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Bhutan's Daily Newspaper
Updated: 1 hour 19 min ago

Online services offline

Tue, 06/28/2022 - 10:45

It is the asset declaration time. The Anti-Corruption Commission (ACC) mandates every public official to declare annual assets to keep an eye on assets of public officials to prevent corruption or prevent and detect illicit enrichment.

Many public officials, however, could not file it. They are frustrated with the online asset declaration system. They are scared too. The online system to ease declaration is  not user-friendly. Now, it has completely crashed.

This comes at a time after the country embarked on an ambitious journey to digitalise Bhutan to improve public service delivery.  While some online systems have reduced time, enhanced accessibility and enabled citizens to avail services easier and faster, many remain down most of the time forcing people to lose confidence in the system.

Many services of the G2C system accept applications only from 9am to 5pm and limit its service, defeating the whole purpose of digitalisation and enhanced public service delivery.



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Financial institutions and private citizens have fallen prey to scammers after relying on online services. This happened even with a Credit Information Bureau in place.

Those with technical backgrounds claim our investments in online systems are limited to just having the online system in place without sustained maintenance or training budget. Many public servants, in fact, use the online system as an excuse for their incompetency or non-performance. The most common phrase amongst service providers is ‘system mi tu bay’.

Our systems are developed by agencies through contracts, but rumours are rife that our Bhutanese firms are just the face for developers from neighbouring countries. When the system developer does not have the liability and accountability to keep it running, it fails. The system development contracts should include the responsibility to maintain the system.

However, the bigger problem than the non-functioning online system is when those responsible refuse to acknowledge the problem.



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In the ongoing asset declaration fiasco, ACC officials owe an explanation to the public. They cannot remain silent. Just brushing off media queries or public grievances shows they are not being accountable to the public. Some are waiting for ACC to question them for not declaring their assets.

With no records and information about how many public officials were detected as being corrupt through the asset declaration system, it is also time to change it if it is not serving the purpose.

If we are serious about the use of information, communications and technology (ICT) for development, it is time to show. Just having online systems is not enough. We need systems that are running and facilitating service delivery.

Understanding the linkage between snow-capped peaks to flow patterns of streams and rivers

Tue, 06/28/2022 - 10:44

The river basins in Bhutan mostly originate from glacierized headwater catchments. The hydropower and agriculture (crops) in Bhutan contributed almost 11 and 18% respectively to Bhutan’s total gross domestic product in 2020. However, the cryospheric water sources of major river basins in Bhutan are under increasing threat from rising global temperature. Impacts of climate change could potentially reduce cryospheric contribution to streams and rivers affecting water availability and food security in Bhutan and beyond.

Research in the Himalayan regions by Nepal et al. (2014) has already reported reduced glacier melt runoff and changes in the precipitation phase have increased variability of the flow regime affecting economic activities. Similarly, a  study by Rupper et al. (2012) demonstrated that an increase of one-degree celsius in glacierized Bhutan would reduce annual meltwater flux by almost 65%. The impact of increasing global temperature on the cryospheric resources was also evident from the recent study by the National Centre for Hydrology and Meteorology (NCHM) which reported that Bhutan lost about 17 gigatons of glacier ice since 2004 to date. This calls for an urgent investigation into the influence of annual meltwater flux on the streams, rivers, springs, and groundwater in low-lying areas.

To address the knowledge gap, the researchers from Sherubtse College and the University of Colorado, USA studied the Chamkhar Chhu in central Bhutan using a combination of in-situ hydrochemistry and isotope datasets that drive mixing models from 2014 to 2017. The research was aimed at analyzing changes in the role of meltwater during different seasons and with distance from the glaciers. The research was critical in providing a piece of first-hand information on the role of climate-sensitive snow and ice-melt contributions to our water sources.

The researchers used a tracer-based mixing model that offers alternative options to remote sensing and other traditional techniques for understanding hydrology. Naturally occurring tracers such as stable isotopes of water and geochemistry were used for estimating the proportions of river discharge from various sources and flow paths. The use of the tracer method in remote and data-scarce regions like Bhutan is particularly strategic as it does not require discharge data to estimate relative flow contributions from ice, snow, and rain. In addition, the mixing-model results also provide insights into the timing and volume of water discharge in response to changes in the climate.



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Hydrologic processes such as source waters and flow paths that control river flow in the Chamkhar Chhu basin were studied using tracer isotopes. Samples including surface water, groundwater, glacier meltwater, and precipitation were collected in pre-monsoon, monsoon, and post-monsoon seasons along an elevation transect from 2,538 to 5,158 metres above sea level.

This study for the first time showed that pre-monsoon (March) baseflow consists of mostly rain and snow (38 and 39%, respectively) while ice melt contributed 23%. With the onset of the monsoon, the river changed to a rain-dominated system, with rain making up the majority of June (52%) and August (71%) flow. In the post-monsoon (October) the river transforms into essentially a 2-part system with ice and rain each sourcing nearly half the flow. Because, in the post-monsoon period, glacier ice, no longer protected by seasonal snow cover, is more susceptible to melting and contributes a majority of river flow during this period.

Overall, the study demonstrated that the Chamkhar Chhu is a rainfall-dominated basin, with seasonally varying snow and ice melt contributions which conceptually agrees with expectations of the annual hydrological cycle typical of the eastern Himalayas. Further, the researchers observed that monsoon rain plays the dominant role in sourcing river flow below an altitude of 3,500 m during monsoon (contributing up to 48%) and post-monsoon (contributing up to 88%) periods (July to November). Even during the drier periods such as the pre-monsoon season, much of the river flow may indirectly be rain-fed.

The high dependence of our water sources on rainfall could be highly vulnerable to temporal and spatial variability of precipitation patterns associated with rising temperatures in the Himalayas. For example, a recent study on springshed in southwestern Bhutan by Jambay & Uden (2022) reported a change in rainfall pattern, which impacted the recharging of local aquifers and caused springs to dry up. It also means that our future infrastructure development, disaster management, and management of drinking water sources need to consider the influence of changing rainfall patterns.



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The research also demonstrated an increasing contribution of groundwater to river flow in the Chamkhar Chhu basin with decreasing elevation. However, our current knowledge of groundwater hydrology, e.g. residence time and lag time between recharge and streamflow are almost non-existent. Thus, understanding the groundwater dynamics of our major river basins is also a critical area of future research. The same group of researchers is currently engaged in piloting a study on groundwater dynamics using a tracer-based method in Eastern Bhutan, which is expected to gather crucial data on the sources and recharge mechanisms of perennial springs and streams.

Currently, Bhutan’s Himalayas are losing snow and glacier resources due to increasing temperatures. The discharge in melt-sourced rivers like the Chamkhar Chhu would lose contribution to its flow from snow and glacier resources. Snow melt was found to contribute significantly to river flow during early monsoon, whereas ice melt is important in the post-monsoon period when much of the lower elevation seasonal snow has melted and the glacier ice is exposed and no longer has the protection of seasonal snow cover. However, on an annual basis, the rainfall may dictate the river discharge at the non-alpine elevations where people, hydropower, and agriculture utilise the water.

The article is published based on personal experiences and observations by a group of water researchers from Bhutan. The group can be contacted at waterresearchbhutan@gmail.com

Bhutan to play in quadrangular series in Malaysia

Tue, 06/28/2022 - 10:43

Thinley Namgay  

A 17-member squad, including three officials, landed in Malaysia yesterday to participate in the first Quadrangular Series 2022, approved by the International Cricket Council (ICC).

It is their first international appearance in almost four years. In the last three years, the international competitions were disrupted by the Covid-19 pandemic.

After the ICC World T20 Asia Qualifiers in Malaysia in 2018, the senior national men’s cricket team has not participated in international competitions.

Bhutan, Thailand, the Maldives and host Malaysia will compete in the tournament begins on July 2 and ends on 13.



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Each team will play twice against another team and the top two teams will play in the final. 

All matches will be counted for the ICC T20 international ranking.

Team Bhutan will be led by longstanding captain Jigme Singye and vice-captain Thinley Jamtsho. Bhutan will face Malaysia in the opening game on July 2.

The last time the men’s team played an international game was in the 2019 South Asian Games in Nepal in the under-23 category. Bhutan lost all the four games played that time against Bangladesh, Nepal, Sri Lanka and the Maldives.

Bhutan Cricket’s Chief Executive Officer, Damber S Gurung said the players have undergone three months of training in Thimphu and Gelephu. “Getting them back in shape was challenging after being hit by the pandemic. Yes, they are still short of match practices.”



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“However, reforming the team was our main objective, and definitely, their performances in the tournament will help us to assess the team’s stance,” Damber S Gurung said.

Quadrangular Series 2022 will be also the first international tournament for coach Trishane Nonis from Sri Lanka after he is appointed the national cricket coach of Bhutan in 2021.

In April, Bhutan Cricket called 22 potential national team players from across the country for a training camp in Thimphu with a focus on improving the country’s T20I rankings.

The players were shortlisted based on their performances in domestic and international competitions among other criteria.

The preliminary squad of the selected cricketers were trained at Pelkhil School’s cricket ground. Of the 22 players, 14 were selected by a selection committee comprising the national team head coach, two members of the cricket board, the captain and the vice-captain.



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TCC walk out; committee declares Thromde FC winner 

Tue, 06/28/2022 - 10:42

Kelzang Wangchuk | Samdrupjongkhar

At the quarter-final match of the ongoing departmental football tournament in Samdrupjongkhar on June 26, the committee declared Thromde FC winner after TCC walked out.

The team TCC blamed the referee and linesman for unfair decision and refused to play the extra time.

The teams were equally strong and TCC was leading 2-1. A penalty kick was awarded to Thromde FC and the match ended in 2-2 draw.

TCC players rushed towards the linesman after the final whistle and police had to be called. When TCC refuse to play the extra time, the committee declared Thromde FC the winner.



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TCC claim that the linesman was not fair because he works at the thromde. “We are not happy with the decision for the penalty re-take but we didn’t sign and walk out from the match,” a player said.

Organiser said the officials’ decision was not wrong because the team TCC’s players were found inside the penalty area during the penalty kick.

He said the committee members have asked the team TCC’s captain and manager to come for discussion but did not turned up, adding that players had removed their boots and walked out from the ground.

“The committee had to decide as per the terms and conditions. It’s not a profit-oriented tournament but was organised to bring the football enthusiast together,” an organiser said.



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Fourteen teams from Samdrupjongkhar and Samdrupchoeling participated in the tournament.

Each team paid an entry fee of Nu 20,000. The prize money for the winner is Nu 70,000 and Nu 50,000 for the first runners-up.

The first semi-final will be played between Sampol FC and Thromde FC today. The second semi-final between JWC from Samdrupchoeling and Business FC will be played tomorrow.

NC asks govt to expedite decision on delayed hydropower projects

Tue, 06/28/2022 - 10:41

Dechen Dolkar 

The government is waiting response from the Government of India (GoI) on the issues of two hydropower projects under construction, Punatsangchu-I Hydroelectric Project and Kholongchu Hydropower Project which have been delayed.

The National Council (NC) recommended the government expedite a decision on the problems faced by these projects to avoid any further delays and cost escalation so that the hydropower projects can benefit the people and the nation.

The NC stated that over the past few years there has been growing concern on the repeated delays and inordinate cost escalation in the construction and completion of hydropower projects.

For example, PHPA-I began construction in 2008 and was expected to complete in 2016. The initial estimated cost was Nu 35.148 billion (B) which has now escalated almost three-fold to Nu 93.756B.



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Likewise, Kholongchhu Hydropower Project commenced in 2015 and was scheduled to complete in 2020. The initial cost projected was Nu 33.05B and estimates of cost on completion have increased to Nu 54.818B.

The recommendations came with the Budget Appropriation Bill 2022-2023 that National Council forwarded after review and deliberation to National Assembly.

During the re-deliberation on the Budget Appropriation Bill for the financial year 2022-23 at the National Assembly (NA), Prime Minister Dr Lotay Tshering said that the detailed project report on the feasibility of construction of a barrage at PHPA-I is submitted to GoI and that the government was waiting a response.

Economic Affairs Minister Loknath Sharma said that discussion on hydropower projects issue is going on with the two counterparts.



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“It has been a long time since the two authorities could not meet and have decided to meet in July to talk about the issue,” Lyonpo said.  

Lyonpo said that PHPA-I is almost completed and left with a few touch-up in the powerhouse. The rationalisation of employees at the project is also going on since most of the work is completed.

He said that the government is anticipating a decision on the construction of barrage within two months.

The dam construction at PHPA-I cost Nu 24B from 2013 to 2019, in total it has cost around Nu 45 to Nu 50B incurring interest during construction.



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On the delay in the construction of Kholongchhu project, Lyonchhen said that the agreement between joint ventures mentioned that the 20 percent of capital work would be awarded to a Bhutanese contractor.

He said that from the Indian agency side, they want to execute 100 percent of capital works and award 20 percent in the construction of roads, bridges and buildings at the site. However, from the Bhutan side, they requested 20 percent of capital work for the construction of tunnels.

“The two agencies could not come to a consensus on the capital work award,” Lyonchhen said.

There are four members each from the companies in the committee and the chairperson has no voting right according to the agreement if they come to voting.

Kholongchu is the first joint venture company formed between Druk Green Power Corporation (DGPC) and India’s Satluj Jal Vidyut Nigam Limited (SJVNL).



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Lyonchhen also mentioned that DGPC withdrew from the project and requested the Cabinet for intervention since it will have issues in the future.

“We felt that DGPC can execute the tunnel construction and their requests are valid,” Lyonchhen said.

Lyonchhen said that the government has directed the economic affairs and foreign affairs ministries to discuss with GoI the award of 20 percent capital work to Bhutanese firm.

However, Lyonchhen said that the major issue with the project is after completing the project it has not mentioned clearly the export tariff rates and the rate is comparatively less. “Government of Bhutan is requesting a slightly higher export tariff rate.”

Lyonpo Loknath Sharma also said that the price escalates in every project before it completes.



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He said that the Kholongchu being the first joint venture and with less expertise during the signing of the MoU, the agreement drawn contradicts the Constitution and hydropower project policy.

Lyonpo said that discussions are being held to resolve the issues.

The NC stated that delays and cost escalation in these projects not only lead to loss of potential revenues leading to budget deficits and accumulation of debt that is transferred to future generations.

It stated that delays in the Kholongchu project have also created uncertainties for house owners and transporters as they are not able to service their loans. Similarly, many local contractors have not been paid and are facing numerous financial problems.

NA supported the recommendations from the NC through the show of hands.



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Similarly, NC recommended government to provide a definitive timeline for the implementation of the Sunkosh hydropower project so that the people can benefit from planned infrastructure development.

During the public consultations, the NC stated, the people have been informed that the project will start soon. Most of the development works like roads, bridges and other infrastructure works under Lhamoidzingkha drungkhag has been delayed waiting for the project to commence.

Members also mention this delay has also caused a major impact on the use of alternative routes to connect the Drungkhag to other interior Dzongkhangs as many bridges are yet to be built. The people are also hesitant to plant cash crops in case of change in the land use due to the Project.

However, Lyonpo Loknath Sharma said that the government cannot give a timeline for the project commencement.

The Sunkosh project is estimated cost about Nu 200B.



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Lyonpo said that with solar and hydrogen energy evolving, there is less demand for electricity. “The government of India has also said that they have secure energy.”

Lyonpo said that the government has also already informed the people that it is not possible to start the project immediately and not to wait for the project.

“Government has also directed the dzongkhag administration not to stop any activities. It is difficult to come in five or six years,” Lyonpo said.

The NA did not support the NC recommendation.

Meanwhile, NC also recommended the government allocate an adequate budget for Jyenkana-Sangbaykha, Haa-Samtse SNH as it is a spillover activity that will be executed by the Thimphu DOR region office and to consider the possibilities of extending the education loan term up to 15 years, excluding gestation period, in consultation with the Royal Monetary Authority.



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Respite for public amid high inflation as fuel prices lowered with cuts on taxes

Mon, 06/27/2022 - 19:16

Under pressure from several quarters, the government on Saturday decided to slash the prices of petroleum products.

Commerce and Supplies Minister Dilendra Prasad Badu said at a press conference on Saturday afternoon that the government has reduced the price of petrol by Rs20 per litre and made diesel cheaper by Rs29 per litre.

Nepal Oil Corporation, the state-owned fuel utility, then came up with a revised price list as per which petrol now will cost Rs179 per litre and diesel and kerosene Rs163 per litre.

The new decision came into effect from Saturday midnight.

Minister Badu said that the government slashed equivalent taxes to enable the NOC to reduce prices of diesel and petrol. The government, however, has not clarified which taxes were slashed, and to what extent.



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The move to cut the prices follows instructions from the House committee on Friday and a meeting of the coalition partners on Saturday to revise the rates of petroleum products, saying inflation was taking a toll on the general public.

The government was instructed to slash various taxes imposed on petroleum products.

After the latest hike in prices, petrol cost Rs199 per litre. Diesel and kerosene price had risen to Rs192 per litre. On Sunday night, Nepal Oil had jacked up prices—Rs21 in petrol and Rs27 in diesel and kerosene per litre. This was the highest increment ever made by the oil monopoly.

On June 9, the corporation hiked the price of petrol by Rs8 per litre to Rs178 per litre and diesel and kerosene prices by Rs12 per litre to Rs165 per litre.

After petrol price hit one rupee short of Rs200, there was a public outcry. With the rise in diesel prices, commodity prices also shot up, making life difficult for the general public.



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Calls for cutting taxes on fuel grew, with students launching protests and lawmakers taking the government to the task over high taxes imposed on petroleum products.

According to Nepal Oil, the government levied Rs65.61 in taxes on every litre of petrol sold at Rs199. It collected Rs49.53 on every litre of diesel sold at Rs192. The government also collects Rs10 as infrastructure tax in each litre of petrol and diesel sold.

“With the government deciding to reduce taxes by a certain percentage point, the prices have been reduced,” said Binitmani Upadhyay, deputy director of Nepal Oil Corporation. At the government’s directive, the corporation board took the decision to revise the price.

Prices have been adjusted as per the government decision to reduce taxes,” said Upadhyay. “The Ministry of Finance will decide on which headings taxes will be reduced. At this time, we only know that taxes have been reduced.”

The government has been levying tax on 7 different headings on petroleum products.

On the purchase of one litre of petrol at Rs131.91 from the Indian Oil Corporation, the government levies Rs25.23 customs tax, Rs4 as road improvement tax, Rs1.50 as pollution tax, Rs10 as infrastructure tax, Rs22.89 as VAT and Rs1.99 for the price stabilization fund.

“If the government does not reduce tax or price on source, the corporation will face a monthly loss of Rs9.67 billion,” said Upadhyay.



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The government earned Rs118.82 billion in various taxes levied on fuel in the first 11 months of this fiscal year. The high taxes, however, drew much criticism against the government.

A day after the the Industry, Commerce, Labour and Consumer Welfare Protection Committee of Parliament directed the government to slash taxes on petroleum products by half, a meeting of the ruling coalition on Saturday also instructed the government to reduce petroleum prices.

When the prices of petroleum products were hiked on June 19, the corporation was facing a monthly loss of Rs4.7 billion, according to the NOC.

“We hope that the tax rate will be reduced at source by the government so as to make up for the losses of the corporation while providing relief to the consumer,” said Upadhyay.



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At Saturday’s press conference, Minister Badu said that people have been forced to shell out more while buying petroleum products because of high taxes, stressing the need to reduce taxes.

Rising diesel prices have stoked inflation in the country.

According to the Nepal Rastra Bank, the year-on-year consumer price inflation jumped to a staggering 7.87 percent in May, hitting a 69-month high. It was 3.65 percent in May last year.

With the reduction in diesel price, Minister Badu requested traders to reduce the price on daily essentials so as to provide relief to consumers immediately.

After the latest hike in petroleum prices, the Department of Transport Management had allowed public transport operators to hike fares by 5.3 percent. For cargo carriers along the Tarai and hill routes, the fares have been hiked by 7.7 percent and 6.94 percent, respectively.



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“Action will be taken if firms or traders are found guilty of charging more,” said Badu.

For governments across the world, reducing fuel prices is a tough task. For one, once reduced, it is difficult to increase the price, and second, fuel taxes are the most important revenue sources.

But Nepal’s predicament has been growing lately.

The government was reluctant to forego the bonanza created by rising oil prices, as it was raising more revenue from the consumers in the form of taxes, just while it was paying more in dollar bills, leading to a reduction in its foreign exchange reserves.

In the first 11 months of the fiscal year ended mid-June, Nepal’s fuel import bill almost doubled from the previous year. Imports were valued at Rs340 billion, compared to Rs191.18 billion in the same period last year. The rising imports contributed to depletion of foreign exchange.

As of the first 11 months of the current fiscal year, the gross foreign exchange reserves decreased 21.1 percent to $9.28 billion in mid-May, 2022 from 11.75 billion in mid-July 2021, according to Nepal Rastra Bank.

Economists say there was no other way than tax cuts on fuels for a short duration to cool down the rising inflation.

It is an immediate and short-term relief for the consumer as the Indian Oil is likely to send hiked prices. I think it is both profit and loss for the consumer,” said Dipendra Bahadur Kshetry, an economist who is also a former central bank governor.



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“With tax cuts, it will be difficult for the government to meet the revenue target while in the long-term different development projects could be impacted if this situation of fuel prices continues,” said Kshetry.

According to Kshetry, petroleum prices will continue to remain unpredictable until the Russia-Ukraine war continues.

“India will not sell petroleum products by bearing losses. So we should consider reducing the consumption for some time,” he said.

He also cautioned about yet another factor.

“In principle, it is the right decision to reduce the prices so as to provide relief to the consumer but the impact is not seen in the market immediately,” he said. “The prices in the market go over speculations and traders are unlikely to reduce the prices of commodities immediately arguing that the cost of all goods and services has increased.”

According to Nepal Oil Corporation, when petrol price was hiked to Rs199, it was a 56.69 percent rise within a year. Similarly, when diesel price went up to Rs192 per litre, it was a 74.54 percent rise within a year.

Brent crude oil is being traded at $113.12 per barrel, as per international media.

Namraj Ghimire, director general of the Department of Transport Management, said that transportation fares will be reduced on Sunday accordingly.

“As the office is closed today [Saturday], we will make a decision on Sunday by calculating the reduced price of diesel,” he said.

As per the auto-pricing mechanism, the government allows transport entrepreneurs to hike fares when oil prices fluctuate by 5 percent.



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Economist Ram Prasad Gyawali said that the reduction in taxes of petroleum product prices is a welcome step at a time when high inflation was hitting the general public hard.

“Petroleum products work as raw material for production and when the prices decline, the cost of production automatically declines, giving much-needed relief to the consumer,” said Gyawali. “Though the government may face losses in terms of revenue, it can compensate for that when things start getting better.”

The Kathmandu Post

ANN

https://tkpo.st/3NocZqO

Cold stores to help farmers store produce

Mon, 06/27/2022 - 11:28

Choki Wangmo | Tsirang

Pigs are fattening by the day on the farms and without a common ground between vendors and farmers rearing pigs, business for local pork producers in Southern Bhutan is at a standstill today.

However, according to the farmers and Members of the Parliament (MPs), cold storage could address this problem in the long run as they wait for immediate interventions.

In the recent question-and-answer session at the National Council (NC), Dagana NC member Surjaman Thapa asked Sanam Lyonpo Yeshey Penjor if the government could support poultry and piggery farmers with cold storage facilities to reduce damage and address marketing challenges.

He said that due to a lack of market, livestock farmers were discouraged to do business which will have adverse impact in the long run.



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Lyonpo said that under the initiative of Food Corporation of Bhutan Limited (FCBL), construction of cold stores at Wangdue and Sarpang is complete while the store in Khaling would be completed in a few months. “The ministry in collaboration with the economic affairs ministry and FCBL plans to build five cold stores by next year.”

Sarpang NC member Anand Rai asked if the ministry could help market eggs and meat items through Bhutan Livestock Development Corporation Limited or implement a buy-back scheme.

The minister said that in the buy-back scheme, the government has to buy produce at the lowest price, incurring losses. “The government initiated an incentive-based scheme production where producers can either sell their produce to the government when the products are in good condition or sell it themselves.”

Lyonpo said that while he was aware of such challenges among farmers, the ministry couldn’t intervene as it is the result of market forces. He said that the government cannot stop imports as such abrupt measures would create a market vacuum.



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“It is a problem in few dzongkhags for a short period of time. We have to consider the welfare of both producers and consumers,” he said.

The ministry, meanwhile, had sought support from the Bhutan Chamber of Commerce and Industry to resolve agri-marketing challenges, the Lyonpo said.

Farmers in Tsirang and Dagana, who had been waiting for months to sell their local pork said that the government need to step in and resolve the price issue between vendors and farmers.

Their business before the holy month had been slow due to the low prices offered for local pork.  



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A farm owner in Tsirangtoed, San Man Subba, said that if there was a fixed farm gate price for farmers and a fixed market price for vendors, there won’t be price irregularities in local produce.

He said that currently, vendors refuse to buy local pork saying that the prices were high compared to imported ones.

Ramesh Tholong from Tsangkha, Dagana said that vendors were refusing to pay not more than Nu 200 for a kg of pork.  “We will be in loss considering the feed prices.”

Sidaman Gurung from Tashiding in Dagana said that while he has to repay loans, he couldn’t sell his piglets and local pork. “Farmers are not asking the government to totally ban imported pork but priority should be given to local producers.”

He said that the authorities concerned should carry out consultation with the producers and vendors to resolve the price issue and market challenges. “We can fix a reasonable price.”



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“Cold stores might help us tackle such challenges in the future,” he added.

Farmers are forming cooperatives and groups with the hope to address the issue.

Meanwhile, at the question-and-answer session at the National Assembly yesterday, Lyonpo said that the marketing challenges farmers faced were not a result of increased import but the price of local produce.

NA passes Bill for effective conservation and management of natural resources

Mon, 06/27/2022 - 11:28

Chhimi Dema

The National Assembly (NA) on June 24 adopted the Forest and Nature Conservation Bill of Bhutan 2021 with 38 ‘Yes’, and two “ No” votes and two abstained.

Chairperson of the Environment and Climate Change Committee, Gyem Dorji, said that the Act, which was enacted in 1995, was not amended for more than two decades.

“During these years, the forest department was guided by executive orders and notifications, which were incorporated into rules, regulations, and guidelines,” he said.

The Act, he added, contradicts the Constitution, the Penal Code, and legislations such as the Land, Mines and Minerals, and Water Acts.

“The amendment would give synchronicity to all these Acts,” Gyem Dorji said.



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The Act allows the government to declare any protected area whereas Article 5 of the Constitution allows the Parliament to declare the area.

The Act overlap with the Mines and Mineral Management Act of Bhutan 1995 on the authority to regulate surface collection.

In the Bill, forest produce includes trees, timber, non-forest produce, wild animal, peat and soil whereas the Act included boulders, stones, sand, gravel, and rocks with are in the Mines and Minerals Act.

A statement report on the Act states that contradiction with the other laws has posed practical problems to the implementers and people. “Further, the field officials are also challenged for the want of clear procedural guidance to guide them during the implementation and enforcement process.”

The report states that the Act does not cover some of the forest protection and conservation aspects such as watershed management, private forest management, provisions on establishment and regulation of the wood-based industry, waste management in State reserved forest, and soil and water management.”



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The Environment and Climate Change Committee of the House presented the Bill to the National Assembly on June 10 and made 134 recommendations.

The amendment allows the sustainable use and management of forests to benefit the people.

As per Section 119 of the Bill that the Ministry of Agriculture and Forests shall adopt and implement science, research, and technology-based innovation measures to prevent and mitigate human-wildlife conflict (HWC).

Additionally, Section 120 states that the government shall institutionalise appropriate measures with compensation to address damages caused by wildlife on people, property, crops, and livestock.

Gyem Dorji said that the ministry as prescribed by the rules had only a strategy to address HCW and that with the amendment of the Act, the ministry will institute appropriate measures to address HWC which will benefit the people.



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Through the amendment, technology such as drones would be used to assess HWC.

The amendment of the Act instructs the government to compensate for farmers’ losses.

Setting some relaxation, the amendment of the Act states that laying of trap or snare may be allowed on the farmland to protect crops, livestock, private property and threat to human life.

The amendment of the Act does not allow timber allotment from any critical ecological sites, landslide-prone areas, risk of damaging roads and bridges, and significant landmarks and heritage sites.

Some sections that were repealed pertained to seizing and releasing livestock used for transportation of illegal forest produce; the allotment of timber from state reserved forest land; and confiscating any vehicle, equipment or machinery used in the commission of forest offence, among others.



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The House also repealed the sections of the Bill that were already included in the Penal Code of Bhutan.

Going by Section 56 of the Bill, the Community Forest Management group members is limited to the use and management of trees and non-wood forest produce and shall have no ownership over the land, water resources, soil, sand, stone, boulder and riverbed materials in the Community Forest.

The Bill was passed to the National Council for deliberation.

CIT and dividends from SOEs grow by over 600 percent

Mon, 06/27/2022 - 11:27

Thukten Zangpo 

What could come as a welcome for the government is revenue from corporate income tax (CIT) and dividends from the 15 state-owned enterprises (SOEs), which have grown by over 600 percent in 2021.

The 15 SOEs excluding the Druk Holding and Investments companies contributed Nu 311.042 million (M) in the form of CIT and dividends, according to the budget report 2022-23.

Tax contribution saw an increase to Nu 201.042M and a dividend to Nu 110M. The increase was mainly due to the improved performance of Bhutan Development Bank Limited, Bhutan Lottery Limited, and Bhutan Duty-Free Limited. Many SOEs are still recuperating from the impact of the Covid-19 pandemic.

Figures from the finance ministry show that the SOEs contributed Nu 43.236M, out of which Nu 30.236M was in taxes and Nu 13M in dividends in 2020. The SOEs could not perform better because of the pandemic. Their contribution also declined by 77.1 percent compared with 2019.



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“During the pandemic, most SOEs were exposed to additional operational and financial stress in ensuring uninterrupted public service delivery under circumstances for which they were not necessarily equipped,” the budget report stated.

However, the ministry stated that the SOEs operated under broad social mandates to primarily fulfil non-commercial social objectives through the delivery of public goods and services.

Government subsidies were provided to many SOEs as compensation to cover the cost incurred or revenue foregone while executing social obligations.

According to the budget report 2022-23,  Nu 398.7M was transferred as subsidies to SOEs in the fiscal year 2020-21, which is an increase of 24.7 percent from the previous year.

Bhutan Broadcasting Service Corporation Limited operational subsidy increased by 12.1 percent (Nu 180.913M) from the previous year. Similarly, National Cottage and Small Industry Bank Limited (NCSIDBL) by 23.2 percent from the previous year.



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NCSIDBL was also provided with an interest subsidy of Nu 13.860M annually for 10 years starting from the fiscal year 2021-22.

Bhutan Agro Industries Limited, Food Corporation of Bhutan Limited, National Housing Development Corporation Limited, and NCSIDBL are the SOEs that receive the interest subsidy from the Government. Kuensel Corporation is the only SOE that has not received any subsidy despite suffering losses.

Subsidies provided to farmers through the Farm Machinery Corporation Limited for the hiring of farm machinery also increased by 38.6 percent from the previous year. Similarly, subsidies to support city bus services also increased by 104.6 percent.

The overall debt of SOEs has increased from Nu 39.821B to Nu 39.871B in the year 2021. The increase was mainly due to borrowing for Druk Green Power Corporation by 7.1 percent, Drukair Corporation Limited by 8.3 percent, and Penden Cement Authority Limited by 16.7 percent.



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Meanwhile, the ministry has initiated a reform study aimed to enhance efficiency, reduce the SOEs sector size, measures to track fiscal support and strengthen financial oversight.

The ministry projected that the CIT and dividend transfer from state enterprises was likely to increase considering new measures undertaken to open up restrictions. “Tax revenue was estimated to increase by 19.5 percent and dividend transfer by 3.6 percent in the fiscal year 2022-23.”

Eleven SOEs are wholly-owned by the government, two majority-owned, and two minority-owned. As of December 2021, the combined net asset value of SOEs was Nu 11.381B which was an increase of 15.7 percent as compared to the previous year.

NA rejects motion to establish a special committee for inflation 

Mon, 06/27/2022 - 11:26

Dechen Dolkar 

The National Assembly (NA) rejected the motions to establish a committee on increasing the price of goods and services proposed by the Opposition members on June 24.

The government, rejecting the motion, asked whether the MPs who are not in favour of the proposal could come up with a new committee.

Kengkhar Weringla MP Rinzin Jamtsho suggested need to establish a special or a multi-sectoral joint committee to carry out an in-depth study and present the report to the House.

Currently, the country’s inflation rate is “reportedly” at 7 percent.

Submitting the motion, Rinzin Jamtsho said that imports has been increasing which has lead to negatively impacted the trade situation, increasingly  challenged  the growth of domestic industries and depletion of the foreign currency reserve.



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He said that the situation has been aggravated by the Covid-19 pandemic and inflation has been flying off the roof.

“The government is responsible for monitoring, controlling and regulating the inflation rate,” the MP said.

The MP said that the situation is affecting the poor.

MP also said that now edible oil costs Nu 1,250, about 125 percent increase in Thimphu.

Tengye Lyonpo Loknath Sharma said that there are three factors—demand-pull, cost-push, and built-in with the internal and external inflation.  “Our inflation is an external factor.”



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Lyonpo said that the government already has a multi-sectoral committee for fuel which is monitoring the fuel prices.

Agrigulture minister Yeshey Penjor said that if people can reduce the import by substituting with locally produced goods, the inflation could be reduced.

Bartsham Songphu MP Passang Dorji said that there is injected inflation and imported inflation.

He said that if the inflation rises there, is stagflation. In the stagflation, there will be no employment opportunities and no economic growth.

“If the motion passes, we will know where our economy is and what essential items can be imported and what else we can export,” MP said.

The value of Nu 100 in 1991 is Nu 1,359 today.



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Prime Minister Dr Lotay Tshering said that despite the difficult situation, the government has maintained inflation below 7 percent.

In FY 2011-12, the inflation was 9.6 percent.

Lyonchhen said that the government has a committee chaired by the secretary of the ministry of economic affairs.

“If members feel that the committee is not competent to perform the duty, they can appoint another committee,” Lyonchhen said.

Finance Minister Namgay Tshering said that the rising cost of import has increased due to external factors: “The dollar rate has increased so high and there is a widening current account deficit.”

Opposition Leader Dorji Wangdi said that the petrol price has increased by 38 percent and diesel by 60 percent, which has led to rise in consumable items by 37 percent.



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“It will affect the low and middle-income group, since more than 80 percent are under this category,” Dorji Wangdi said.

He said that the per capita income has decreased over four years. “In 2017, per capita income was US$ 3,400 and last year came to US$ 3,100.”

Bringing Covid-19 back to focus

Mon, 06/27/2022 - 11:24

It might appear as if the Covid-19 pandemic has left us for good. This is because we are not seeing as many cases as we used to since it caught us almost by surprise. The scourge of the century is still a significant threat; we can not take it lightly.

In the neighbouring countries and the world beyond, Covid-19 continues to overwhelm people, governments and their health sectors. Our nearest neighbour, India, has been grappling with a sudden rise in the number of positive cases.

For example, Maharashtra recently saw a rise of 15 percent positive cases with the rate of positivity hovering at around 10 percent. As the number of previously infected people are contracting the virus again, many are asking whether antibodies from the previous infections could be waning.

What the science tells us is that viruses can retreat and revive, which means if we do not take necessary precautions, we can be infected again. Some scientists have gone on record to say that the current wave could be as devastating as the last one we experienced. While some may take it lightly by saying that the whole new development needs concrete study, we may be making ourselves more vulnerable to the Covid-19.



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What can not be argued is that we become easily complacent when case numbers drop. In many places in Bhutan, including Thimphu where population density is very high, simple and effective protocols such as wearing face mask and the requirement to wash hands have disappeared.

Experts tell us that information, education and communication are still very important. Covid-19 is here to stay and terrorise us for some time. What the health sector has done so far deserves praise, but to do more is our responsibility, each individually—we must prevent the spread of the virus as much as possible. For this, understanding the signs and symptoms of the condition is critically important. It’s about being careful.

As we earnestly consider re-opening, there are questions to ask: Are we doing enough to protect ourselves from this deadly virus? Is forgetting health protocols a way to defeat the rapidly-mutating virus? Can we risk further disruptions which have already crippled us as a nation?

Sensible restrictions and meaningful requirements still are very much relevant. It could be a case of penny wise and pound foolish otherwise.

Standing on the Shoulders of Giants – How to Search for Existing Technological Inventions and Innovations for R&D

Mon, 06/27/2022 - 11:24

Whether you are a researcher, an entrepreneur or a corporate innovation leader, it would be crucial to find out what kind of technological solutions exist already to get R&D (Research and Development) insights, adapt an existing solution for your use, challenge the validity of a patent, or gather evidence of patentability. Sometimes, much time and money may be spent trying to invent or innovate on something only to realize too late that the same had been done by somebody already.  

So, how do you find out what kind of technological solutions already exist? Today, in the age of the Internet, it is not difficult. You just need to know where to search and how to search. I got to learn about this in my Ph.D course and later at a training course I attended at the Swedish Patent Office in Stockholm in 2018. Broadly, you can search for technological inventions and innovations in two categories of search databases: patent databases, and non-patent literature databases. This article is meant to show you the basics so that you can use it as a starting point to learn more on this subject. 



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Patent Databases 

What is a patent? It is a kind of Intellectual Property (IP) right granted for an invention which can be a product or a process. Sometimes, people loosely call all kinds of IP protections as patent, but in reality, patent is just one of the IP protections, and it is the most difficult one to obtain. Other IP protections include copyright, trademark, industrial design, utility model, traditional knowledge, geographical indications, genetic resources, etc. So far, only one Bhutanese individual has been granted a patent by the Intellectual Property Department under the Ministry of Economic Affairs. To be granted a patent takes a long time because patent examiners have to make sure that the invention is really new. 

Patent databases contain detailed information about patents in searchable format. There are many free patent databases online.  However, you should have some idea about patent searching. You can get help on how to do this from the Intellectual Property Department under the Ministry of Economic Affairs or from one of the Technology and Innovation Support Centers (TISCs) recognized by the IPD. Alternatively, you can search online for patent search guides and follow them.



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Free Patent databases

Patentscope by WIPO (patentscope.wipo.int)

WIPO is one of the 15 agencies of the United Nations. It has 192 member states. Patentscope by WIPO provides free access to 83+ million patent documents from multiple participating patent offices, and it can be used in 9 different languages. 

Google Patents (patents.google.com)

Google patents was launched on 14 December 2006 as an experiment, but it soon gained popularity. Like the Google search engine, it has a simple user interface.  It even has a feature to include non-patent literature from Google scholar.

Espacenet is managed by the European Patent Office (EPO) and provides access to over 130 million patent documents from 97 countries. The website even allows you to search with multiple language combinations using its machine translation system.

USPTO (https://www.uspto.gov/patents/

search )

USPTO is a federal agency of the US Government which is responsible for grants of U.S. patents and registration of trademarks.The website not only shows published and applied patents, but it also gives information on what patents are, if your idea is eligible for a patent, patent application process, patent maintenance, etc.

Other free patent databases

PQAI is an open-source platform, created to improve the patent process by enabling better prior art search and analysis. Lens.org is an initiative of Cambia and Queensland University of Technology. 



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Paid Patent Databases

The abovementioned free databases are great, and may serve most of your purposes. But for professional searches, people use one of these paid patent search services: Derwent World Patents Index, PatBase, Patseer, Drug Patent Watch, Patsnap, Patent Inspiration, and WIPO’s INSPIRE.

Non-patent literature

Non-patent literature (NPL) refers to all published documents other than patents or patent applications. This encompasses scientific publications such as journals, books, or conference proceedings, news reports etc. Patent examiners use NPL to check if a patent application is really new (inventive step). 

NPL Academic Search Engines

Google Scholar (scholar.google.com)

Google Scholar is a very popular academic search engine for searching for academic journal papers and conference proceedings. Its simplicity and speed makes it very useful for doing a quick search on any topic of interest. It boasts coverage of over 300 million articles spread across various academic disciplines.

Microsoft Academic (academic.microsoft.com)

This is Microsoft’s response to Google Scholar and is not far behind in terms of ease of use and coverage since its relaunch in 2017.

PubMed (pubmed.ncbi.nlm.nih.gov) is very popular for free research on biomedical and healthcare literature.

SemanticScholar covers over 180 million articles and partners with the likes of IEEE, Microsoft Academic, and Springer Nature. Semantic Scholar applies AI to extract the meaning from the scientific literature.



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Two Simple Examples of Technology Search

Let us say you want to come up with an electric fence to ward off monkeys because there has been news reports that the electric fence currently used in Bhutan are not very effective against the monkeys. You can easily do a search on Google Patents using the key words “electric fence for monkeys” and look at the results you get. 

There are many patent documents related to the topic. Some look very interesting and may be worth exploring further. Few of the top results are: “Electric fence effective for monkeys, eagle and hakubishin”, “High impulse voltage generator for electric fence of electricity-saving type capable of certainly electrocuting monkey and wild boar”, and “Electrified fence for monkey invasion prevention”. Likewise, you can conduct searches on other patent databases to see if you get any interesting and unique results. The great thing about patents is that the patent holder is required to disclose complete information about the technology with detailed drawings and explanation in return for the protection of his patent rights.

Similarly, a search using the key words “Solar-powered vegetable dryer” returns many interesting results. If you are an innovator interested in coming up with a solar powered dryer for our farmers, the first step is to search these databases and look at what others have done. This will definitely refine your own invention or innovation. 

Changes in the System

Mon, 06/27/2022 - 11:23

What are other major changes?

The following are some of the major changes. 

1. One tourism policy 

The one tourism policy is to revitalize the policy of ‘High value, Low volume’ tourism, where all tourists coming to Bhutan will receive the same premium and exclusive services. Bhutan will re-brand as an exclusive destination and attract discerning visitors.  

 2. No Minimum Daily Package Rates (MDPR)

The Minimum Daily Package rate of USD 250 and USD 200 per night per tourist will be lifted and not applicable. The tourists will have more flexibility to choose the services and arrange their tour operations. The change will allow the service providers to offer innovative and competitive services. 



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3. Professionalized tourism service providers

The tourism service providers (tour operators, hoteliers, guides, and drivers) will be elevated and professionalized to provide exclusive services. Stringent standards for licensing and certification of tourism service providers will be introduced. Leveraging the economic makeup of our country, the tourism sector will engage youth in meaningful high skilled, and well-paid jobs and have the dexterity to navigate and excel in a rapidly-changing technology-driven world. 

4. Digitalized systems to enhance services 

There will be significant changes in the tour operations and service delivery. For instance, the visa application will be open, where individual tourists can apply and it will be 24/7. One-stop tourism online portal will be in place to cater to all services for tourists. Work is also being done on digital payment enhancement, including payment gateway. This has been a long-standing challenge for the tourism industry. With this, we hope to make digital payment easier and more efficient. 

5. More access to other parts of Bhutan 

There will be four land entry points – Samdrup Jongkhar, Gelephu, Samtse, and Phuntsholing, which will give everyone a good choice to explore other parts of Bhutan. All these places will have a dedicated tourist information center to support and facilitate tourists and those involved in tourism.



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What is the rationale behind lifting the Minimum Daily Package Rate?

The system of MDPR was designed in the 1970s when the Government pursued the role of a private tour operator. It was like hosting a Government guest today. This served the purpose of where choices were minimal and there was no existence of private tourism players with no competition and choices. However, now after about 5 decades where everything has changed, it has become imperative that we take advantage of the benefits of choices provided by the existence of many service players in the market. We need to ensure that services meet the expectations of our tourists. The demands of tourists have changed and it has become sophisticated. We need to ensure that the system is flexible and more agile and provide a level playing field for everyone.

 

 Some of the limitations of the MDPR are:

1. Discourages innovation and creativity as most stick to the minimum services.

Had to be paid in advance

Services such as accommodation, meals, and guides are fixed and pre-decided 

2. Doesn’t encourage going above the MDPR and also cannot account for payment of more than $200/250.

Misunderstood as tourism levy (SDF)



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Stakeholders gamed the system leading to revenue leakages, tax evasion, and making Bhutan a cheap destination through misuse of the MDPR and the various discounts

Not able to ensure value for money for tourists (e.g. a tourist actually pays USD 475 per day and lands up getting services worth USD 70 only.)

Pricing and services are not transparent  

Discourages out-of-pocket spending for food, accommodation, guide, and transport as these are all pre-decided and pre-paid. 

Tourists could not connect directly with service providers nor could apply for visas directly on their own. 

The lifting of MDPR is aimed at addressing these issues and also facilitating creativity and innovation in the tourism sector to achieve the ultimate objective of making Bhutan a high-value destination.

 

What will be the roles of the tour operators?



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Except for the mandatory requirement to process visas and accept the MDPR, everything else remains the same. With the lifting of these logistics responsibilities, the Tour operators can now dedicate their time and resources to professionalizing the tour operations and tour packages. There will be more opportunities for innovation – to think of newer and creative ways to package tour programs or to come up with newer products that will attract diverse interest groups. Now the tour operators can play a bigger role in crafting and promoting the products. The tourists can contact our tour operators directly with the awareness being created on tourists being able to book directly with a Bhutanese tourism service provider. A dynamic online portal is being developed for tourists to connect directly with the Bhutanese service providers and attractions, in addition to other features that will make choosing and connecting with the Bhutanese service providers easier.

However, the new system will not be able to accommodate the so-called briefcase tour operators.

 

How about the tourist guides? The concern is that many may go out of business given the sheer number of licensed guides available in the market.

In the new tourism system of High value, the role of tour guides will be most critical. Therefore the future tour guides will be professional and become the true ambassador of our country.

According to our records, pre-Covid-19 there were 3597 licensed guides, of which only 1300 were active for about 72,199   tourists. Therefore, the guides like the tour operators and hotels in Thimphu, Paro, and Punakha were in oversupply.



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So, it was a fact that more than 50  percent of the licensed guides were already unemployed pre-Covid-19 and going forward because of the slow re-start of tourism even without the effect of the changes, the tourist arrivals will be gradual. This means the engagement of guides will also be gradual and besides the required number of guides will be much lower than pre-Covid-19.

The vision for future guides of Bhutan is really high. A Bhutanese tour guide for example should be able to not only elaborate on every aspect of our country, but also about other countries. For instance, a Congolese tourist should be able to learn about Congo including their language from the Bhutanese tour guide.  The work on this vision has already been started by the Desuung Reskilling Programme.

 

Who are the high-value tourists or how do you define high-value tourism in the context of Bhutan?

I like to clarify that our objectives of ‘High value, Low volume’ are beyond revenue, meaning other objectives such as sustainable development, cultural preservation, promotion, spirituality, and wellbeing promotion are equally important.



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With this backdrop, High Value tourists can be understood in two equally important contexts. First is the value in terms of the profile of the tourist. A tourist who is discerning respects the local nature and culture, who appreciates the authentic ways of life, who appreciates space, tranquility, self-fulfillment and rejuvenation, clean air, clear water, the highest unclimbed mountain in the world, and virgin forest.

Second in terms of the minimum spending. This is not at all being elitist, in fact, it is the way of the world. For instance, even my brother wants to visit the Antarctic, but he cannot because he does not have the money to sponsor his trip. And this applies to every one of us. We know the doors to heaven are open to everyone, however, one has to fulfill minimum merits to be able to enter heaven. Similarly, while everyone is welcome to visit Bhutan, some minimum criteria have to be fulfilled to be able to visit Bhutan. And one such criterion could be the minimum spending. 

Nu 27.2B worth of T-bills and bonds raised: FM

Mon, 06/27/2022 - 11:22

Thukten Zangpo

The government has issued Nu 27.2 billion (B) worth of Treasury Bills (T bill) and long-term bonds as of June 23 this year to raise funds, according to finance minister Namgay Tshering.

Responding to the Dewathang-Gomdar MP, Ugyen Dorji who asked for an update on T-bills and bonds sold by the government and their purpose, Lyonpo said that the T-bills are issued as part of the government’s temporary monetary measures, which have been practised by many other developed and developing countries globally.

“T-bills are issued as short-term cash management to finance the resource gap when the expenditure has to be met before receiving expected external grants or when there is projected domestic revenue collection to finance,” he said.

Lyonpo added that the Indian government has committed a total grant of Nu 45 billion (B) in the 12th Plan, however, the grant is disbursed on yearly basis as per their annual budget plan.



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The government issued T-bills for a term of 1-4 months with an interest rate of 0.09 to 0.92 percent. After maturing, the T-bills are redeemed (use the proceeds from the maturing bill to buy another bill).

The government has issued Nu 19B worth T-bills as of June 23 this year.

By this month, Lyonpo said that T-bills would come to Nu 15.5B after Nu 3.5B would be redeemed from the World Bank’s grant.

Bonds were issued when the FIs have excess liquidity and there are no avenues of lending for business activities. The government issued a first-time bond in 2020 when the economic situation and economic activities were not doing well.

Lyonpo added that T-bills and bonds are usually subscribed by the Financial Institutions (FIs) from statutory liquidity ratio (SLR) as per the Royal Monetary Authority’s regulations and it would not soak up liquidity to meet private sectors’ demand.



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SLR is a certain amount of reserve money the FIs need to keep in case the public wants their money back.

The FIs have to maintain 20 percent of total liabilities or deposits either in the cash or in government securities as mandated by the RMA’s regulation.

The government had raised Nu 8.2B from the bond’s term ranging from 3 years to 10 years of which Nu 7.5B was allocated to the National Resilience Fund and Nu 700 million (M) to National Cottage and Small Industry Bank Limited.

Lyonpo said that the government is in the process of converting Nu 4B T-bills into bonds, as requested by the FIs.

Picture story

Mon, 06/27/2022 - 11:22

His Holiness the Je Khenpo yesterday offered prayers and blessings on the 50th anniversary of the establishment of Dechenphodrang Monastic School. The three-day celebratory rituals will end tomorrow. 

Fourth phase of monetary measures provides loan restructuring options

Sat, 06/25/2022 - 15:39

Eight loan restructuring measures extended to ease the impact of the pandemic

Thukten Zangpo 

Phase IV of the monetary measures will allow eight different forms of loan restructuring options to support depending on the severity of impact of the pandemic and the affordability of the borrowers.

The measures include deferment of loan repayment, partial repayment of loans, extension of maturity period for term loans, change in the repayment frequency, conversion of overdraft or working capital facility to a term loan, loan splitting, transfer of loans to third party, and extension of gestation period.

The Royal Monetary Authority (RMA) issued standard operating procedures (SOP) of the monetary measures to the financial service providers (FSPs) on Thursday which allows them one or more loan restructuring measures based on the risk classification and affordability of the borrowers.



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The sectors were categorised under high, moderate, and low risk.

Hotels and Restaurants, both standard and budget are categorised under the high-risk sector, would get a deferment of loan repayment for up to two years and an option of partial loan repayment of 50 percent installment for up to two years.

Similarly, loan-term for hotels and restaurants under construction would be extended from 20 years to 30 years excluding the gestation period for both existing and new loans.

Under the moderate risk sectors, construction (contract-based), hospitality, entertainment, and recreational services, mining and quarrying, manufacturing enterprises, handicrafts and textile production, trade (retail), housing (commercial), home loans, personal loans (consumer and mortgage), transport (commercial and non-commercial), and education loan would get a loan deferment for up to one year. These sectors would also have the option of partial repayment of 50 percent of installments for up to one year.

Both high and moderate risk sectors can extend the maturity period of loan terms up to three years in addition to the deferment period. This will allow a reduction in installment amount by spreading the repayments.



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The support measures also allow the sectors to change their repayment frequency to monthly, quarterly, or half-yearly.   

The sectors are also eligible to convert the overdraft working capital facility to term loans, which will enable the borrowers to make the payment as per the agreed repayment schedule.

Additionally, loans can be split into multiple accounts to reduce equated monthly installments and can be used with other loan restructuring facilities such as deferment of repayment or partial repayments.

The loans can also be transferred to a third party to an independent party wishing to purchase the collateral.

For projects under construction, the gestation period can be extended up to two years depending on the progress of the project.

Meanwhile, low-risk sectors like institutional or educational services, ICT, contract (non-construction), consultancy services, health services and traditional medicines, wood-based products, renewable energy, hydropower, traditional and herbal medicines, trade (wholesale), crop cultivation, livestock farming, agro-processing, forestry, loan against fixed deposits and others are eligible for an extension of gestation period up to two years depending on the progress of the project.

Interest accrued from loans deferred or partially repaid for the period from phase I to phase IV would be converted to a fixed equated installment facility (FEIF) account.



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FEIF accounts are created for the transfer of accumulated interest during the deferment period. Borrowers would be liable to pay the amount in the FEIF account in equal installments for a period of up to five years.

Similarly, for soft working loans ending deferment or gestation period on June 30 this year, the FEIF would be opened for the transfer of accumulated interest and commencement of repayment without charging interest.

However, the RMA stated that a separate directive would be issued on the accounting treatment and other prudential requirements related to FEIF accounts.

According to the RMA, outstanding loans as of June with performing repayments are eligible for the support.

However, loans to the government, loans to financial institutions, staff incentive loans and credit cards, soft working or working capital or bridging loans granted under the previous monetary measures, FEIF accounts, and non-performing loans (NPLs), including loans suspended, under litigation or asset pending foreclosure are not eligible for the latest monetary measures.



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The SOP states that NPLs would be resolved through NPL Resolution Framework. The framework aims to support and rehabilitate viable NPLs through loan restructuring measures while resolving the non-viable loans through various foreclosure means such as court or out-of-court settlements.

“Extending relief measures to NPLs without careful consideration would only defer the problems temporarily without necessarily resolving underlying issues. And in the process, the borrowers are often burdened with growing indebtedness, causing social concerns,” the SOP stated.

Currently, the FSPs are in process of developing their specific internal SOP for the implementation.

Bar Council hands lawyer 1-year suspension for unethical conduct

Sat, 06/25/2022 - 15:38

Staff Reporter  

The Bar Council of Bhutan yesterday suspended a private lawyer for breaching the code of conduct. The suspension comes into effect on July 15.

A woman had complained to the Jabmi Tshogdey (Bar Council) that her lawyer Ngawang Tobgay had simultaneously represented her opposing party’s case at Paro dzongkhag court, while her case was ongoing with the High Court. She asked the lawyer to refund the fees she paid him.

The case was reviewed by the disciplinary committee of the Bar Council.

The woman attached the validly executed agreement between the parties to prove that her lawyer was obliged to take up her case till the completion of the appeal system.



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Ngawang Tobgay admitted the existence of “Conflict of Interest” as alleged when the agreement with his client was still valid.

The woman requested the council to take action against Ngawang Tobgay and assist her in restituting the fee that she had paid him.

The Bar Council on the recommendation made by the Disciplinary Committee has found that Ngawang Tobgay presently holds a Bar Council certificate to practice as a jabmi (lawyer).

“Jabmi does admit the existence of conflict of interest by intentionally representing the case of his client’s opposing party simultaneously albeit in another court (Paro), without the consent of the client while the case was ongoing in the High Court,” stated the council’s decision handed to the parties.

On January 3, 2022, Ngawang Tobgay appeared before the committee and admitted his existence of “Conflict of Interest” by representing the client’s opposite party in another court during the subsistence of the agreement.

The council found prima facie evidence, including an admission by the Ngawang Tobgay, of “Conflict of Interest” for representing his client’s opposing party without the client’s consent.



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Section 36 (d) of the Jabmi (Amendment) Act of the Kingdom of Bhutan 2016 imposes a duty on jabmi to “always respect the interests of their clients and not represent them where interests of the clients’ conflict.”

Section 36 (e) of the Act imposes a duty on jabmi to “give disinterested advice to the client and if the jabmi is or becomes interested in the transaction of the client he/she should disclose such interest to the client.

Moreover, the jabmi was obliged to represent the client’s case till the Supreme Court of Bhutan upon which only the remaining amount of Nu 300,000 was to be paid by the client as per the agreement executed in October 2021 between Jabmi and the woman.

“In this case, the Jabmi has failed to abide by the code of conduct of the Jabmi (Amendment) Act 2016 by failing to disclose conflicting interests to the client,” the Council’s decision stated.

The Act constitutes unprofessional conduct and therefore, violated the provision of the Jabmi (Amendment) Act 2016.



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The Bar Council decided that Jabmi was not liable to refund the Nu 200,000 the complainant paid in advance. The two sides had agreed on a fee of Nu 500,000 of which the Jabmi was paid Nu 200,000 at the initial stage of proceedings. The Jabmi had prepared the documents, provided legal advice and represented his client in the dzongkang court and the High Court. Therefore, the committee did not find any basis to ask the jabmi to reimburse the advance paid.

Ngawang Tobgay is not allowed to appear before the court as jabmi for any person, whether in an ongoing or new case, until the suspension order is revoked by the Bar Council.

Government subsidies to SoEs drop

Sat, 06/25/2022 - 15:37

MB Subba 

The government has slashed its annual subsidies to state-owned enterprises (SoEs) and other agencies by 4.5 percent in the fiscal year 2022-23 although the Covid-19 pandemic has affected their businesses.

The total subsidies provisioned for the fiscal year have been reduced to Nu 1.915 billion (B) from Nu 2.007B in the previous fiscal year.

The government provides subsidies to help critical sectors or enterprises keep the price of a commodity or service low and sustain their businesses.



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A majority of the SoEs claimed they have been struggling financially due to the Covid-19 pandemic, but have fulfilled their social mandates.

While about Nu 1.84B of the total subsidies is for recurrent expenses, Nu 75.88 million (M) is for capital works.

More than Nu 1.4B is for domestic power tariff. The government provides the subsidy to Bhutan Power Corporation Limited (BPC).

The Broadcasting Service Corporation Limited has been allocated Nu 182M in the new fiscal year.

The state-owned broadcaster has been severely affected by the pandemic both professionally and financially, according to BBS officials.

As an SOE, BBS is required to meet 50 percent of the current expenditure from the revenue it generates. In 2021, the BBS’s financial performance improved and generated Nu 44.950M.



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The Bhutan Chamber for Commerce and Industry (BBCI) has also been allocated Nu 10.5M.

The government has allocated Nu 50M as operational subsidy for community service centres under the National CSI Development Bank.

More than Nu 86M million has been alloted for interest and principal payments on account of the purchase of aircrafts.

The Bhutan Agro Industries Limited has been allocated Nu 14.459M for interest subsidy and almost Nu 3.6M as price support.

SOEs are not only a major source of revenue for the government but also play a strategic role in providing infrastructure and public service by operating in key strategic sectors.



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Few SOEs had frozen the recruitment of employees for financial reasons while some have resorted to cost-cutting measures to cope with the loss of revenue.

Meanwhile, the rationale behind providing subsidies is to help SOEs meet their social mandates and the public services.

Is Bhutan’s economy at risk? 

Sat, 06/25/2022 - 15:37

Thukten Zangpo

Rising food prices driven by cost of transportation, a growing trade deficit, burgeoning debt, and decreasing domestic revenue. These are not good signs for any country recovering from the Covid-19 pandemic. Is the country’s economy at risk?

Bhutanese economy has been recovering well from the pandemic after the economy contracted to 10.1 percent in 2020. The finance ministry in its budget report for the fiscal year 2022-23, had projected the real gross domestic product (GDP) to grow at 3.7 percent in 2021 and 4.5 percent in 2022 respectively. In 2023, the economic growth is projected at 3.88 percent.

However, economists say that the country’s short-term economic outlook is concerning. The World Bank had also recently signaled that many countries could face stagflation, a slow growth combined with high inflation.



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Inflation

Bhutan’s consumer price inflation accelerated from 5.6 percent in 2020 to 7.4 percent in 2021, which was above the Royal Monetary Authority’s (RMA) upper tolerance of 5 percent. The inflation eased to 5.79 percent as of April this year.

Inflation hurts the fixed-income groups, workers in informal sectors, small businesses, and the poor the most. An economist said that combined with higher unemployment, rising inflation will push more people below the poverty line, household debt will also rise, and spending cuts will follow.

Food prices contributed to about 60 percent to the overall inflation and non-food contributed to 40 percent in 2021.

The finance ministry in the budget report stated that the rising cost of fuel will have a ripple effect that can cause a significant trade shock. Similarly, the rising cost of goods is likely to affect manufacturing competitiveness and impact investment prospects. It could also paralyse the economy because it erodes the purchasing power of Ngultrum making the cost of goods expensive for consumers.

However, the ministry projected inflation to fall to 5.2 percent in 2022 and 3.5 percent in 2023 at the pre-pandemic level if supply-side disruptions dissipate and global food and energy prices stabilise.



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Fiscal deficit

Bhutan’s fiscal deficit has been widening over the years. The fiscal deficit of Nu 2.734B (1.5 percent of GDP) in the fiscal year 2018-19 was projected to grow at an alarming rate to Nu 17.498B (9.3 percent of GDP) in this fiscal year.

With dwindling domestic revenue, the deficit is projected to further widen at an all-time high of Nu 22.882 billion (B), which is 11.25 percent of GDP in the fiscal year 2022-23 of the total expenditure estimated at Nu 74.807B.

According to the finance ministry, the deficit would be financed through net external concessional borrowing of Nu 0.27B and net domestic borrowing (treasury bills and long-term government bonds) of Nu 20.356B.

The deficit was observed because of the shortfalls in the domestic revenue collection and increased spending requirements related to the pandemic. Bhutan adopted tax cuts during the crisis and forgone revenue of Nu 5.01B in the income year 2020. Tax to GDP ratio was 11.7 percent in the fiscal year 2020-21, a decrease of 1 percent as compared to the previous fiscal year.

According to the budget report, the ministry targets to contain the fiscal deficit below 5 percent of the GDP during fiscal year 2022-23.



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Trade deficit

Rising prices of goods and increasing imports is already widening the country’s current account deficit (CAD). The CAD was projected to widen from 12.4 percent of GDP in the fiscal year 2020-21 to 23.6 percent of GDP (Nu 44.4B) in this fiscal year.

Moreover, the trade deficit which is the largest component of CAD was estimated to widen from 7.1 percent in the fiscal year 2020-21 to 17.8 percent of GDP in the fiscal year 2021-22.  This was attributed to a decline in energy generation and lower hydro exports and a significant increase in imports. However, figures with the ministry show that both exports and imports including electricity increased by 18.9 percent and 35.8 percent respectively in 2021 compared to 2020.

The country’s export was little more than half the import value at Nu 58.25B. Import in 2021 was worth Nu 90.323B.

As the economic activities picked up imports from India surged to Nu 71.236B in 2021 compared to Nu 51.379B in 2020. Imports from third countries also saw a surge. Bhutan imported goods worth Nu 18.99B in 2021. It was Nu 15.26B in 2020.

As an import-dependent economy with a pegged exchange rate, any depreciation of the Indian rupee versus the US dollar raises the cost of imports from third countries. However, the pegged exchange arrangement is in favour of Bhutan as more than 80 percent of its trade is with India.

The ministry projected that the CAD to narrow as trade balance improves and electricity exports increase with the commissioning of the new hydro-projects- Puna-I, Puna-II, and Nikachu in the medium term.



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Foreign currency reserves

Widening current account deficits eats into the foreign currency reserves. The gross international reserves is estimated to deplete to USD 1.33B this fiscal year from USD 1.56B from the previous fiscal year.

Of the total, convertible currency (CC) reserves are estimated at USD 1.157B and INR reserves at INR 13.076B (USD 171.6M). The total reserves would be sufficient to finance 22 months of essential imports.

“It is on a declining trend as no new investments generating foreign exchange earnings have been identified. The recent trend indicates that there has been a significant increase in imports without many corresponding inflows, which could possibly risk the pegged exchange rate regime,” the ministry stated.

Tourism and export was either shut down or was happening on a minute scale, which had a significant impact on the reserves of a country. Foreign direct investment (FDI) also did not see much growth.

According to the ministry, the CC reserves inflows are limited to external grants, loans, and hydropower receipts making it difficult to meet the balance of payment obligations and straining the foreign currency reserves.

Prime minister Dr Lotay Tshering during a question-answer session on June 21 said that if the country faces a foreign reserves crisis, the government has to either reduce or stop imports. He added that Druk Holding and Investments is coming up with plans to revamp two to three existing FDI projects to earn foreign reserves.



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External Debt

As of March, this year, the country’s debt was recorded at Nu 247.68B (130.9 percent of GDP). About 89.7 percent of the debt was external debt. Major share of the debt was from the six hydropower projects in the country. At Nu 162.197B, hydro-debt contributed to 73 percent of the total external debt.

Non-hydro debt stood at Nu 59.91B, constituting 27 percent of total external debt.

INR denominated debt accounted for 69.7 percent of total external debt at Nu 154.9B and the convertible currency debt was USD 884.191M which was equivalent to Nu 67.20B.

Of the total debt, 91.2 percent of the hydro-debt was denominated in Indian rupee.

Director of Macroeconomics, Research and Statistics of the RMA, Gopal Giri, during the Bhutan Democracy Forum last month said that if the pegged exchange regime is distorted, Bhutan might have to pay more for hydropower debt. He added that although the Indian rupee is depreciating currently, the exchange rate is not volatile as India is a big economy.

The ministry projected the external debt to increase from Nu 229.202B on June 30, 2022, to Nu 239.814B by June 2023, an increase of 4.6 percent.

The growth was projected mainly due to hydro loan disbursements, projected at Nu 11.737B for the fiscal year 2022-23, and Nu 5.470B of budgetary loan disbursements from multilateral development banks and Japan International Cooperation Agency.

The external debt-to-GDP is projected to reach 117.9 percent in the fiscal year 2022-23, a steep jump in the following fiscal year 2023-24 hitting 129.1 percent.

The projected hike in fiscal year 2023-24 is mainly contributed by the capitalisation of interest during construction of Punatsangchhu-II estimated at Nu 42.333B with the expected commissioning in June 2023.

However, delays in hydropower projects could pose risks and could raise the country’s debt. The cost of the two major ongoing hydropower projects in the country, 1,200 megawatts (MW) Punatsangchhu-I (P-I) and 1,020MW Punatsangchhu-II escalated to Nu 93.75B from Nu 35B and 89.77B from Nu 37B estimated in 2009 respectively.

Understanding Tourism Industry

Sat, 06/25/2022 - 15:36

Current national discourse on the tourism industry, with all the passion and diversion of views, is educative. It is a welcome trend that there is a vigorous exchange on an issue of national concern and importance and impact. 

Of course, people are upset. Some of them might lose their businesses and some may need to change their careers. It is obvious from the views and arguments that, for some, it is about personal interests, which is understandable. For some, it is a general concern about an important issue, which is reassuring. And some are getting the message that Bhutan must aim high and must achieve those goals. 



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Emerging from the sometimes-heated debate are some illuminating perspectives on how we understand concepts. One is that we often distort the term “high-end”. For most people high-end tourism means wealthy visitors who stay in expensive luxury hotels. We forget that high-end refers to the destination, not the tourist’s bank account. It is the experience which includes the comfort of the stay, quality of services, and the excitement of seeing and learning about lives elsewhere. 

This is why, when we suggest that the government invest in high-end tourism, we don’t mean building fancy restaurants and smooth roads. We mean improving the standard of education and health care, quality of transport infrastructure, managing waste – making life better. In the context of Gross National Happiness, it is the responsibility of the government to create the conditions that benefit both guests and hosts. Such conditions are created through infrastructure, the regulatory environment, and investment.



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When a tourist says, “for $ 200 I can get a luxury hotel in Phuket,” it’s a verdict on Bhutanese hotels and services. It does not mean that we should lower our rates. It means that we should raise our standards. And, in today’s debate, we remember that tourism is more about the locale than the hotel.  

We mean creating an environment where tourists and local residents can jog or stroll in safety, not bothered by antisocial elements or bitten by dogs. We mean quiet treks through pristine forests and not being swamped by the masses. We are also talking about the feel of a society at peace and people who are not intent on ripping-off guests. We are talking about a taxi driver or shopkeeper who takes the trouble of returning a bag left behind by a passenger or customer. 

The new policy sets the stage for healthy competition among service providers. Bhutan can still aim for resorts where guests are served fresh vegetables from its own garden. When we talk about products, we are talking about what we ourselves eat and use and wear and hang on our walls. We want to elevate a market where our shops try to palm off cheap trinkets from India and Nepal as Bhutanese handicrafts. 



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Another issue is the perception of stakeholders in the tourism industry. Tourism is more than operators, agents, guides, hotels, and others who work in the industry. We are now reminded that Bhutan and all Bhutanese citizens have a stake in this industry. This important industry must benefit all Bhutanese, especially the sections of our population which enrich our identity. Communities like the Layaps and Brokpas and Doyas must be involved in the industry as beneficiaries and not be just photo opportunities. 

Yes, we have to deal with the discomforts and stresses of change. But, hopefully, we are going through the teething problems of a new initiative to liberalise the Bhutanese tourism industry and introduce bold changes. There are many questions to be asked. While we don’t expect the average citizen to sacrifice all comforts in the interest of long-term benefits to the country, a simple way to look around us and ask ourselves: “Is this high end? What would happen if we don’t change things now?”

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