The plague...

Kuensel featured this advertisement yesterday. Read it, and see what’s wrong.

I, like the friend who showed me this notification, found it funny that RITH would invite bids to produce the plague. But we all know that what RITH really wants is a plaque to commemorate the inauguration of the institute. Funny. And no harm done.

But look at the notification again. Look at it closely. To be awarded the work, one must be a registered license holder and pay Nu 200 for a set of bidding documents. The bidding documents will be sold from 17th May to 31st May during office hours.

The bidding documents will, no doubt, spell out many more conditions that bidders must fulfill. A committee will study all the bids. And another committee will award the work to one lucky bidder.

And what is the work? To produce a plaque. The advertisement itself could cost more than the plaque. Add to that the many hours that the many officials and the many businessmen have put into this endeavor, and you end up with a very expensive plaque. Expensive, but not necessarily good.

Our financial system must be tight. But the system should not be counterproductive. For small projects – like this one, to produce a simple plaque – excessive and cumbersome procedures add to the administrative burden and make a mockery of efficiency, transparency and accountability. Now that’s not funny. Because that, like the plague, can cause a lot of harm.

But nat!...

At school, we, like all children, all over the world, loved playing pranks. Our arsenal boasted an impressive range of innovative pranks. But the simplest and the most popular of them by far was the very versatile but nat! prank.

This is how it was administered: We’d go up to a fellow student and excitedly declare, “I found your wallet!” And then, very slowly, add, “But nat!”

Or we’d tell him, “Our math test is postponed … but nat!” Or, “She says she likes you too … but nat!”

The but nat! was meant to negate whatever news had just been delivered.

For obvious reasons, the prank would work only if the victim had really lost his wallet. Or if he hadn’t prepared for the upcoming math test. Or if he had confided that he was in love with a certain girl. And if, by some chance, the victim had lost a lot money, or really hated math, or was madly in love, the prank would triumph.

The prime minister, who, incidentally, also attended the same school, has pulled off a but nat! on the entire nation.

Last month, he went on live TV and confidently broadcast that the government would ban the import of vegetables from this month onwards. But last week, a month after his announcement, he seems to have changed his mind, and slowly added … but nat!

There’s no doubt that we can grow our own vegetables. In fact, we must grow our own food. But we’ve done precious little to encourage domestic production. So we’ve been relying almost exclusively on imports.

We can, and we must, grow our own food, especially vegetables. But that’s not possible overnight. Our dependency on imported food has come about from years of inefficient farming combined with lazy government policy.

Yes, we can, and we must, work towards substituting imported food with domestic production. But we must work carefully, deliberately and intelligently. An immediate and outright ban on vegetable imports will do more harm than good.

So I wasn’t surprised to hear the government say but nat! and negate the vegetable import ban.

But I am surprised at their decision to allow only one agency, the Food Corporation of Bhutan, to import vegetables. The FCB, as far as I know, does not have any experience in importing vegetables. As such they will find it difficult, if not impossible, to negotiate, buy and transport a wide range of perishable goods every week to Thimphu and other parts of the country. They don’t have the experience to do the job. And they don’t have the incentives to do a good job.

It’s clear that we will be compelled to import vegetables for some time. As such, the government should permit the vegetable vendors to continuing importing vegetables. They, not FCB, are the people who know how to do this business the most efficiently.

But in the meantime, the government must encourage domestic vegetable production. The government must take food self-sufficiency seriously.

Playing but nat! at school, with students, is one thing. Playing around with government policy, without understanding the ground realities, is quite another.

Thank you Ama...

We don’t celebrate Mother’s Day in Bhutan. But 160 countries do. And 79 of them celebrate it today, the second Sunday of May.

I think we should celebrate Mother’s Day too. Like the rest of the world, we should dedicate a day to thank our mothers for their love and affection, and to acknowledge them for the huge influence they’ve had on our lives.

Bringing up children is a difficult job at the best of times. But my mother raised six of us – all boys! She did so single-handedly. And she did so on a shoestring. That meant that she had to work hard, and she had to work continuously – she would feed us and clean us; she would tend to the cows, chickens and the occasional pig; she would work in her garden growing all sorts of vegetables and fruit; and she would take care of an unending throng of guests.

But in spite of all her work, she always seemed to have time to tell us stories. And most of the time, she told her wonderful stories while she wove for the family. Yes, she made our clothes too! She knitted our caps and socks, and scarves and pullovers. And she wove our ghos, every single one of them. But that’s not all: for several years she wove tsug-thrus, heavy but warm and furry blankets, till each and every one of us had our very own comforter.

For all that, and much more, six men got together to say, “thank you Ama!”

Country roads...

Ancestral road

I am in Dorikha. I got here this evening having walked up from Dorithasa.

My ancestors did this journey every year, at this time of the year, over the course of many centuries. They migrated to escape the oppressive summer heat of Dorithasa in favor of the much cooler Dorikha. And in the winter, they moved right back to Dorithasa to enjoy the mild weather there.

Most of my relatives no longer migrate between two farms. They now live, throughout the year, in one of the two villages. But the two villages are closely related. So our people still make the arduous journey between Dorithasa and Dorikha frequently.

During the last five years, I too have had the occasion to travel between my two villages frequently. My job, as a politician and a member of parliament, requires me to visit my constituency and, as such, to make the journey between Dorithasa and Dorikha at least twice each year. I enjoy this aspect of my job thoroughly. Walking through the immense rhododendron forest, punctuated by tsamdro meadows, is in itself a wonderful experience. But what is truly awe-inspiring is the knowledge that I am tracing the footsteps of my ancestors; and the powerful feeling that, somehow, I am connecting with them.

Today, as always, I enjoyed my trek up from Dorithasa. But today I made sure to walk slowly. I walked slowly, and I paused frequently, to capture the beautiful sights, to absorb the enchanting sounds, and to take in the rich air of the still pristine forests.

I walked slowly, because from the next time on, I’ll be driving! The farm road being built has almost reached Dorithasa. And from there it will continue to Sombaykha and Gakiling gewog centers.

Once the road is ready, our people will no longer have to make the difficult journey over the mighty Tergola on foot. I won’t have to either. We’ll be able to drive.

Will our ancestors approve? I know they will. The road, after all, heralds a new and exciting chapter to a hitherto forgotten part of our country.

Nima Dorji...

One of the Youth Development Fund’s most active programs is its young volunteers in action, better known as Y-VIA. The volunteers are typically young students still going to high school.

Last week, in Changjiji, Y-VIA put on a delightful show to launch UNICEF’s state of the world’s children report. They sang, danced, acted and joked for their President, Her Majesty the Queen Mother, Ashi Tshering Pem Wangchuck, and other guests from the civil service, education system, international organizations, and the local community.

But the Y-VIA volunteers also used the occasion to launch their own report, based on three case studies they had done on extreme poverty among urban youth. The stories are painful, but they must be heard. So I’m reproducing below, in their original, their case study about Nima Dorji, a trash collector who lives in Thimphu’s landfill …

Nima Dorji is a 14 years old boy who works and earns his own livelihood by collecting trash and selling to the scrap dealer in Phuntsholing. Nima is from Samdhingkha in Punakha. Both his parents are working. In fact his mother is in the civil service while his father is a carpenter. Nima left home at the age of 11. He has two younger sisters. He was a student of Babesa Primary school and then later he became a monk out of his own interest. His journey from a monk to a trash collector motivated us to look deeper into his life.

We found Nima, when out of curiosity to see if we could find children in the land fill of Memelakha.  We saw this thin and filthy looking boy rummaging through the piles of dirt along with the dogs. He ran away when he saw us for the first time. We made contact with him by giving him a set of clean clothes and some food. His story unfolds with him living with his parents in olakha. Both his parents work so there is some income in the family. He never enjoyed school. He refused to do his school work and this annoyed his mother. He wanted to be a monk instead. After failing in class two for two consecutive years, Nima‘s mother finally put him in a monastery in Samdrupjonkar. The same year, a lama advised the parents to send Nima to Trongsa dratshang. However, Nima was greatly disappointed when he saw the bad behavior of his monk friends and senior monks. He was bullied and beaten often. His learning according to him did not progress much. With great disappointment and despair he ran away to Thimphu. He found a friend in Thimphu who did trash business. Afraid to go home, he decided to become a trash collector and found a home with ten other young trash collectors. The two room house became Nima’s home and his friend, his new family.

We found his parents living in a hut in olakha. Ten members of the family live all together in this little hut. According to his mother, she is waiting to get him registered in a shedra. We took Nima to meet his mother to see their reaction. While Nima remained quiet, the mother was indifferent. It was difficult to see love or any family bond between Nima and his mother. We also visited his school and the teachers couldn’t recognize him as he had changed and aged drastically.  Nima did not draw too much attention from his teachers. He was just an average student who did not enjoy school. His friends were in class 5 and they too did not recognize him. They do remember one thing about him. He was passionate about becoming a monk.

Nima never got into drugs or any criminal activities. He was never a naughty boy when he was little. He hardly gave any problems. His only problem was not taking interest in his school studies.

As a trash collector he earns Nu 1900 a month. Nima is known to be a hardworking trash collector who also sends money to his mother. He still hopes that a day will come when he can have another opportunity to go back to school.

Nima along with his ten friends, live in the filthiest environment that we can ever imagine. They live with the trash of the entire Thimphu city. They work bare hands with no masks and their clothes are filthy. They work is hazardous to their health and they are prone to communicable diseases as they often rummage through wastes from the hospitals. Their hands often get cut and poked by syringes that are thrown in the rubbish.

Their diet consists mainly of potatoes and rice. Their day begins at 7 in the morning with the leftover of their dinner. Lunch is around 3 or 4 in the evening. The wife of one of his friends and her sister cook for the boys. Living with are two little toddlers whose playground is the land fill.

They do not have access to clean drinking water and electricity. They use a solar light in the night. They often get sick with diarrhea, cough and cold, headaches and other ailments brought about by poor hygiene and sanitation.

Nima often feels depressed with what he has become. He regrets leaving school and wishes he got sound and adequate guidance from his parents and teachers. He looks furlong and hopeless. He feels he brought this situation upon himself. This is just a story of Nima but the eyes of his friends told their own pathetic sad stories.

Not so fast...

What do you make of this?

The cabinet has reportedly “further ratified” the Education City project bid, and awarded the bid to a consortium of bidders (infinity Infotech Parks Ltd., and Infrastructure Leasing and Financial Services Ltd.) It appears that a contract agreement will be signed this month following which work on a detailed project report will begin.

Good? I don’t know. I still have serious misgivings about the size and feasibility of the project. True, education is a viable business, and we must harness its potential to service both local and foreign demand. But planting a bunch of education institutions in one location, like industries in an industrial estate, is not the way to go.

The Education City could easily become a white elephant. Or, worse still, it could become a breeding ground for large scale, low quality education catering to tens of thousands of foreigners. Instead, it will be easier, and much better, to encourage investors – local and foreign – to build international schools and colleges in various parts of our country.

But there’s another reason why we should be worried. The Education City Bill has not yet been passed by the Parliament. The National Assembly approved it during its last session. Now it has to be approved by the National Council. And then it has to be submitted for Royal Assent.

So why has the government ratified the Education City project bid? And why have they awarded the bid? The government will have the authority, by law, to proceed with the Education City project only after the Parliament passed the Education City Bill. That, after all, is the whole purpose of the Education City Bill.

The Bill is still under discussion in the Parliament. The Parliament may pass it. Or it may not. Either way, the government does not have the legal authority to proceed with the Education City at this time, not until the Parliament passes the Education City Bill.

Insurance claims...

It’s been seven whole months since the 18th September earthquake. But many of the earthquake victims, including all the victims in my constituency, have still not receive their insurance claims in spite of the Home Minister’s assurances during the eighth session of the Parliament. So I felt compelled to send this letter yesterday.

More essential stuff...

In my previous post I had proposed that, “the government is getting ready to sell even more foreign currency from our reserves.”

What if I am correct? What if the government is, indeed, preparing to sell foreign currency to alleviate the rupee crunch? If so, what is the procedure?

Last year, four months ago, the government sold US$ 200 million of our foreign currency reserves. At that time, US$ 200 million worked out to Nu 10.3 billion, which in turn worked out to 14% of our GDP. That was, and is, a lot of money. But no one questioned the process. All that was reported on the process was: “The government on Thursday night struck a deal to sell USD 200M to address the country’s dire Indian rupee (INR) position…”

We will be required to dip into our foreign currency reserves occasionally. So we should think about the process. Who, by law, for example, can approve the use of our foreign currency reserves?

According to Article 14 Section 3 of the Constitution, “Public money shall not be drawn from the Consolidated Fund except through appropriation in accordance with the law.” In other words, the government cannot spend money unless that expenditure has been approved by the parliament.

But the Constitution is silent about the procedure for spending money from the foreign currency reserves. Instead, Section 115 of the Royal Monetary Act says that, “The Authority may purchase, sell or deal in– foreign exchange …”

Does ‘foreign exchange’ here include foreign exchange from our reserves? If so, should RMA have the complete authority to sell our foreign exchange? If not, what should be the procedure?

The government’s annual budget is debated and approved in the National Assembly. It is then submitted to the National Council for review. After that, it is submitted to His Majesty the King for Royal Assent.

The government’s budget for 2011-12 is about Nu 38 billion. That is not even four times the amount of foreign currency reserves that was sold last year (US$ 200 million fetched Rs 10.3 billion). The process to approve the government’s budget is vigorous. And rightfully so. But the process to approve use of our foreign currency reserves seems to be nonexistent. At best it is vague.

It is essential that the government and the parliament consider this matter urgently. Otherwise, we could end up recklessly depleting our foreign currency reserves.

Essential stuff...

Article 14 Section 7 of the Constitution requires that, “A minimum foreign currency reserve that is adequate to meet the cost of not less than one year’s essential import must be maintained.”

But what constitutes essential import? Salt, shoes, sicnidizole – surely they are “essential”. But what about construction material, like, say, CGI? And raw material for industries? Are they essential? And how about arms and ammunition? I think they are essential, very essential.

It’s important to have a proper definition of what, in our context, constitutes essential import. It’s important because that definition will determine the “minimum foreign currency reserve” that must be maintained by the government at any time.

We don’t have a clear definition. But last year, when the government sold US$ 200 million from our foreign currency reserves, they told us that we still had US$ 702 million in our reserves, and that that would finance 13 months of essential import.

Divide US$ 702 million by 13 and multiply that by 12 and we quickly get US$ 648 million, the amount that, by the government’s own reckoning, is required to finance one year’s essential import.

That was in December last year. But yesterday, just four months later, the prime minister announced, on BBS TV, that our foreign currency reserves stand at US$ 716 million, and that that can finance 36 months – that’s three years – of essential import. So basically, the prime minister is now telling us that US$ 239 million is enough to finance one year’s worth of essential import.

Between 648 million and 239 million lies huge difference. And that difference points to two conclusions. One, the government is getting ready to sell even more foreign currency from our reserves. And two we need a clear definition of “essential import”.

The prime minister has proven that the government – this government, and others in the future – cannot be trusted to provide an honest and consistent definition of what constitutes “essential import”.  Governments will define, and redefine it, to yield to immediate temptations of selling off our foreign currency reserves.

We need a better way of defining “essential import” and, by extension, of calculating the “minimum foreign currency reserve” that governments must maintain. One way would be to form an independent authority whose duty it would be to decide, without bias and from time to time, what constitutes “essential import”. But for that to work, the authority must have broad-based representation including members from the government, RMA, judiciary, private sector, and His Majesty the King’s secretariat.

Stop the bleeding...

During their interview with BBS TV last week, Lyonpo Yeshey Zimba and Lyonpo Wangdi Norbu went to great lengths to inform us that the so-called rupee crunch wasn’t a crisis. They told us that the situation was normal; that they’d been aware of it for a long time; and that they were in full control of it. They told us that we should not be worried, that we should not panic. And they warned us that any talk about a crisis “could be deliberate attempts to discredit the government.”

I’m not one to worry needlessly. But I’m not reckless either. So I try to piece things together, and when they don’t add up, I get worried. I get scared.

On the one hand we have the government telling us that everything is okay. But their assurances are followed by reports, only a few days later, that RMA’s short-term rupee borrowings have already hit Rs 9.7 billion.

Just four months ago, RMA’s rupee borrowings had peaked at Rs 11 billion (3 billion from GOI credit line, and 8 billion from an overdraft facility maintained with the State Bank of India). The government, at that time, sold US$ 200 million for Rs 10.3 billion and liquidated the Rs 8 billion SBI overdraft credit. So RMA would have been left with a loan of Rs 3 billion (GOI credit) and cash reserves of Rs 2.3 billion.

Now, four months later, RMA’s short-term rupee borrowings have already climbed to Rs 9.7 billion. Of that amount, Rs 3 billion is the earlier credit from GOI. So that means, rupee borrowings have increased by Rs 6.7 billion in four months. Add to that the Rs 2.3 billion that was left over after clearing the SBI overdraft credit, and we get Rs 9 billion. That figure should equal the rupee deficit during the last four months. And that deficit seems to be growing. So I’m scared.

Our combined imports exceed our exports. That’s why we have a rupee crunch. But the rate at which the deficit seems to be growing is alarming. It was a record Rs 8 billion last year (that’s why the government sold US$ 200 million). And now, within a span of barely four months, the economy has been hit with a deficit of Rs 9 billion.

Our economy is bleeding. But the government does not seem to know it or does not care to admit it. They have not yet identified the problem. Instead, they blame the private sector, and seem to think that the rupee crunch will be solved mainly after GOI extends their credit line from Rs 3 billion to 10 billion.

Loans will not solve our problem. They’re good only for temporary respite. Eventually, loans will make matters worse.

Yes, we must curtail private consumption. But that has been the focus of  RMA’s many measures. And that doesn’t seem to have helped.

What we must do – and what I’ve said over and over again – is curtail government expenditure. The government’s expenditure has grown dramatically since 2008. And unless the government reins in their excesses, the rupee crunch will continue. In fact, it will get worse.

Eventually we must work hard to correct and improve our balance of payments. We must import less. And we must export more. There’s a whole lot we can and must do: agriculture, construction, education, tourism, ICT, hydropower, mining, manufacturing and even lottery, all of them represent big opportunities. But all of them will take time.

For now, we must stop the bleeding. And most of it takes place by way of government consumption. So the government must stop all unnecessary spending, especially excessive recurrent expenditure. The government must go into austerity mode.

Here’s what the government has spent and is spending.