Reopening borders to boost economic activities

Reopening border gates will reinvigorate trade between countries and create a spillover into various subsectors

The reopening of Bhutan’s border gates will spur economic activities, ease staffing pressures and help small businesses get back on their feet. It will also facilitate human capital movements and help address unemployment caused by the coronavirus pandemic. While this may not be happen overnight, it will definitely help the country’s economy.

According to Lyonpo Loknath Sharma, ministry of economic affairs (MoEA) with the opening of border gates, Bhutan cannot expect a sudden surge in economic activities, but with the windows for trade opened, economy will benefit. “Moreover, the opening of borders will stimulate small economies like services and manufacturing requiring day workers, it will also boost restaurant services in the bordering town with an increased entry of people from across the borders,” Lyonpo said, adding that the country will also see a gradual increase in the tourism sector which will lead to increased economic activities in the hospitality, and Cottage and Small Industry (CSI) sectors as well. 

Lyonpo shared that the export and import of goods will happen systematically with the opening of the borders. This means that trading will happen through the proper exit and entry points and there will not be open areas across the borders as it used to be before the pandemic.

“This will help prevent illegal and unaccounted trade,” Lyonpo said, adding that respective agencies who are managing entry and exit points have already improved their systems to curb such happenings, through small leaks and movement such as personnel vehicles or personal accompanied baggage. 

Lyonpo said allowing people to cross borders will reinvigorate trade between the countries involved and create a spillover into various subsectors.

With the economic interaction from upstream to downstream, an economist, Damber S Kharka said that the unemployment rate can be reduced as import and export activities get activated.

“The gradual reopening of the economy is taking hold and therefore, we could expect a firmer economic recovery in the second half of 2022, especially in the final quarter of the year,” he said, adding that Bhutan’s economy is headed in the right direction.

He said that a weak economy means the inability to provide good healthcare. On the other hand, a healthy workforce means one will have a greater driving force to push for an improved economy.

“To think that we may choose one or the other is not only naive but will also have dire consequences on the nation as a whole,” he said, adding that businesses across the country will always respond to demand, so bringing back foreign travelers and visa holders are vital.

In addition, he said that many businesses in the tourism and hospitality sectors have had a rough two and half years. The return of foreign tourists will finally bring them some good news.

An economist said that for many other small businesses, shortage of workers has caused significant issues and forced many to close. Re-opening border gates will ensure the return of much-needed skilled resources for the country but also supply a stable source of people, whether it be backpackers, students, or tourists who provide employment in the services sector, as well as a stable stream of customers.

Meanwhile, there are no specific goods identified for export and import and trade will continue as usual based on what the country is exporting and importing currently, according to the MoEA.

Lyonpo Loknath Sharma said that there will be no change in the major trade structure as export and import had been happening. However, this is expected to bring more expediency to trade and business activities.

Lyonpo added that since economic enterprises hold the key to the development of people living along the Indo-Bhutan border, lending vibrancy to the trade center is the key to the development of the economy and the people living along the border areas.

According to the second quarter (April-June) of trade statistics, a total of Nu 6.2bn worth of goods has been exported and around Nu 24bn worth of goods imported.

Additionally, a local economists said “reopening border gates will reinvigorate trade between countries and create a spillover into various subsectors,” adding that there are costs and benefits associated with opening up the borders. He said that local industries may not survive in the domestic market alone and the resumption of cross-border economic activities will increase demand and production.

Kinley Yonten from Thimphu