GMC is seen as an opportunity for Bhutan’s private sector to leapfrog
The private sector’s importance for a country’s economic development is unquestionable. While Bhutan’s history doesn’t spell out the private sector as such, an informal economy existed centuries back. As planned development began, small businesses grew and privatization began in the 6th Five Year Plan. However, Bhutan’s private sector is still termed sluggish. There is a silver lining though and seizing opportunities from the Gelephu Mindfulness City (GMC), is seen as the key for the private sector to grow and contribute substantially to the government.
“The pace of growth within the Bhutanese private sector remains sluggish, posing challenges to the nation’s overall economic development. Despite strides made in recent years, various factors contribute to this sluggishness and hinder the sector’s potential for robust expansion,” a local economist said.
According to him, privatization began in the 6th FYP period (1987-1992), involving privatization of public sector undertakings and corporatization of government agencies. The Bhutan Chamber of Commerce and Industry, a non-profit organization comprising of business community from all around the country was established in 1980 with the aim of developing and being responsible for private sector development.
Chief Executive Officer (CEO) of a construction company added that the Bhutanese private sector faces challenges in accessing skilled labor and adapting to evolving market demands. A shortage of skilled workers and a gap in technical expertise hinder the sector’s capacity to innovate and remain competitive in an increasingly globalized marketplace.
“To address these challenges and invigorate the private sector, concerted efforts are needed from both the government and private stakeholders. Policy reforms aimed at streamlining regulations, improving access to finance, and fostering an environment conducive to entrepreneurship are essential. Additionally, investments in infrastructure development, particularly in transportation and communication networks, are crucial for facilitating business operations and market access,” he said.
He underlined that ultimately, revitalizing the Bhutanese private sector requires a multifaceted approach that addresses structural constraints while fostering a culture of entrepreneurship and innovation. By addressing these challenges comprehensively, Bhutan can unlock the full potential of its private sector, driving sustainable economic growth and prosperity for its citizens.
Moving further, he noted that as Bhutan strides into the future, the emergence of the GMC stands as a beacon of opportunity for the country’s private sector.
According to a businessman, the prospects at hand indicate that Bhutan’s private sector stands on the cusp of unprecedented growth and development.
According to him, it is unmistakable that Bhutan’s private sector harbors immense potential to drive economic prosperity and societal well-being. “However, realizing this potential entails more than just favorable circumstances; it demands a proactive approach to seize emerging opportunities,” he emphasized, highlighting the critical importance of nurturing a supportive policy environment conducive to innovation, entrepreneurship, and investment.
Meanwhile, the CEO emphasized that the establishment of GMC serves as a pivotal juncture in the trajectory of Bhutan’s private sector. With its potential to serve as a nexus for innovation, infrastructure expansion, and economic activity, GMC presents a fertile ground for businesses to flourish. By harnessing the opportunities GMC offers and aligning with evolving global dynamics, Bhutan’s private sector can position itself as a dynamic force in the nation’s economic landscape.
“There exists a pressing need for adaptability and innovation within the private sector. As the business environment undergoes transformation, companies must exhibit agility in response to shifting market conditions and evolving consumer demands. Furthermore, seizing the opportunities presented by GMC necessitates a forward-thinking mindset and a readiness to explore novel avenues of growth and collaboration,” he remarked.
The CEO reiterated that the future of Bhutan’s private sector hinges on its capacity to embrace change and harness the transformative potential of initiatives such as GMC. “By leveraging innovation, forging strategic partnerships, and capitalizing on emerging trends, Bhutan’s private sector can chart a course towards sustainable growth and prosperity for the nation as a whole,” he concluded, underscoring the significance of proactive engagement in shaping the sector’s future trajectory.
Meanwhile, a 2021 report says that the private sector in Bhutan exhibits a predominance of small-scale enterprises across various sectors, encompassing trade, industry, and services. Approximately 14,000 establishments operate within this domain, collectively employing around 74,000 individuals.
The landscape of Bhutan’s private sector is notably characterized by the dominance of two key economic sectors: wholesale and retail trade, and accommodation and food service activities. These sectors collectively account for a significant portion of both establishments and employment opportunities. Specifically, wholesale and retail trade comprise 60% of total establishments and contribute to 24.1% of employment within the private sector. Similarly, accommodation and food service activities encompass 21% of establishments, representing a vital component of Bhutan’s economic ecosystem.
However, despite the substantial presence of these sectors, the manufacturing industry exhibits comparatively lower establishment numbers, constituting only 5.1% of total enterprises. Despite this, manufacturing still employs a noteworthy portion of the workforce, approximately 14.5%, emphasizing the sector’s potential to generate employment opportunities.
Moreover, the construction sector, while constituting a relatively small percentage (just over 1%) of total establishments, plays a significant role in employment generation within the private sector. It employs approximately 18.5% of the total workforce, highlighting its substantial contribution to Bhutan’s labor market.
These statistics underscore the diversified nature of Bhutan’s private sector, with various industries contributing to employment and economic growth. While certain sectors may exhibit higher establishment densities, the distribution of employment across different industries reflects the sector’s resilience and capacity to accommodate a diverse workforce. Additionally, the data shed light on the employment elasticity of industries, indicating potential areas for targeted policy interventions to enhance employment opportunities and foster sustainable economic development.
By Tashi Namgyal, Thimphu
