private sector expertise but also reduce the burden on the national budget to finance social infrastructures.
The MoF has also rationalized subsidies to the SOEs.