Dorji Khandu

Journal of a Young Parliamentarian

Effective Civil Service Reform in Bhutan

His Majesty The King issued Royal Decree for Civil Service Reform during the 113th National Day celebrations in Punakha (Picture Courtesy: HM’s Facebook Page).

 

Since the establishment of the RCSC in 1981, several reform efforts have been made to improve civil servants’ competencies and performances. Nevertheless, the core impediments against developing a more professional and efficient bureaucracy remain entrenched in the system.  Although the civil servant to population ratio is 1:25 as of 2019, inefficient service delivery has become an impediment to our national development and progress. This is evident from the Royal Kasho on Civil Service Reform issued to the RCSC during the 113th National Day Celebration. As His Majesty, the King desired, we must prepare for our future and adapt to the globalized world by capitalizing on being a small nation’s strength and opportunities.

Therefore, this study explores how our government could initiate civil service reform to achieve greater efficiency, effectiveness, and responsiveness towards public service delivery.

 

Why Civil Service Reform?

Recent studies have indicated that governments worldwide continuously aim to improve public service delivery, accountability and transparency to respond to citizens’ needs. Even governments with a high standard of public service delivery are under constant pressure to improve continuously (World Bank, 2020). Similarly, Kazakhstan’s government has developed a professional public workforce to improve its administrative efficiency and public service quality (OECD, 2018). Likewise, Xiaoqi (2012) highlighted that civil service reforms in China aim to promote administrative efficiency and help policymakers strengthen their control over the civil service to enable China to regulate and manage its increasingly complex economy and society. Moreover, civil service reform in ASEAN member countries concluded that reforming the public sector can narrow the government’s gap by creating an efficient and responsive public sector (Kim & Araya, 2012).

Some authors have also suggested that an efficient, transparent, responsive, and accountable public administration is paramount for a nation’s proper functioning and the primary means of achieving government strategies (UNDP, 2015). The literature review shows that governments have to reshape public sector leadership to deal with new challenges (OECD, 2001). Furthermore, the research concludes an analysis of 14 countries’ experiences to reduce public expenditures, improve policy responsiveness and implementation, improve government as an employer, improve service delivery, and build public and private sector confidence (Manning & Parison, 2003).

Obongo & Wilkins (2014) argued that governments worldwide have reacted to unprecedented economic challenges and rapid political and public expectations changes over the past two decades. This is evident from the OECD’s publication that Citizens’ rising demands and expectations concerning public services’ quality, increase pressure on the public administration to improve its efficiency and responsiveness and be innovative flexible in responding to longer-term issues (OECD, 2010).

 

Best Practices & Lessons Learnt

Singapore is leading all the ASEAN member countries regarding government effectiveness, control of corruption, and the rule of law. This is because its reform programs mainly target solving specific problems, a high standard of accountability to the government, and political leadership (Kim & Araya, 2012). Moreover, Singapore’s civil servants are one of the highest-paid to attract the most highly qualified candidates, encourage their retention, and deter any tendency towards personal corruption (IPPR, 2013). China’s experience also follows this in managing and reforming its civil service model for other Asian countries because of the institutionalization of civil service recruitment and competition and merit-based promotions, the instalment of transparency and predictability into the public personnel management system, and government promotion officials’ accountability as well as public participation (Xiaoqi, 2012). The experiences of Japan and Kazakhstan offer similar insights (Aoki, 2015; OECD, 2018).

There exists a very extensive literature on this issue and the majority of prior research indicated that the civil service’s effective performance depends on merit as the basis of recruitment, selection, pay-scale, performance appraisal and promotion and retention practices. Civil servants need practical training and career development, which would result in better organizational and individual performance. Consequently, successful reforms in these areas can substantially increase public service effectiveness and efficiency (OECD, 2001; Iqbal & Ahmad, 2006; World Bank, 2008; UNDP, 2015b). Therefore, reform initiatives could be prioritized within three main areas: delivery excellence, service-oriented civil servants, and effective and efficient, organizations critical to improving overall public services (World Bank, 2020). In contrast, Repucci (2014) argued that the civil service reform generally includes reforms in remuneration, human resources, downsizing and operational efficiencies.

The research indicated that an essential part of effective and accountable public-sector management is transforming available resources into maximum impact following political priorities (MoFA, Denmark, 2007; Manning & Parison, 2003). There is a need to change the government’s role from the regulator to the facilitator to progress the delivery of services to the people (Iqbal & Ahmad, 2006).

 

Reform Challenges & Way-forward

Although most countries introduced civil service reform programs to improve public service delivery, they have faced challenges such as the need for resources and adequate human capital, lack of willingness to change and weak monitoring processes, and strengthening the communication and understanding of the reform objective and more participation of citizens and civil society (Kim & Araya, 2012).

Thus, the future civil service reform needs to consider developing competency management, investments in its senior civil service system and developing a performance culture to ensure these systems have a real impact in professionalizing the civil service and developing greater efficiency and performance (OECD, 2018).

When designing CSR programs, the main issues commonly faced are training, career Vs. position system, civil service management arrangements, pay and compensation, gender equity and performance management, politicization and patronage (UNDP, 2015). In a series of analyses and reports, the World Bank recognized the enormous challenge of civil-service reform operations, and it has recognized that success has been limited (Shepherd, 2003).

In this regard, Repucci (2014) suggested a broad framework when designing and implementing reforms. The challenges related to the context in which civil service reforms occur and how practitioners can overcome them are the importance of local context, political will and local ownership, weak institutions, systems of patronage, the long‐term nature of reform and sustainable reform. The challenges related to practitioners’ processes and procedures when implementing reforms are prioritizing reform, participatory processes, donor coordination, and the debate between comprehensive and incremental reform (Repucci, 2014; Obongo & Wilkins, 2014).

Therefore, Polidano (2001) emphasized that the strategic and tactical choices can determine the success of the design and implementation of civil service reform. Keeping the scope of change narrow, limiting aid donors’ role, and reform leadership are crucial factors for successful civil service reform. In summary, successful reform requires focus, the mobilization of resources, incentives, persistence and a strategy that puts reform on the political agenda (OECD, 2005).

 

Analysis: Local Context

The analysis was carried out based on worldwide governance (service delivery) indicators using the Percentile rank method (Daniel et al., 2010).

Effectiveness of Government captures perceptions of the quality of the civil service or public services. The study finds that the government’s effectiveness has a significant positive impact on a country’s growth performance and is associated with higher GDP growth rates over time (Han et al., 2014).

 

Figure 1: Government Effectiveness (Source: NSB and RCSC).

The strength of the civil service in Bhutan as of 2019 end was 29,442 (Annual Report, 2019). The civil servant to population ratio is 1:25 as of 2019 compared to 1:40 in 1996. Although the civil service size has almost doubled over the last two decades, the government effectiveness has declined to 64.90% (2019) from 74.86% (1996), with an average of 68.36%. Furthermore, the average GDP growth rate is 7.06%, with the highest growth rate observed in 2007 at 18.36%, mainly due to the commissioning of the Tala Hydropower Project (Figure 1).

Figure 2: Governance Indicators (Source: Worldwide Governance Database).

The effectiveness of the government has improved in recent years with an average of 68.36% (Figure 2) compared to most countries in the South Asia region. The government’s effectiveness is determined by the organizational environment (economic development & education status), organizational characteristics (size and diversity) and political characteristics. Therefore, the government effectiveness measures the perceptions of the quality of the civil service, the quality of public services,  the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies and the degree of its independence from political pressures (Sánchez et al., 2013). Moreover, low productivity of the civil service due to low competency, lack of a proper performance management system, and low motivation affect the government’s effectiveness.

The World Bank’s report on the ease of doing business, 2019, which compares business regulation for domestic firms in 190 economies, placed Bhutan in the 81st position, down from 75th in 2018. Due to too much reliance on the bureaucratic procedures involved in both the civil service and public organizations. For instance, it takes 61 days to get an electricity connection in Bhutan, whereas it takes only 26 days in Singapore. Similarly, it takes 12 days and 8 procedures to start a business in Bhutan, whereas it takes less than 2 days to start a business in Singapore. Such lengthy processes may discourage FDI due to unnecessary procedures required in business setup and operations.

The Constitution guarantees citizens to select the government and provides avenues to air their opinions (including through free media) on how services are being delivered to them and hold to account those that provide such services. This is only possible when there is transparency in how the government operates. In recent years, accountability in Bhutan has been improving drastically, with a rank of more than 51% (Figure 2) compared to most countries in South Asia region except India.

The system of displaced complacency where the system is protecting bureaucrats more than bureaucrats protecting the system has resulted in the civil servants’ failure to adapt to the dynamic nature of development and service requirements over time (Kuensel, 2021). Although Article 26 (1) of the Constitution guarantees the RCSC discharge its public duties in an efficient, transparent and accountable manner, both the CSA 2010 and BCSR 2018 emphasize only the ethics and integrity of civil servants without providing ample legal procedures to fix the accountability (Tshering, 2020). The lack of clear direction on improving accountability has resulted in civil servants violating their ethics and integrity and officials abusing power in service delivery.

Both regionally and globally, the corruption level is perceived to be low in Bhutan, with an average of 81.84% (Figure 2). Recently published National Integrity Assessment 2019 indicates that the experience of corruption in service delivery is minimal, but the perception of corruption in favouritism is prevalent in public service delivery (ACC, 2020). The lack of transparency and e-services; people availing services from the agency are making payments in cash, kind, services or other forms of gratification to public officials.

Since 1907, Bhutan has enjoyed a stable political environment engendered by our successive Kings’ dedicated and selfless leadership. With the constant nurturing of democracy, political reforms have been introduced during the last 100 years of Monarchy, the latest being the adoption of the Constitution in 2008. Bhutan’s political stability is best among Asia’s countries, with an average of 78.79% (Figure 2).

However, the change of government every five years since 2008 also hindered development activities and impacted bureaucratic efficiency due to lack of continued political will and significant changes in policy as per the political ideology.

The RGoB’s ability to formulate and implement sound policies and regulations for promoting private sector development is fragile amongst Asia, with an average of 28.16% (Figure 2)The major challenge of private sector development is the lack of access to markets for our goods and services. Our economic dependence on a few sectors and the composition of firms and investments in developing new and existing markets have been less than optimal.

 

Recommendations:

Based on the study findings, to achieve greater efficiency and effectiveness, and responsiveness towards public service delivery, the following recommendations are proposed.

  1. Enhance the effectiveness of government through rightsizing the civil service, meritocratic approach to civil service employment, applicable performance management system, contemporary and effective HR policies, fair remuneration for civil servants, practical training and career development and strengthening ethical leadership.
  2. Improve public service delivery through transparency, professionalism and accountability.
  3. Strengthen mechanism to address accountability issues and provide clear direction for fixing accountability through stringent legislation and rules.
  4. Reduce corruption by fostering integrity in the system. Strengthening e-services for service delivery can help optimize HR and budget and assure transparency in public service delivery.
  5. Promote private sector development with an accessible market both within and abroad to reduce the burden on the civil service and the demand for civil service jobs through the formulation and implementation of sound policies and regulations. Moreover, change the role of the government of the regulator to the facilitator for effective public service delivery.
  6. Ensure strong political will and local ownership of successful civil service reform to put reform on the political agenda, engage the local government in the process, and help develop the approach for effective implementation of the civil service reform.

 

NB: The author declares that the material being presented in this paper is the author’s original work unless cited. The author reserves the rights of the content, and in the case of republication of the whole, part, or parts thereof needs to be acknowledged.

 


Question to Minister of MoAF on Cordyceps Collection Issues

The legalization of cordyceps collection following the Royal Command issued by His Majesty the King in June 2004 has tremendously improved the living conditions of the people in highland dzongkhags (Kuensel, 2005). The slaughtering of yak for meat dropped, and equality improved among the highlanders, dispelling division between haves and have-nots in the community. The policy prevented poachers from across the border and encouraged highlanders to stay in their community, safeguarding our border areas in the north.

The Ministry of Agriculture and Forests (MoAF) presented to the National Council on the legalization of Paris Polyphylla and cordyceps harvesting period, amongst other issues (Royal Banquet Hall on 12th September 2018).  During the consultation meeting, members asked about the possibility of providing adequate preparatory days to collect cordyceps. The officials of MoAF informed the committee that they would inform the House with proper research and accurate information. However, the committee did not receive any update so far.

Our consultations with Local Government Leaders of 14 gewogs in 7 dzongkhags found out those preparatory days differed from gewogs to gewogs. Some gewogs were provided only 2 days besides a one-month collection period.

On 30th May 2020, Dangchhu, Gangtey, Kazhi and Saephu gewogs had also requested an extension of collection days for two weeks.

The House acknowledges MoAF for extending two weeks to the highland communities in 2020 as the year was affected by late snowfall; unprecedented heavy rainfall was impacted by cyclone ‘AMPHAN’ and other extreme weather patterns (Ref.: MOAF/DDFPS/2020/333,  dated on 2nd June 2020). The time extension was expected to help a highland society economically because cordyceps are the primary sources of livelihood.

Due to varying climatic condition, collectors need at least 2 weeks of preparation besides a one-month collection period. This will also address the conflict between the cordyceps collectors and forest officials in the field.

During the National Council’s review workshop at Institute for Management Studies Limited (IMSL) on 12th and 13th April 2021, these issues were highlighted to be genuine. The House directed the committee for the concerned Minister to update the status on the extension of preparatory days for cordyceps collection.

The cost of cordyceps started with less than Nu. 60,000 per kilogram in 2004 and now fetched an average of  Nu. 1 million per kg (Cordycep Report, 2019). The records show that an average of 400 kg of Cordyceps Sinensis auctioned every year worth more than Nu 200 million. It is one of the export products and contributed more than 3 million royalties every year besides business income tax to the government and other economic and social benefits.

Considering all the above points, the National Council hereby asks the MoAF Minister to clarify the following to the general public:

  1. Section 5.1 of the Guidelines for the collection of Ophiocordyceps Sinensis for 2014 has not been implemented effectively. The distance from the remotest villages and Chiwogs to the collection site is not considered. Is there a possibility of providing an adequate preparatory period for the cordyceps collectors considering the economic and social benefit to the country?
  2. Has the government incorporated the possibility of extending the collection period considering the severity of climatic factors in the revised guidelines?
  3. What management plans is the government developing to promote sustainable harvesting of cordyceps?
  4. Cordyceps collectors of Lunana and Wangdue involved in boundary dispute (Kuensel, 2018). How is the government planning to address the border demarcation issues between the gewogs and the inter dzongkhags?

 

Minister’s Response

  1. Preparatory period

The Minister informed the House that the collection time and permit for cordyceps collection were not uniform across the growing areas because of the different growing times of the Ophiocordyceps Sinensis. The local government has the full authority to decide on the preparatory period, as they know the ground reality for the collection period, situation, and the background of the collectors. The Minister also said that the Ministry would approve the extension if they receive the resolution and proposal from Dzongkhag Tshogdue.

Comment: The Minister’s statement is loud and clear that the LG leaders have full authority to provide an adequate preparatory period for the collectors, and other officials also should take note of it.  

  1. During the severity of climatic factors

Earlier, the collection time was only for one month, including the travel time, but since 2013, the collection was allowed for one month, excluding the number of days of journey, to and from the collection site. In 2020, based on local weather conditions and considering the pandemic situation, the RGOB extended collection time by two weeks in addition to the previously allotted collection time of one month. The Minister emphasized that the Ministry would continue to support depending upon the climatic conditions in consultation with the LG leaders in the future.

Comment: We are delighted with the government’s response on the extension of the collection period during the severity of climate factors. However, we insist that it should be incorporated in the revised guidelines. It should be systematic but not at the whims of politics. 

  1. For sustainable harvesting of Cordyceps

Sustainable harvesting of Cordyceps:

  • Limiting collection of cordyceps to 3 people per household
  • Restricting the collection period to one month to allow mature spores to germinate

Comment: We felt that the government should develop more holistic, sustainable harvesting programs such as proper waster management, improve R&D on Cordyceps domestication and installing weather reading instruments in the collection sites for climate impact studies. 

  1. On Boundary Issues

MoAF has no authority over the border demarcation issues. However, the Minister said that a consultation meeting with the National Land Commission is underway. Once finalized, the Minister would inform both the House accordingly.

  • As per the guidelines for collection/harvesting of Ophiocordyceps Sinesis of 2019, the Department of Forest & Park Services (DoFPS) is mandated to monitor the collection of cordyceps and issuance of collection permit books to the Gewog through the respective Parks and Division offices once the areas have been identified.
  • In addition, section 10 of the guidelines state, “The collection of Ophiocordyceps Sinensis shall be allowed only within the respective Gewog boundary or administrative jurisdiction having traditional rights”.
  • Similarly, section 43 states that “In the event of any conflicts arising out of ambiguous boundaries between the Gewogs, the concerned Dzongkhag shall resolve such conflicts through Dzongkhag Tshogdu”.
  • Recently a letter was sent to the National Land Commission dated 4th May 2021, letter no. 413 to clarify the cordyceps collection boundary between Wangdue & Bumthang Dzongkhag.

Comment: It was observed that a letter which was sent to the National Land Commission was for boundary conflict between Wangdue & Bumthang Dzongkhag. It seems that MoAF has not taken any initiative concerning the border conflict between Gasa & Wangdue Dzongkhag. Therefore, we would further recommend that the MoAF and the concerned authorities take prompt action in resolving the border issues. 


Follow-up Report on the Resolutions of the 26th Session of the National Council

In the 2nd sitting of the 27th Session of the National Council, the Natural Resources and Environment Committee of the House presented the follow-up report on the resolutions passed by the House on the RNR Marketing Policy in the 26th Session. The review was carried out to resolve marketing issues and comprehensively understand the RNR Marketing Policy, implementation status, and effectiveness. The House had submitted five recommendations – four to the Ministry of Agriculture and Forests and one to the Ministry of Finance.
MINISTRY OF AGRICULTURE AND FORESTS (MoAF)

Recommendation I

The analysis of 10 years of data from 2010 to 2019 exposed the following cross-cutting issues related to production and marketing:

  • There exists a huge gap between the import and production of vegetables for tomatoes and onions,
  • The productivity of cash crops such as apples and oranges are stagnant but increase in their import
  • The import of never exported fruits such as banana, mangoes, papayas, pineapples and watermelon have been increasing
  • The products such as apples shelled betel nuts and ginger are imported at a higher price than export.

Some of these crosscutting issues are expected to be addressed through the implementation of 3 years marketing action plan, which was approved in the 1st Multi-Sectoral Committee (MSC) meeting and Agriculture Economic Contingency Plan 2020.  But, MSC has become weak by reducing the quarterly meeting required in the Policy to twice in the Terms of Reference and became non-functional for having met only once since the inception of the policy. The difficulty of getting common conveyance for the Committee meeting and having indecisive representatives from other stakeholders could have been discussed and resolved if the subsequent MSC meeting was held. Moreover, any crosscutting issue would have been the discussion points in the meeting and consequently strategized the appropriate action plans. Therefore, MSC has to be functional in order to put the marketing system in place by coordinating and harmonizing the approaches of all involved stakeholders as per the Policy and Terms of Reference.

Response:

A Multi-Sectoral Committee (MSC), following the RNR Marketing Policy 2018, was formed to address the Marketing issues of the cross-sectoral agencies.

After the formation of this committee, we organized the first meeting where the ToR of the MSC was finalized. We attempted for further meetings seeking agenda from the sectoral agencies. Having received no pertinent issues as an agenda, the secretariat of MSC couldn’t organize follow up meetings.

However, as this MSC meeting is important and as recommended by NC, the ministry will activate the committee and the meeting. The next meeting is scheduled for May 2021.

 

Recommendation II:

Various market infrastructures such as cold store, naturally ventilated store, large market, roadside market, farm shop, cooperative shop, sales outlet, packhouse, warehouse, processing equipment and others have been established by the Ministry and most are functional. Most of the infrastructures have been established independently by the Department of Agriculture Marketing & Cooperatives (DAMC) and the National Post Harvest Centre (NPHC).  From the field visits, it was found that most farm shops have limited storage space, roadside collection sheds have no toilet facility and only a few cold stores and other farm-level stores, which could assure longer storage life of products, have been established.

Having learned a lesson from COVID-19 and to deliver faster and better services, MoAF in collaboration with Thromde is establishing vegetable market sheds at other appropriate locations without having a future utilization plan of the existing Centenary Farmers’ Market.

During the Nationwide Lockdown because of COVID-19, people had access only to a limited quantity and variety of vegetables as the import of vegetables has been temporarily restricted. Also, many locally grown products like cabbages and ginger were spoiled when the export could not be done. It confirms the limited storage and processing facilities and poor distribution channels for fresh vegetables.

Thus, there is a need to establish smaller capacity cold stores at strategic locations facilitated by refrigerated vans, other low-cost farm level stores, future utilization plan of Centenary Farmers’ Market and small-scale processing equipment to improve the distribution of fresh and processed quality products within the country and export.

Response:

The development of market infrastructure for public use is one of the important strategies to facilitate marketing. In the fiscal year 2019-2020, the Department has supported the constructions of 17 market infrastructures including a large market facility in Dagana and Mongar.

In line with the need to build storage capacity in the country, the Ministry in collaboration with FCBL has initiated the establishment of 3 integrated Cold Stores and Warehouses-one each in Sarpang, Tashigang and Wangdue. These facilities are due for completion by August 2021. Further, the establishments of 5 Cold Stores are proposed in the forthcoming fiscal year 2021-2022.  SOEs such as FCBL and BLDCL were supported with the Refrigerated Vans.

The establishment of small capacity cold stores by private parties is also encouraged and ensured with support through cost-sharing mechanisms of 80:20 ratio i.e. the share of investment of 80% by the proponent and 20% by the Government. The Ministry has also issued a letter of interests to the private entrepreneurs for leasing of land and availing financial loans for the establishment of such structures.

The Ministry, as in the past, is continuously supporting producer farmers and processors with small scale processing equipment mainly through farmers group and cooperative development programs. For the coming financial year, the department has invited expression of interest for financial support to set up the cottage and small scale RNR based enterprises

 

Recommendation III:

Various market studies are carried out and uploaded on the DAMC’s website. Some of the findings of the studies are captured in the action plans of the Department but there is no assured coordination among the stakeholders for the implementation of the findings of the studies, for example, initiating the production of suitable cardamom variety for an international market.

Though the RNR-Enterprise Coordination Unit is going to facilitate with regards to enterprise development, any intervention is somehow delayed because the DAMC has to collaborate with multi-stakeholders especially the NPHC, implementing the value addition as well as market infrastructure, has no direct interaction in planning since NPHC is under the management of different Department, Department of Agriculture.

Under the financial scheme such as Corporate Business Development Scheme, buyback scheme and school and hospital program have benefited the farmers though implemented based on the budget availability.

With the introduction of the Good and Service Taxation system in India, the export of fresh produce faces some problems where the products get stranded unless there is prompt intervention from the concerned authority. With these hiccups, the products get spoiled and result in economic loss to the people.

There is a need to establish mechanisms among the stakeholders for

  • Discussing the findings of market studies, for example, initiating the production of suitable cardamom variety for the international market
  • Adoption of technically feasible processed products through stronger and formal collaboration between DAMC and NPHC

There has to be a continuous support to the existing financial schemes with sufficient budget and good public awareness.

The current stranded problem of fresh produce export has to be resolved in advance by working in collaboration with the counterpart authority.

Response:

In reference to resolving of issue of the stranded problem of fresh produce export various actions have been taken:

  • The Ministry in collaboration with the Foreign Ministry has taken up the export trade regulatory issues with GOI and resolved them.
  • The Ministry deputed marketing officials at Phuentsholing and facilitated the fresh produce export through the establishment of a dedicated agricultural export transhipment facility, escorting of outbound vehicles from green zones to transhipment facility and implementing the COVID 19 containment measures during the export.
  • Producers/Exporters were linked with the potential buyers across the borders.
  • Activated buyback scheme for those commodities such as cabbage and ginger which has a very low export price.
  • Distribution and linking with domestic markets were facilitated

 

Recommendation IV:

Agriculture Marketing Information System (AMIS) is accessible through an online system as well as mobile apps. The online system has real-time prices of 37 commodities located in 23 markets across the country. It will also have information on the latest auction market prices linked through the Food Corporation of Bhutan. However, there is no information on the quantity of products required by the market and the public are not aware of AMIS.

To have better information, it is good to incorporate the estimated quantity of products required per market in the AMIS and also display it on TV screens in the Market. If possible, the estimated quantity, location of the products and cost of production needed to be incorporated in AMIS. Further public awareness of AMIS has to be carried out.

Response:

The Agricultural Market Information System (AMIS) was launched towards the end of June 2020 covering price market information of 37 commodities from 23 markets across the country. In addition, the provision of information on the latest auction market process is also linked with the Food Corporation of Bhutan Limited. Recently, two additional markets under Thimphu Thromde and two additional commodities have been also added into the system- thereby taking the total number of markets covers to 25 and commodities to 39. Over time, we wish to increase the coverage both of the market and commodity-based on the requirement.  However, as submitted earlier, one of the current limitations of the AMIS is the volume traded per market. Towards this end, the department through the project (EU-ITC), which supported the development of AMIS explored various options and means to capture the volume traded in each market. However, given the complexity in capturing such data from each market and having into the system, the department was advised that from the experiences of such systems in other countries, the best option would be to go for one time survey to capture the volume aspect, which will definitely add up to the cost. At the moment, the department is exploring how best to incorporate the volume aspect with the support of EU-ITC into the current AMIS.

 

MINISTRY OF FINANCE (MoF)

Recommendation V:

The availability of   CSI banking service at Gewog Level has reduced the travel of people to the Dzongkhag and the online application has reduced the administrative burden but the delay of loan approval is a concern for the loan applicants.  The disqualification of loan application criteria as per the credit manual 2020 is not available on the CSI website for the public. The technical recommendation letter from the respective department has to be produced manually.  Therefore, CSI bank has to upload the disqualification of loan application criteria on the website and need to work for providing the technical recommendation letters from the respective Department electronically. Further, the management has to expedite the loan approval by setting the turnaround time for every loan portfolio.

Response:

  • The delay in the loan approval happened last year mainly because of the following reasons:
  1. Increase in unexpected numbers of applicants (especially in response to monetary measures of RMA wherein interest rates were reduced).
  2. National lockdown on two occasions from August 11th  to 11th September and December 2020 to January 2021, severely hampered the bank to manage the loans.
  3. As the new Core Banking Solution (CBS) system was underway, all the applications were processed manually. However, CBS is on trial starting this month.

By the end of 2020, the bank had almost 2000 pending applications. The pending applications were completed only recently. Now, the bank expediting the process and reduce the turnaround time for Microloan ( Loans up to Nu. 500,000) to a maximum of 10 working days and for CSI loan to less than 21 days. To make it possible, the bank has started to approve the loans on a weekly basis and sign the legal documents at the geog level through CSE without requiring the applicants to report to the HQ/Dzongkhag office as it used to be in the past.

  • CSI bank credit manual contains eligible criteria and conditions for loan application but does not specify the disqualification criteria for loan applicants and the manual is for internal use and can’t be given on the website.   Although the rejection loan applicants very low,  these are based on the nature of projects and their feasibility, completeness of required documents and consonance with the bank’s mandate. However, the bank has uploaded eligibility criteria on the bank’s website along with the checklist.
  • We already have the practice of receiving technical clearances from agriculture and livestock officers from the Gewogs. This information is electronically transmitted to the approving authority of the bank.

During the deliberation, some members expressed dissatisfaction with the responses received, particularly on three recommendations (1, 3 and 5). Hence the House directed the Natural Resources and Environment Committee (NREC) to re-deliberate with the concerned members and issues to be resolved accordingly.


Questions to MoEA Minister 

The Bhutan 2020 vision document targeted to provide electricity for all by 2020, in the 10th Plan.

About 99.97 percent of the households in the country have been provided with electricity as of today but not all. Around 164 Households, 39 villages in 21 Gewogs under 17 Dzongkhags are still off-grid.

The remaining 0.03 percent constitutes 300 households in Lunana, which is about seven days journey on foot across the high mountain passes in Gasa.

The government had allocated Nu 7 million in the financial year 2019-2020 to conduct the Detail Project Report (DPR) of the mini-hydropower project in Lunana.

The Department of Renewable Energy (DRE), Ministry of Economic Affairs provisioned to undertake feasibility study and development of power supply to Lunana gewog in 12 FYP.

In this respect, DRE assigned Druk Green Power Corporation (DGPC) to prepare a Detailed Project Report of the mini-hydro power project in Lunana, as a deposit work within the financial year 2019-20.

A multidisciplinary team from DGPC and DRE was deputed to Lunana for the site survey and for the investigation from September 9 to October 13 last year.

The survey reported that a River at Toenche had the potential to produce over 415 KW of energy, which would be sufficient to supply power to more than 200 households in the gewog.

Moreover, providing a reliable power supply in Lunana was one of the major pledges of the current government and it should be the top priority in the 12th FYP.

The detailed project report (DPR) was submitted to the government in January 2020. The total cost of the project is estimated at Nu. 662.93 million as per the estimate done in December 2019.

The electrification project was slated to begin on May 1, 2020, as per the DPR work plan.

Considering all the above points, the National Council hereby ask the MoEA Minister to clarify the following to the general public:

  1. Will the government be able to fulfill the Bhutan 2020 vision of 100% electricity coverage?
  2. What is the funding status of the proposed mini-hydro project in Lunana Gewog? Is there any alternative funding, if there are no foreign donors?
  3. When will the government be able to Commission the project?

 

It was fulfilling to have followed this development since the beginning. Lunana would be connected with electricity by 2023.

Economic affairs minister during question hour session at National Council on December 9 informed the house that estimated budget for the mini-hydro project in Lunana is around Nu 662.93 million. The mini-hydro is expected to produce 500KW. The Government of the Republic of Korea would fund the project through its official development assistance programme (ODA).

It was more hopeful when the minister ensured that the project would be carried out as planned with the internal funding if there are no foreign donors. Considering the location and the short summer seasons, it would be difficult to work on the project like in other parts of the country.

The news from the minister about the project expected to complete by 2023 is much more fulfilling being a representative of the highland communities that wished to have electricity for decades.

I take in confidence and trust we the people of Lunana have on the government of the day. The day to brighten the sacred highlands of us is not very far. I hope the project would receive continued attention till the end. Thank you, everyone, on behalf of the people of Lunana.

Similar story by Kuensel: https://kuenselonline.com/lunana-to-get-electricity-by-2023/


On issues concerning the road to the Finance Minister

In today’s session, I raised the following issues to the Hon’ble Finance Minister during the Introduction of the Annual Budget at the National Council (2nd Sitting of the 25th Session).

The Government continues to accord high priority for the construction and maintenance of roads. For the fiscal year 2020-21, the budget allocation to the road sector is Nu. 4,225.957 million:  about 6 percent of the total budget appropriation.

Under the Economic Contingency Plan (ECP), the Government plans to initiate the improvement of about 1,447 km of farm roads with existing road connectivity (one farm road from each Gewog).

To stimulate economic growth, the Government has announced fiscal and monetary measures and started implementing economic contingency plan in the areas of tourism, agriculture and construction, and this includes improvement of one farm road each in all Gewogs.

In this regard, I urge the government to give importance to build new roads to gewogs that has no road such as Laya and Lunana in Gasa dzongkhag.

This is in line with the government’s expectation to improve access to the market, reduce transportation costs, and to enhance rural income. Moreover, this would improve the living standard of the highlanders and help the government realize the vision of Reducing Gap, besides many significant advantages.

I also recommended the Government to ensure issuing of the road-related clearances at the earliest possible with a new policy similar to that of the Government’s Procurement Rules and Regulations during emergencies.

The Department of Forests and Park Services, Wangchuk Centennial National Park, Bumthang accorded the Forest Clearance for construction of farm road measuring 15.5km from Bisha Goenpa to Gyentsa on March 2, 2020, and Jigme Dorji National Park, Gasa accorded the Forest Clearance for construction of farm road measuring 8km from Ramina to Jaziphu under Lunana Gewog on March 13, 2020. However, the Gewog is yet to receive the Environment Clearances for these road constructions.

The road to Laya was one of the significant pledges of the current Government and should consider it as the top priority. Although the preliminary survey was carried out recently, more needs to be done to complete the remaining 30% of the road to Laya from TongshuDra (Approximately 13 km). It has been more than 2 years now; the gewog is yet to receive the road clearances.

Moreover, as always I reminded the Government of the need to improve road conditions between Punakha and Gasa border, especially from Kabesa Sirigang to Shatem Draphu.

The road, despite being crucial for ensuring administrative ease, economic development through tourism, and livelihood enhancement through connectivity; the quality of the road, as mentioned earlier, remained a major stumbling block for more than two decades.  Thus disappointing the people.

However, it was encouraging to hear from the Hon’ble Finance Minister that the works to get clearances at the shortest time possible is taking good progress. The government including Gasa-Laya gewog centre road to be blacktopped along with 23 other GC roads was welcome news.

While sharing the concerns and views of the people, I revere and share the same thoughts of the need to secure our economy in times like today. There is a need to create employment and realize the consumption capacity of the people as mentioned by the minister.

The budget for FY 2020-21 is presented in the midst of COVID-19 pandemic which has caused a global health crisis and economic downturn.


Climate Change-induced Risks from GLOF in Bhutan

Climate change is a global concern today. It is hitting us hard, and that is due to an insatiable desire for so-called ‘unsustainable development; a concept propagated by some western thoughts.

Bhutan has already felt the impact of climate change and more than 17 events had occurred in the 19th century. The glaciers in the Himalayas; the world’s greatest repositories of snow and ice are retreating at a rapid pace. This has led to swelling of the glacier lakes and increasing risks to the fragile mountain ecosystem.

In Bhutan, 677 glaciers and 2,674 glacial lakes were identified. Of the total lakes, 24 were considered potentially dangerous (Mool et al. 2001). Over the past two centuries, we have experienced more than 20 glacial lake outburst floods (GLOF).

Four outburst cases were reported in the last forty years (UNDP 2013; Seth 2015). Significant GLOFs occurred in 1957, 1960, 1968, and 1994, devastating lives and property downstream (Komori 2008; SNC 2011; UNDP 2013; Sangam et al. 2015).

The threat of GLOF still looms large in the Himalaya. Bhutan has been acutely aware of its vulnerabilities due to climate change and frequent seismic activities. One of the recent GLOF events in the region was the outburst of Lemthang Tsho (lake) on July 28, 2015, and the breaching of subsidiary lake II of Thorthormi Lake on June 20, 2019.

Asian Development Bank highlighted that the glaciers of Bhutan, which covered about 10 percent of the total surface area in the 1980s, are an important renewable source of rivers in the country.

There are four major lakes located in Lunana namely-Thorthomi, Raphstreng, Luggye, and Baytsho. Thorthomi and Raphstreng are two of the 25 glacial lakes in Bhutan that pose serious GLOF risks. Pho Chhu sub-basin is the most vulnerable valley in terms of GLOFs (NCHM 2019).

The past records heavy damages on properties, livestock, and settlement because of GLOF incidents. The 2008 UN reported that Himalayan glaciers would melt within 25 years. In 2009, the rate of glacial melt in Bhutan was three times the world average.

Over the previous three decades, regional temperatures had risen by 2.7 °C (4.86 °F). According to the US geological survey report, 66 glaciers have decreased by 8.1 percent in the last 30 years in the country.

The Thorthormi glacial lake is considered the country’s likeliest climate-induced disaster. The lake, perched at the height of more than 4,400 metres, is swelling because of melting ice and is in danger of bursting its wall (www.downtoearth.org.in).

There are other external factors like earthquakes, avalanches, and falling of rocks, which have a triggering effect besides glacier retreat alone.

It was observed that Thorthormi is not a fully formed lake. It’s under the forming stage. Small ponds of melted glaciers are converging into larger lakes gradually. Just below Thorthormi, divided by a large moraine wall, lies the Raphstreng Lake.

It is evident from the NASA Earth Observatory image by Robert Simmon, 2009, that the moraine wall, which divides Thorthormi and Raphstreng, has a vast ice body at 80 meters depth. Scientists have raised concerns over the structural strength and stability of the moraine dam.

Studies confirm that Thorthormi Lake and other ponds in the Thorthormi glacier are expanding. The landmass is said to be shrinking by the year. Recent satellite images show the unsteady moraine dam is receding at an alarming 30 to 35 meters every year (www.downtoearth.org.in).

The moraine ridge will not hold forever, and that Thorthormi will spill over into Raphstreng Lake one day. The convergence of the two lakes could trigger a major GLOF (www.bbs.bt). If this happens, the water from Thorthormi would spill over to Rapstreng and both lakes might burst.

In the worst-case scenario, the convergence of Thorthormi and Raphstreng would cause severe floods that would affect regions in Punakha. The GLOF is expected to be three times more than the 1994 GLOF, according to a report from the third pole.

It would threaten communities of Lunana, Punakha-Wangdue district, and others in the downstream. The majority of Bhutan’s population and infrastructure are concentrated in the broad river valley and the climate-induced GLOFs would cause significant human and economic devastation.

The World Wildlife Fund (WWF) says half of the fertile land in Punakha and Wangdue valley will be submerged underwater. Punakha Dzong and much of Khuruthang could be submerged too.

The melting of ice at Thorthormi Lake caused an increase in the water level by almost two meters (www.drukgreen.bt). This incidence has prompted the government to issue a nationwide flood advisory last year.

The research further indicated that any significant disturbance on Thorthormi Lake could result in a GLOF, potentially with massive cost to life, property, and infrastructure.

Currently, the moraine dam has sufficient mass to withstand the hydrostatic (water) pressure from Thorthormi Lake. However, the local hydrologist raised concern that if the melting continues due to a rise in temperature, the moraine will not be able to hold.

If the two lakes combine and cause a GLOF, it will travel much faster this time because the river channels have already been cleared of debris and other hindrances by the 1994 flood.

One of the worst situations for Bhutan is a combination of a heavy rainstorm and GLOF happening at the same time. This could also have serious implications across the border downstream in India.

The countries in the region will have to rethink both disaster preparedness as well as infrastructure development (www.thethirdpole.net).

Climate change as a global concern is already impacting millions of people all over the world, making lives more vulnerable. The hardest hit in the world is the people living in developing countries like Bhutan.

A significant portion of the country’s revenue is derived from hydropower that involves considerable investments and requires sustainable water resources. The GLOF poses a direct threat to the economy since Bhutan’s core revenue rests on hydropower. The revenue from hydropower export to India constitutes 40% of the country’s revenue and it is expected to increase to 60%.

Two of the most significant hydropower projects in the country, the 1,200 MW Punatsangchu-I and 1,020 MW Punatsangchu-II, built downstream the Thorthormi Lake, will be in grave danger, and the biodiversity in the region would be affected.

What is more worrying is that the government has prioritized the construction of the 2,560 MW Sankosh hydropower project along with the same river system (www.thethirdpole.net).

GLOFs also possess risk on crucial development sectors like agriculture and forests in the Hindu Kush Himalayas, according to The International Centre for Integrated Mountain Development.

Agriculture in Bhutan provides livelihoods and employment to more than 75% of the population. The majority of the people practice subsistence farming on small marginal lands holdings. These are extremely vulnerable to flood impacts.

According to National Geographic, the Himalayan Mountains is home to the third-largest deposit of ice and snow in the world after Antarctica and the Arctic. It was warned that the Himalayan region could be facing an epic disaster between extreme heat waves and reduced water flows from the Himalayas.

Today there is a need for a societal awakening and to spend a significant part of the economy to avoid the catastrophic risks we are facing.

The 1994 GLOF was the catalyst for the need to establish an early warning system (EWS) giving downstream inhabitants time to evacuate (www.hydromet.gov.bt).

The Flood Warning System in Lunana is a crucial part of GLOF risk mitigation efforts. Early warning sirens have been set up and safety evacuation zones identified along the Punatshangchu and Pho Chhu basin.

The first automatic GLOF Early Warning System was operational since September 2011. The early warning systems are only to help us minimize the damage to lives and property.

Artificially draining the lake is one method of reducing risk. Preparing hazard zone maps of the downstream region to study the impact of the flood and several efforts have been undertaken to mitigate GLOF risks.

A three-year project to lower the Raphstreng lake water level by four meters was completed in 1998. A similar project was carried from 2008 and 2011 at the Thorthormi that saw 17 million cubic meters of water drained out from the lake.

With the risk becoming severe daily, the government is now looking to step up monitoring of temperature in the Thorthormi area by installing more sensors.

Without required measures in place, the lake outburst would have far-reaching impacts on the settlements, historical monuments, and hydropower, the most. Therefore, we need to be more sensitive to GLOF risks.

Having said that, in my capacity as a water resources engineer and decision-maker in the Parliament, I have made a site inspection to Raphstreng and Thorthomi Lake during the Constituency visit in October 2019 to observe the ground reality.

Despite my limited knowledge of climate change and its related impacts, it is evident that the GLOF is real, it is going to happen eventually and we should always be vigilant, as per my observations at the site.

Therefore, reducing climate change-induced risks and vulnerabilities from glacial lake outburst floods should be our priority and address the adverse impacts of climate change.

Studies revealed that there is a need for proper risk management practices, which starts from the identification of critical glacial lakes and to prioritize in-depth investigation.

As a long-term adaptation, Bhutan should prioritize water resource management, diversification of energy, climate proofing of hydropower and infrastructure, agriculture diversification, and awareness, among other things. Advocacy to cope with health risks, enhancing preparedness, and understanding of GLOFs triggered by climate change should be focused.

The Impact of Bhutan’s impending climate disaster in the future will be far more significant unless the government prioritizes the above-mentioned disaster mitigation efforts.

 

Disclaimer: Views expressed are those of the author’s own unless cited and concerns shared as the responsible people’s representative.


Revamping the TVET system in Bhutan

Technical and Vocational Education and Training (TVET) and skill development pose a serious challenge, particularly in countries with rapidly evolving labor markets (ADB 2009).

Recognizing the importance of Technical and Vocational Education and Training (TVET) in the overall socio-economic development process, the Royal Government of Bhutan had introduced the TVET system, right from the mid-1960s in the country.

Despite considerable investments made in the TVET sector over the past decades, it still faces significant challenges in terms of access, relevance and quality of skills in the wake of a rapid socio-economic transformation of the country.

The TVET is still a less preferred option for most youth in general while at the same time, TVET graduates continue to face difficulty in upgrading their educational qualification and career advancement. These factors have further aggravated the problem of the weak TVET system.

The National Council during the deliberation on employment policies, programs and strategies in its 16th Session had highlighted the need to conduct a comprehensive diagnostic study on the current TVET system. However, since the Ministry of Labour and Human Resources was in the process of developing a TVET Blueprint, the review work was shelved temporarily.

The issue on the need to review the TVET system in the country surfaced once again during the 3rd National Council’s retreat held at Paro in July 2018. A 5-member Special Committee for TVET was constituted to conduct the review.

The Special Committee conducted a series of one-on-one meetings with stakeholders and referred numerous documents such as TVET policy, reports, plan documents, TVET sector assessment reports, TVET Blueprint, etc.

The Committee submitted the Interim Report to the House during the 22nd Session of the National Council. The Final Report was submitted during the 23rd Session of the National Council where the House had an extensive deliberation on the report. 

Following are the key highlights of the report:

Currently, there are 797 trainees undergoing training in eight institutes including two Institutes for Zorig Chusum (IZC). The minimum entry qualification for the courses offered in Technical Training Institutes and Institute for Zorig Chusum is class X certificate holders. Of the total 153 trainees, 111 have diploma qualifications, 32 have a degree qualification and 10 trainers with a national certificate. 

Although the Bhutan Vocational Qualification Framework (BVQF) has been established to enhance the quality of vocational skills and to provide definitive career pathways for the vocational trade practitioners, a considerable gap remains in the effective implementation of the system. 

The Institutional linkages between the Vocational Training Institutes and the Industries are weak. 

The officials providing TVET support services in the Ministry are often bogged down with bureaucratic works that could partially be blamed for not being able to provide focused and timely professional TVET services, particularly in the fields of research & development, curriculum review & development, and professional development for instructors/trainers. Moreover, the civil service system’s strong emphasis on educational qualifications has created limited opportunity for most of the TVET instructors in terms of their career progression in the civil service. This has inadvertently affected their morale negatively.

Despite the increased intake capacity in TVET, the youth opting for TVET courses are under-subscribed. There is also a weak linkage between the TVET Institutes and Industries as well as limited collaboration/affiliation with the institutes overseas. The lack of adequate financial resources is one of the main factors confronting this area.

After extensive deliberations on the findings of the Committee’s review report, the National Council recommended the following to the Government:

  • To establish a TVET Council with members representing relevant sectors & TVET experts, and a TVET Sector Skills Council. 
  • To develop TVET HR Policy with a dedicated HRD budget for the professional development of instructors, including the provisions for recruiting experts with specialized expertise in the TVET sector.
  • To diversify areas of training programs and enrich the current curriculum that will impart soft skills. 
  • To strengthen industrial linkages so that it provides better employment opportunities for the TVET graduates as well as to ensure the relevancy of skills training to the labour market.
  • To provide adequate budgetary support to the TVET sector.

The Government of the day supported the yearlong TVET policy review carried out by the National Council and gave light to the Council’s recommendations.

Transformation of the Technical and Vocational Education and Training (TVET) should be the primary focus of the labour ministry, and the rest should follow, Prime Minister Dr. Lotay Tshering said at the review of the agency’s annual performance agreement on August 5, 2019.

To develop and revamp the image of Technical and Vocational Education and Training (TVET) in the country, a TVET Interim Office was established in Thimphu on March 17, 2020. 

The team comprising of five members will officially work towards the formation of an autonomous agency related to TVET. Leading the team as the Chief Executive Officer is Kinga Tshering, former Parliament member, who graduated from Harvard Kennedy School in recent years for the TVET Reform Initiative.

The team will have to report to the Prime Minister’s Office during the transition period until it takes off as an independent organization.

The Government pursued TVET reforms, since last year, following the Council’s recommendations. It had two expert groups working on the new curriculum for skills and competency relevant to the 21st century, and ensuring the governance structure of the revised system.

The team led by the new CEO presented follow up on the Councils Review Report on the TVET and held a brainstorming session on TVET Reforms on April 16, 2020.

Under the dynamic leadership of the newly appointed CEO, we are hopeful that the TVET system will grow to a greater height and we are proud to be part of the reform and to be working towards a common goal of the nation.

If Education is the key to Economic Development then TVET is the master Key to Sustainable Development. ~Dr. Prof. Shyamal Majumdar. 


Looming economy uncertainty with COVID-19 outbreak but are we prepared?

Looming economy uncertainty with COVID-19 outbreak, but are we prepared for the Worst Case Scenario?

 

According to a Bloomberg report by Cecile Daurat, the global economy has started to feel the strain of China’s viral outbreak- and the potential $160 billion hit in lost growth may be on the way.

The COVID-19 outbreak presents the global economy with its greatest danger since the 2008 financial crisis that was considered the most significant economic downturn since the Great Depression, according to the latest Interim Economic Outlook report from the Organisation for Economic Co-operation and Development (OECD).

The outbreak did not spare the isolated Himalayan kingdom of Bhutan, and it reported the first Coronavirus case after a US tourist tested positive on March 6, 2020.

Although, Bhutan’s GDP is expected to grow by 5.7% in 2019 and 6.0% in 2020 (ADB, 2019) the economic growth this fiscal year may record at the weakest pace due to the global outbreak of pandemic COVID-19.

According to the Royal Monetary Authority’s Annual Report 2019, domestic economic growth slumped to four year low of 3% in 2018 from 4.63% in 2017, mainly due to successive decline in hydroelectricity power production and a significant fall in prices of both domestic and imported goods.

Economic growth has not improved despite the Government going slow with the investment in hydropower projects. The dependency on hydropower has weakened the private sector and made the overall economy vulnerable.

Since 2018, the Government has started to invest heavily in education. Despite the laudable reform, jobs available remain vacant while educated youth remain unemployed.

It is evident from the RMA’s Annual Report 2019 that despite the increasing working-age population, the labour force participation rate remains more or less constant. In 2018, a total of 185,694 potential workers stayed out of the labour force, mainly students (43%), attending family duties (28%) and old age (15%). The total labour force as of 2018 is 310,856.

Moreover, Bhutan Statistical Bureau records the unemployment rate in 2018 at 3.4% and youth (15-24 years) unemployment rate at 15.7%.

The external imbalance continues to reflect weak underlying economic fundamentals of high dependency on imports (including a large expatriate labour force), grant and aid-driven investment, and high stock of external debt.

The current account deficit deteriorated to 23.7% of GDP in FY 2018/19 from the previous year (19.5%). The widening deficit was contributed by an increase in trade imbalance, net service payments, followed by a decline in net primary and secondary income receipts (RMA, 2019).

Research shows that external borrowing continues to be the key financing source of development activities. The country’s debt has increased over the years. The share of external debt to aggregate output slightly increased to 112.4% in FY 2018/19 from 110% in the FY 2017/18.

In absolute terms, the total outstanding external debt recorded as of June 2019 stood at USD 2.73 billion (~Nu. 191.10 billion), an increase of 3.3% from the previous year. It was mainly contributed by the rise in hydropower loan and convertible currency loans from multilateral institutions. The 1200 Megawatt Punatshangchu Hydroelectric Project I commission was pushed to 2024 due to geographical surprises. It escalated the initial project cost of Nu 35 billion to Nu 93.7 billion (as of 2019) which is almost three folds.

As per the Pay Commission’s recommendations 2019, the annual implication of the pay commission’s pay hike is Nu 4.238 billion a year and 17.913 billion in the next four years. But, with the commencement of the Pay Revision Act of Bhutan 2019, the financial implication far supersedes the estimated value. It was included in the outlay of the 12th FYP, and it is to be financed by the domestic revenue. The significant sources of financing would consist of revenue from the commission of the 720 MW Mangdechu Hydropower Project.

As per the Public Accounts Committee’s Report, the Government still has a total unresolved irregularities balance of Nu. 1.037 billion. At the fiscal level, it represents about 2% of the total outlay indicating opportunity cost to the economy. Balance unresolved irregularities from the Annual Audit Report 2010-2017 are Nu. 1.031 billion as of November 2019 and the unresolved balance of Nu. 198.118 million pertaining only to MHPA for non-levy of liquidated damages for non-completion of construction works for AAR 2015.

The revenue loss to the Government due to new tax exemptions is Nu. 826.03 million. The Government’s additional revenue from GST at the standard rate of 7% (annually) with limited exceptions is 3.0 billion a year, but it will be implemented only from July 1, 2021, which violates Section 46B of the Public Finance (Amendment) Act 2014.

The Government’s proposed introduction of Sustainable Development Fees on regional tourists is expected to earn Nu. 933.56 million. However, due to the recent outbreak of the Global epidemic Coronavirus (COVID-19), the revenue generation through tax enhancement is likely to be lower than the anticipated amount.

As per the Bhutan Tourism Monitor (BTM) 2018 published by the Tourism Council of Bhutan, the tourism industry in the country continued to grow in 2018 contributing significantly towards socio-economic development through revenue and foreign currency generation and employment creation, amongst others.

A total of 274,097 foreigners visited Bhutan in 2018, which is an increase of 7.61% over 2017. International leisure arrivals grew by 1.76% to 63,367 over 2017 while visitors from the regional market grew by 10.37%.

There are a total of 271 TCB certified tourist accommodation service providers in the country comprising of 136-star hotels and 1,495 Village Home Stays (VHS). There are over 2,300 tour operators and over 2,400 guides and drivers catering to the needs of the visitors in the country today.

Bhutan Development Report 2019, published by the World Bank Group indicated that the tourism sector generates more than US$280 million (Nu. 19.6 billion) annually in visitor spending and accounts for more than 20% of non-hydro exports.

Taking these points into account and as far as political sensitivity and soft diplomacy are concerned, I am convinced that the Government has made the right decision by not imposing a ban on tourists’ entry until March 6, 2020, despite massive public outcry on social media.

However, right after the confirmation of the first COVID-19 case, the Government imposed two weeks restriction on all incoming tourists, to enable rigorous monitoring, source assessment of infection, mitigate the situation and for the safety of visiting tourists and public in general.

If the outbreak continues to spread, and the situation gets worse, the nation should be prepared for a possible economic recession and slump of economic growth in the FY 2020/2021.

The recent publication on the World Economic Forum indeed emphasise that a crucial role of Government is to protect the well-being of its people—most crucially and visibly during emergencies such as the recent outbreak of the Coronavirus. Governments have a role to play in softening the economic impact of Coronavirus and from spending on healthcare to business continuity plans.

As for now, let us follow the guidance of our farsighted King, have faith in our Triple-Gem, strictly prescribe to the health advice and render full support to the Government with solidarity. Being a bona fide citizen, in the spirit of One Nation One People, we would triumph over global pandemic COVID-19; collectively and stronger together.

“We must always stand united in spirit and purpose, and we must always be one nation with one common goal.” ~His Majesty the King Jigme Khesar Namgyel Wangchuk, 2007.

Way forward:

  • Government should Prepare a massive Economic Stimulus Package to protect the economy from COVID-19 impact
  • Government should Re-prioritise the 12th Five Year Plan if necessary
  • Interim measures through Monetary and Fiscal Policy such as Tax Holiday
  • Food Corporation of Bhutan Limited should ensure food security for the nation at all times as per their mandate
  • RMA to ensure that the international reserves remain at a comfortable level, sufficient to finance 13 months of merchandise imports as per the Article 14 (7) of the Constitution. However, reserve utilisation should be the Government’s last option
  • We should support the Government’s activities towards COVID-19 preparedness and response by supporting fundraising and through other voluntary contributions.

 

Disclaimer: The views and opinions expressed in this article are those of the author based on existing information and literature review and do not necessarily reflect the position of National Council of Bhutan. 


National Council’s role on Tourism Levy Exemption explained

Introduction

The National Assembly had proposed five more Dzongkhags in the list to exempt payment of tourism levy taking the number to 11 and forwarded it to the National Council. The House of Review added four more dzongkhags making it to fifteen dzongkhags. This move surprised the general public, media, and including MPs from NA. But, we have learned enough lessons from past experiences and adopted the smart move this time. Here in this article, I will briefly explain the beginning from 2017, how deliberation happened in the National Assembly and National Council.

 

Tourism Levy Exemption Bill of Bhutan 2017

In 2017, when the former Finance Minister introduced the Tourism Levy Exemption Bill in the National Council, he said that the purpose of the Bill is mainly to exempt the existing royalty of USD 65 for international tourists visiting six eastern dzongkhags. The main objectives of the Bill were to ensure balanced regional development; provide tourism benefits the country as a whole, and improve the tourism business in the country. To achieve this, he said that the proposed Bill would exempt the levy for three years on a trial basis for international tourists visiting the eastern region.

As per the 20th session resolution of the National Council, the House comprehensively deliberated on the Tourism Levy Exemption Bill of Bhutan 2017 on 2/12/2017 and resolved to reject the Bill with six objections. In the 13th sitting of the National Council, the members voted against the Tourism Levy Exemption Bill of Bhutan 2017 (Money Bill). Of the 20 members present, 5 members voted “Yes”, 12 members voted “No” and 3 abstained. The Bill was then forwarded to the National Assembly on the grounds of rejecting the Money Bill for the re-deliberation.

However, the National Assembly on 4th December 2017, rejected the National Council’s resolution that asked the Government to scrap the Tourism Levy Exemption Bill 2017, which waives royalty of USD 65 in a day per tourist visiting eastern dzongkhags.

NA endorsed the Bill with the show of hands, 30 MPs, mostly from the ruling party, voted to reject NC’s recommendations.

Opposition members spoke in support of the NC’s objections although they voted in favour of the Bill with some reservations when the Assembly passed the Bill.

The exemptions in the past has never benefited the Dzongkhags and has achieved no visible increase in tourists flow in the Eastern Circuit.

 

National Assembly

On 16th January, eight Bills tabled for first and second readings in the National Assembly, and the six Bills were declared as Money Bills including Tourism Levy Exemption (Amendment) Bill of Bhutan 2020.

The Chairperson of the Environment and Climate Change Committee of National Assembly presented the Committee’s recommendation on Tourism Levy and Exemption Bill of Bhutan 2020 as a new Bill on 3rd February during the Third Reading of the Bill in the Assembly with 6 Chapters and 18 New Sections.

The National Assembly of Bhutan adopted Tourism Levy and Exemption Bill of Bhutan 2020 on 4th February with 43 Yes votes and 1 No vote out of 44 members present at the voting.

As per their adoption, a leisure tourist visiting selected Dzongkhags such as Lhuntse, Mongar, Trashigang, TrashiYangtse, Pemagatshel, Samdrup Jongkhar, Tsirang, Dagana, Zhemgang, Trongsa and Sarpang were exempted from payment of applicable tourism levy for the duration of their stay. However, the tourism levy exemption shall expire by 31st December 2024.

 

National Council

The National Council received the Tourism Levy and Exemption Bill of Bhutan 2020 (New) as Money Bill with the official letter on 4th February 2020 (Ref. NAS/SG-6/2020/3034) for re-deliberation.

Hon’ble Finance Minister introduced the Tourism Levy Exemption (Amendment) Bill of Bhutan 2020 in the 16th Sitting of the NC on 5th February 2020.

Subsequently, the House deliberated on the Tourism Levy & Exemption Bill of Bhutan 2020 on 6th February 2020.

During the deliberation, Hon’ble Members expressed their support on the amendment in Section 7; Chapter 2, which stated, “A regional leisure tourist shall be liable to pay concessional tourism levy of Nu. 1200 per night halt”. Therefore, the House adopted the section. However, general concerns shared were related to the mushrooming of many hotels.

The House extensively deliberated on section (8), under chapter (2) wherein the National Assembly has amended the exemption from payment of applicable tourism levy for the duration of their stay by listing 11 Dzongkhags to attract tourists. Fourteen members shared their views on two main points: firstly, in keeping the provision, the list of the dzongkhags should be based on proper research and the second was to delete the exemption list from the Bill as it creates inequality within the country.

While the House adopted most of the amendments proposed by the National Assembly on the Bill, the House directed the Committee to review the disputed sections during the in-house deliberation considering the view of the members and to prepare the Bill for the final adoption.

 

Committee’s in-house deliberation

There has been a much-heated debate amongst the members concerning the Exemption list of the Dzongkhags.

After thorough deliberation, members proposed three possible options as follow:

Option 1: To remove 11 Exempted Dzongkhags proposed by National Assembly

Option 2: To add the most deserving dzongkhags only

Option 3: To keep 11 Dzongkhags as it is and recommended to add the most deserving dzongkhags

 

Views and Analysis

Option 1: Removing 11 Exempted Dzongkhags proposed by National Assembly seems impossible

Justification: 

This Bill was introduced and declared as Money Bill in the National Assembly as per Article 13 (2) of the Constitution of Bhutan and Section 46D of the Public Finance (Amendment) Act 2012.

The National Assembly of Bhutan adopted Tourism Levy and Exemption Bill of Bhutan 2020 on 4th February with 43 Yes votes and 1 No vote out of 44 Members present at the voting.

The Public Finance (Amendment) Act 2012, Section 46G and 46H permits National Council to make only recommendations on money or financial Bill.

From the past experiences, removing 11 Exempted Dzongkhags or Rejecting the entire Bill is not a solution.

Therefore, the National Council’s recommendation on the Money Bill, adopted by 43 Yes Votes (97.7%) did not make much difference. Even if the House recommended doing away with the exempted dzongkhags, the NA might have followed with their previous decision without much thoughtful choice and debate. Otherwise, they should not have added 11 dzongkhags in the exempted list.

In the first instance, the Government is not clear with their objective to introduce the Bill; whether to regulate the visiting tourists or to ensure balanced regional development. But one thing is clear that it has been deeply politicized going by the map pattern and dzongkhag selections. They have focused more on the Opposition’s constituency, where there is a major population. Surprisingly, the matured Opposition fails to play a constructive role and to provide checks and balances to the Government simply because their dzongkhags are listed in the exemption and they didn’t realize the politics behind. The nation’s expectations were from the longest-serving MPs and the Opposition, but to no avail and hope in despair.

The Opposition should execute their mandates as per Article 18 of the Constitution to play a constructive role, providing healthy and dignified Opposition to the Government and shall not allow party interests to prevail over the national interest.

 

Option 2: Members proposal to add the most deserving dzongkhags was also not possible

Justification: 

As per the Publication of the Tourism Council of Bhutan on Bhutan Tourism Monitor 2018, the tourist visits in Haa, Chhukha, and Gasa are 6615, 2971 and 675 respectively and Samtse with no tourist visit record at all.

The NA should have considered these Dzongkhags instead of dzongkhag like Trongsa with 5864 tourists visit if their intention was on the regional distribution of tourists over political interest.

The 11 dzongkhags (Exempted List) are represented by 26 Constituency and 26 MPs in the National Assembly. The probability of rejecting the 4 Dzongkhags proposed by the National Council member is very high.

 

Option 3: Keeping 11 Dzongkhags as it is and proposed to add the most deserving Dzongkhags considered being the best “BARGAINING CHIP.”

Justification: 

Based on the research and latest statistics, the House recommended adding 4 Dzongkhags (Haa, Chhukha, Samtse, and Gasa) in addition to the 11 Dzongkhags adopted by the National Assembly with 43 Yes votes.

With the introduction of SDF of Nu. 1200 per night on regional tourists, the Government estimated the revenue of Nu. 933.56 million per annum, which is intended to compensate for the revenue loss of Nu. 826.03 million from tax exemptions such as Income slab, 5% Sales Tax on telecom services, Corporate Income Tax from 30% to 25% and others.

National Council’s recommendation made the Government and National Assembly think twice before they pass their final judgment and reflect once again on their previous decisions.

They are left with only two options either to remove all dzongkhags or accept all 15 Dzongkhags. Because if they go by the previous decision and reject NC’s recommendations, they have a fear of public backlash, which they have learned enough lessons from the recent Zhemgang flagship case and their previous selection of dzongkhags was not done based on the comprehensive research but rather with political interests.

If they accept all 15 Dzongkhags, the whole purpose of levying the SDF (Sustainable Development Fee) would be defeated, and the estimated revenue generations of Nu. 933.56 million per annum may be forgone.

The Government knows very well, how difficult it is to propose Tourism Levy, especially when the neighbouring country is concerned. In November 2019, Foreign minister Dr. Tandi Dorji visited India at the invitation of India’s External Affairs Minister S Jaishankar (Ph.D.). Lyonpo briefed the Indian foreign minister about Bhutan’s plans to implement a revised tourism policy, particularly regarding regional tourism, and sought the Government of India’s understanding and support in its implementation. It was learned that tourism levy was negotiated at 35% of USD 65 per night halt, but it was reduced to 25% due to pressure from the business communities within the country.

Therefore, the Government has no choice but to decide to remove all the Dzongkhags from the exemption list. The whole purpose of introducing the SDF is to give all tourists the best value for money irrespective of regional or international and regulate the flow of regional tourists.

 

Conclusion

In the 20th Session, the National Council raised concerns regarding the need to regulate the flow of regional tourists due to exponential growth in numbers that could exceed Bhutan’s ecological, cultural and infrastructural carrying capacity.

As far as the National Council is concerned, our conscious is very clear that we do not support to exempt any dzongkhags under the tourism levy SDF. But our smart approach worked for NA to overturns its decision on SDF.

On 19th February 2020, the House that once adopted the Bill with 43 Yes votes decides not to exempt any dzongkhag from the Nu 1,200 SDF. We appreciate the NA for reflecting on their previous decision and taking a complete U-turn this time.

Following a re-deliberation of the Bill, NA members felt that exemption of tourism levy would not help to promote tourism in the exempted dzongkhags. Prime Minister Dr. Lotay Tshering who in the earlier Session voted for exempting 11 dzongkhags supported the argument. He said that instead of creating disharmony due to such exemptions, SDF should be levied to all dzongkhags.

Therefore, the NA MPs who think that NC hasn’t done our task correctly should thank NC for letting you reflect on your previous decision. The Bill that has been adopted with 43 Yes votes previously, when finally making U-turn indicates that there is no moral and lack of research works on their part.

NA endorsed Tourism Levy Bill of Bhutan 2020 with 33 Yes votes. The decreasing votes from 43 to 33 Yes votes speak for itself.

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of the affiliated organization. 


Twist of fate for Zhemgang’s Flagship Program

The celebration of feathered friends at Tingtibi in Zhemgang highlighted the potential of the place is one of the best birding sites in the region during Bhutan Bird Festival held from 11-13th November 2019. Otherwise, the town slept throughout the year.

Zhemgang’s dream of exploring their richness in Eco-tourism could have received an enormous boost if the government had not removed the dzongkhag’s tourism flagship programme in June this year.

The decision to remove the flagship programme came under the scrutiny of the National Council and opposition party; rightful institutions under the sacred constitution to maintain checks and balance of the government.

A confused discourse took place on social media platforms questioning government’s intent and bias while replacing Zhemgang dzongkhag with Sarpang for the flagship programme.

The Government was adamant about its decision and disregarded the resolution passed by the parliament.

The decision of its kind based on the past precedent, as told by the Prime Minister was not healthy because we cannot afford to continue with flaws of the past to make the decision appear politically right. Everyone must uphold the constitution and its prestigious institutions.

The change could have been for better or worse reasons, but the removal of policy that was passed by the parliament undermined the wisdom of essential institutions: national council and the assembly.

If the Cabinet was to make the final decision, redoing all works done by the elected representatives, our role of being people’s representative is at stake.

The government should be reminded that the Parliament, which consists of the Druk Gyalpo (His Majesty the King of Bhutan), the National Council and the National Assembly, shall ensure Government safeguards the interest of the nation and fulfils the aspirations of the people through public review of policies and issues, Bills and other legislation, and scrutiny of State functions.

All said and done, and now it seems that the Government is trying hard to reconcile and heal the political wound they have created with their shortsighted decision.

The three days festival may have contributed to the local economy, but not in terms of the development in the district; significant infrastructure development required to trap tourism potential of the region, which the dzongkhag had been planning for a long time to attract increased numbers of tourists.

As per the Bhutan Poverty Analysis 2017, the poverty rate in Zhemgang stands at 25 per cent, one of the highest poverty rates in the country while Sarpang fares better with 12 per cent. On contrary budget approved for Zhemgang and Sarpang were 701.266 M and 741.903 M respectively in the Financial Year 2019-2020.

When Zhemgang was excluded from the focus group of tourism flagship programme, it became controversial. Some saw the move as being politically motivated.

But hope for Zhemgang still alive with a twist in the tourism flagship program. As per the Tourism Council of Bhutan, the plan would be implemented as a circuit-based programme instead of focused dzongkhag approach in its flagship programme. All dzongkhags will get equal opportunities or priorities depending upon their capacity and feasibility. As per TCB, every dzongkhag will have one or two projects in consultation with the local government and the private sector.

TCB plans to brand four dzongkhags—Zhemgang, Gasa, Lhuentse, and Sarpang in the current fiscal year. The promotion and branding of other dzongkhags will follow.

Although Zhemgang is considered as a paradise for botanists and bird watchers, the dzongkhag has received only 1,263 international tourists (332 arrival and 931 bed nights), which is 0.14 per cent of tourist arrival in the country. Considering the dzongkhag’s rich biodiversity and the unique attraction, the number of tourist arrival was a concern, and the dzongkhag does not have star-rated hotels and has only four village home-stays.

Zhemgang is most suitable for bird watching, river rafting and the government allocated Nu. 27 million to support the recent bird festival and to develop birding infrastructure.

The captive Siberian Rubythroat (a new bird species) set free by the Honorable Prime Minster during the festival may breathe fresh air of Zhemgang, and rapid growth of Eco-tourism in the region is very much anticipated.

The decisions we take will have a long-term impact, for better or for worse, on our country and our people. I wish the Government of the day would make their decision wisely as per the law and by upholding the sacred constitution of Bhutan.

 

Disclaimer: The views and opinions expressed in this article are those of the author based on literature review and do not necessarily reflect the position of National Council of Bhutan.


Legalization of Paris Polyphylla

The Natural Resource and Environment Committee and National Council members convened a consultation meeting with the Ministry of Agriculture and Forests on 12th September and Legal status of Paris Polyphylla was one of the issues discussed amongst others. In this article, I will briefly share the summary of the comprehensive presentations made by MoAF officials pertaining to the legal status and the way forward.

What is Paris Polyphylla?

Paris polyphylla is an Asian species of plants native to China, Taiwan, the Indian Subcontinent, and Indochina. It produces spider-like flowers that throw out long, thread-like, yellowish green petals throughout most of the warm summer months and into the autumn. In the fall, the flowers are followed by small, scarlet berries. It is a perennial, which slowly spreads, and survives in leafy, moist soil in either complete or partial shade. This flowering plant usually grows up to 90 cm (3 ft) high and spreads out about 30 cm (1 ft) wide. Its leaves grow in a single whorl below a flower growing in two whorls.

In Bhutan, it grows at an altitude up to 3300 meters and grows well in moist and humus-rich soil, under the forest canopy of full shade-partial shade. Rhizome is made up of modified stems of plants that usually grow underground, contains roots, and shoots from their nodes, and it grows in a creeping manner. Paris Polyphylla is known as Dou Sethochem or Dochu Kewa in Dzongkha, Thoksampa in sharchop kha and Satuwa in lhotsham kha.

The Paris polyphylla collection has been legalized with collection permit issued by the Ministry of Agriculture and Forests based on the Forest & Nature Conservation Act 1995. The collection can be done through management groups or individual basis as interim measure instructed by MoAF.

Rhizomes are allowed for collection from October to November after the fruits are fully ripened. Flowers during April & May and the collection of a plant during these months would seriously affect the sustainability of it in the wild.

With the legalization of the collection of the Paris Polyphylla, MoAF encountered some constraints such as the formation of the management group is not possible as it grows sporadically over a large area, Illegal collection by outsiders makes the resources unsustainable, Untimely collection of rhizome (before maturity) in this manner is likely to pose threat to its sustainability in the wild and It takes about 6 years to fully mature rhizome (3 layers of branch whorl).

The forest department issued an office order that anyone found collecting the roots of the plants without a permit or outside the harvesting season would be penalized.

Fines & compensation are as per the Forest and Nature Conservation Rules and Regulations 2017, Section 417- the commercial taking of restricted non-wood forest products. A fine minimum of Nu 5,000 with possible extension up to Nu 50,000 depending on the degree of offense and compensation at a fair market value of the forest produce involved will be imposed. The market value was fixed at Nu 3,000 a kilogram for dry and Nu 1,000 a kilogram for fresh roots. The fines and penalties were standardized for illegal collection to discourage illegal practices.

As part of the long-term sustainable harvest, the MoAF has started domestication Trial at Bjemina – where plants growing well but rhizome formation has not taken place and Deptsang, Shingkharlauri – nursery sells plants and plantation doing well. They have also done the upscaling of domestication and enterprise set up for product development and diversification.

Paris Polyphylla has been used in Traditional Chinese Medicines for years. The plant can be used as a pain reliever, antiphlogistic (removing heat), antispasmodic, diphtheria, for fever, headache, wounds, and burns, among others.

There are few field Manual or Guidelines for the sustainable production and management, guidance and instructions for nursery development, cultivation and domestication of Paris polyphylla such as Guidelines for resource assessment and management of Dou (2012) and A field manual on Nursery management and cultivation of Dou (2012).