Bhutan by Bhutanese...

Election lessons...

Congratulations to the newly elected thrompons of Gelephu, Phuentsholing, Samdrupjongkhar and Thimphu thromdes. Congratulations also to the elected tshogpas of the four thromdes.

The elections of the four thromde tshogdes (city councils) represent the first local government elections held under the auspices of the Constitution. So, the elections also underscore Bhutan’s determined journey to a democracy.

Congratulations are also in order to the Chief Election Commissioner and his staff. The ECB team conducted another round of efficient elections – methodically and meticulously – notwithstanding the protest on their decision to waive off the rule requiring candidates to be registered in their constituency for a minimum of one year.

Here’s a summary of the votes cast – drawn from ECB’s announcements – in the elections for the four thrompons:

And here are three things I’ve picked up from the voting patterns:

One, hardly 50% of the registered voters actually voted. That’s not bad by international standards. But it’s a far cry from the almost 80% voter turnout that the first general elections enjoyed. And, local government elections, in which residents vote for candidates to address their immediate concerns, not vague national issues, should actually generate a bigger turnout.

This does not bode well for our democratic culture. A strong democracy begins with a healthy voter turnout. And declining numbers at the polling station may indicate that we don’t understand democracy; or that we are unwilling to participate in the democratic process; or that we don’t have faith in the system; or that we are simply not interested.

Any of these reasons is dangerous. So we must be careful. We must become more aware of the principles of our democracy. We must stand ready to safeguard the ideals of our democracy. And we must be willing to participate in the democratic process. Otherwise, rest assured, democracy will fail us. And we will have only ourselves to blame.

Two, the elections saw only 26 postal ballots – 24 in Thimphu, 2 in Gelephu and none in Phuentsholing and Samdrupjongkhar. This means that public servants from these constituencies work in their own constituencies; or that public servants from these constituencies went home to vote; or that these constituencies have very few public servants; or, and most likely, that most of the public servants did not vote.

And three, a disproportionately low number of residents of the thromdes were eligible to vote. In 2005, Thimphu had a population of almost 80,000 people. Since then, Thimphu’s boundaries have expanded and its population has increased to 108,000. But it had only 6,300 registered voters for the thromde elections. That means less than 6% of the population were eligible to chose their local government. Of them, only half voted. The three other thromdes also tell similar stories.

This is obviously because the Constitution and electoral laws permit only those whose census is registered in a constituency to vote in that constituency. But since voting is the most powerful way of holding elected leaders to account, the inability of most residents to take part in an election does not augur well for democracy. So we need to reconsider our laws. Or better still, we need to reconsider where we register our censuses, in order to make better use of our franchise.

The banner showcases our new thrompons. I wish them, and the winning tshogpas, a successful tenure.

Great expectations...

Tomorrow, registered voters in Thimphu, Gelephu, Samdrupjongkhar and Phuentsholing will elect their respective thromde tshogdes or city councils.

As we discussed in my last post, the Thimphu city council – the new mayor in particular – will have to sort out the capital city’s water problems.

But the mayor and his council will also have to attend to many other competing priorities. Sewerage, solid waste, public transport, roads, traffic, housing, schools, fire, parks and income generation are some of the issues that should demand the city council’s immediate attention.

The thrompons of Gelephu, Samdrupjongkhar and Phuentsholing will find that they too will have to address more or less the same issues.

But the biggest and most important responsibility of all four city councils will be to consolidate the powers and authority granted to them by the Constitution. Without these powers, the city councils will not be able to fulfill their Constitutional duties and obligations. And stand little chance of improving our cities.

The banner features the Thimphu City Corporation building, which will house the offices of its new mayor.

Water pipes...

Pipes for peace

Thank you for taking part in “Big picture – 10”.

Your responses were varied, and many of them were deliberately funny. Answers ranged from electrical, telephone and TV cables; to branches, roots and stems; to serpents, TMT bars and organizational charts!

But most of you knew the answer – yes, the picture showed water pipes, and yes such pipes, carrying water to individual houses, can be seen all over Thimphu.

“namgay”, “Tshewang” and “dodo” guessed that the picture of the water pipes was taken in Hejo, Langjuphakha and Taba respectively. The picture was actually taken above the “RICB Colony”.

The pipes – I counted about 150 of them – are installed and maintained privately, and carry water from a small stream to the houses below. I was told that some of them deliver water houses in distant Changzmatog!

The pipes are there because Thimphu City Corporation’s water supply is woefully inadequate and unreliable.

Thimphu has sufficient water. The Wangchhu and its many streams provide more than enough water for the entire valley. But that water must be tapped and distributed efficiently. And that is something we have not been able to do.

So Thimphu’s new mayor – whoever should win the elections tomorrow – has his work cut out for him. The mayor will be expected to improve and expand the capital’s water supply system: to ensure that inhabitants get more than a few hours of running water each day; to remove the need for the water tanks that sit on top of every building; and to make the ubiquitous private pipes redundant.

By the way, the winner of “Big picture – 10” is “namgay” who answered: “Thats a Bundle of Polythene pipes la…conveying water i guess.. common see in places like hejo…”

The picture wasn’t taken in Hejo, but like “namgay” says, the pipes are a common sight in Thimphu.

“namgay”: please contact me by email to claim your prize.

More pipes

Pension benefits...

We talked about pensions two years ago.

First, we voiced concern that the NPPF pension scheme was sustainable for only 30 years.

Then, we discussed the merits of a defined-contribution plan over the existing defined-benefit plan.

And then, we expressed alarm that the government was interfering in how our pension scheme was being run.

Let’s keep talking about pensions. There’s good news. And there’s bad news.

The good news is that, despite increased competition in the financial sector, NPPF seems to be performing well. In the last year, the membership base has increased by 5.4%, from 40,222 to 42,393 members. Revenue generated increased by 14.57%. And the total fund grew by 18.6% to Nu 8.97 billion.

The good news is also that NPPF’s pension scheme could soon become available for workers in the orgranized private sector.

The bad news is that our pension scheme is become even more defined by benefits. Retirement pension benefits have now been increased to 40% of final salaries. This is bound to make our pension scheme unsustainable, especially after returns on NPPF’s investments start to inevitably drop due to the growing competition in the financial sector.

The bad news is also that some six serving ministers are already drawing pension benefits.

Our ministers collect pensions because they have retired from the civil service. And because they’ve reached the retirement age. They’re entitled to draw pensions. But, as serving ministers, they still have regular incomes. So the very purpose of pensions – i.e., to provide predictable income when income from formal employment is not longer available – seems to be lost.

In a defined-benefit plan, pension rates are based on the salary of a member with little regard to how much that member has contributed.  Such a scheme naturally encourages members to collect their pensions as soon as they reach retirement age, even if they are still formally employed. That’s why our ministers collect their pensions although they have regular salaries. The system encourages them to do so.

In a defined-contribution plan, pension rates are based on the contributions of individual members. So the more a member contributes, the more that member will collect during retirement. Such a scheme would encourage members to make contributions as long as they have regular jobs, so that they enjoy bigger benefits when they no longer have regular jobs.

NPPF knows that defined-benefit plans are not sustainable. The experience of many countries has already demonstrated that.

So NPPF should migrate to a defined-contribution plan. The transition will be difficult. And it will be painful, especially for members who will retire in the next few years. But it is possible, now. Our pension scheme is still young; contributing members outnumber pensioners by a huge margin; and returns on the pension investments have been good. Plus, our government may be willing to chip in to defray some of the immediate costs associated with migrating to the more sustainable defined-contribution plan.

Big picture – 10...

We haven’t done this for a while. The first person to get the big picture wins a copy of “Treasures of the Thunder Dragon: A Portrait of Bhutan”.

Australia floods...

Safe, sound and dry

I just got off the phone with Colin McCowan, popularly known as “Mister Col” by Bhutanese studying in Brisbane, Australia.

Col says that he’s in touch with all 25 Bhutanese students in the Brisbane area. And that all of them and their families are safe.

The floods have wrecked unimaginable damage in Queensland. So I’m grateful that our students and their families – all 60 of them – are safe and sound.

Mister Col: thank you for taking care of our students.

Discriminating industries...

Excised steel

Today’s steel prices:

A ton of 10 mm TMT bar manufactured in Bhutan (by Karma Steel, for example) costs Nu 39,000 in Phuentsholing.

A ton of similar grade (Fe415) 10 mm TMT bar manufactured in India (by SRMB, for example) costs Nu 42,900 in Jaigon, outside Phuentsholing.

If you were a contractor, which steel would you buy? Bhutanese steel, right? All else being the same, TMT bars manufactured in Bhutan would be cheaper by Nu 3,900 per ton.

But Punatsangchu Hydropower Project Authority contractors prefer Indian steel. Why? Because for PHPA, the government refunds the excise duty levied on Indian steel (collected in India by the Indian government, then transferred to the Bhutanese government). The excise rate for steel is 10.3%. And that seems to be enough to make PHPA contractors prefer TMT bars manufactured in India over those produced in Bhutan.

PHPA’s demand for steel is huge. And that demand will get even bigger – much bigger – as construction on the other hydropower projects also begin.

This massive surge in demand for steel should come as good news for our industries. It doesn’t. Instead, our steel manufacturers are disappointed.

I am disappointed too. And I am confused.

Ideally, our government should favour our own industries over foreign ones. That, in fact, is what every country tries to do. But if, for whatever reason, that isn’t possible, our government should at least not discriminate between goods produced in our country and those that are imported.

And under no condition – no matter what – should our government discriminate against national companies by favouring foreign products. But that, unfortunately, seems to be what’s happening at PHPA.

Our government refunds the excise duty paid on Indian steel. But it does not refund the excise duty paid on Bhutanese steel. (Bhutanese manufacturers pay excise duty in India when buying raw material.) So Indian steel becomes much more competitive. And our own manufacturers lose out.

If our government must refund the excise duty levied on steel manufactured in India, it should also refund the excise duty levied on the raw material that is purchased by domestic steel manufacturers. Only then will the playing field be level. Otherwise, our manufacturers don’t stand a chance. And they may eventually go out of business.

That won’t be good for the promoters – they’d lose money.

That won’t be good for the employees – they’d lose their jobs.

That won’t be good for the banks – they’d lose their investments.

That won’t be good for the government – they’d lose revenue from business and personal income taxes.

And that won’t be good for our economy.

But that precisely is what’s happening. Bhutan Concast is almost bankrupt. They’ve shut their factories. They’ve let go of most of their workers.  And they may be forced to default on their loans.

I’m disappointed. And I am confused.

Price increases...

A civil servant tells me that the recent salary increase has made him poorer!

How? Because his pay increase barely covers the corresponding increase in the cost of rent, fuel and groceries. This is his statement of expenditure:

We can’t do much about the increase in the cost of fuel and onions. They reflect price hikes in India and have nothing to do with salary increases here.

But we can’t allow rents and the prices of other goods to shoot up every time civil servants get a pay hike. This undermines the whole purpose of a pay increase. And it makes life for employees in the private sector that much more difficult.

Are you a civil servant? If so, has the recent salary increase made you richer or poorer?

Forest fire...

Saved ... phew!

The people of Lopa village in Haa, Samar Gewog, did not sleep last night. They stayed up to guard their village – a cluster of mostly old farmhouses at the edge of a pine forest – from wild fires that was spreading through the woodland above their village.

The fire had started yesterday afternoon. And the Haa Dzongdag had quickly mobilized forestry officials, civil servants and community volunteers to fight the blaze. But the fire, which was fanned by strong winds, would not be contained. And by nightfall, the dzongdag wisely called off the fire fighting efforts as boulders, set loose from the rocky outcrop above the village, came hurling down the hillside.

But by the crack of dawn today, dzongkhag officials and volunteers were already battling the fires. This time they were joined by almost a hundred RBA soldiers. And this time they were successful. They bought the fire under control.

Had it not been for the quick response of the dzongkhag and forestry officials, and the help of the army, the fire would have razed Lopa and spread through the neighbouring village of Nobgang to the dense pine forests above Puduna. And the fire would still be raging.

Featured in the banner are the remains of the recent snow that put out a big forest fire in Katsho, and helped contain another one today.