Public policies

Several multinational companies, like Tata, Airtel, Lafarge, and Infinity, have shown interest in investing in Bhutan. And others, like Mountain Hazelnut Venture, have already started doing business in our country. So it’s time the government finalized its foreign direct investment policy.

But before finalizing the policy, the government should hold thorough consultations with all stakeholders, particularly the private sector, to ensure that they understand the policy and, more importantly, that they commit to supporting it.

And once the FDI policy is finalized, it should be made public.

Incidentally, the cabinet approved the Economic Development Policy last year. But it is still not available to the public. Instead, just last month the prime minster informed a potential investor that:

Bhutan was finalizing the Economic Development Policy which would spell out the kind of environment in which they can operate.

Transparency is important. And it is especially important where there’s money to be made.

Mineral development policy

According to the DGM director general the draft mineral development policy “… is for the development of the mining sector in a equitable, safe, more value added and environment friendly way.” Good.

The draft mineral development policy proposes to allow only “one mining lease to an individual or to a company”. Very good. I’m all for a healthy reduction in the number of mines in our country.

But wait a second, what about the Punatshangchu Hydropower Project Authority? Didn’t they recently apply for “three large quarries”? And what about Penden Cement? Surely they operate more than one mine. And Dungsum Cement? They’ll surely need more than one mine!

Incidentally, it seems that PHPA will not operate the quarries themselves. Instead they may just transfer their mining lease to the big three Indian Contractors – L&T, HCC and Gammon.

Which leads me to an important question: are foreign companies allowed to operate our mines?

Doubtful PM

Still unsure

More than decade has already passed since the start of Bhutan’s accession process to the WTO. And many of our current ministers have been involved throughout the process. So I find it strange that, after all these years, one of them, the prime minister, is “still unsure” about joining the WTO.

What do you think? Should we join or not? Or are you also “still unsure”?

Take our poll that asks, “Should Bhutan join the WTO?”

Caricature by Bhutan Observer

Flip-flop

I’m happy that the Government has revoked its decision to liberalize tourist tariffs. And that it has decided instead to increase the minimum tourist tariff to US$ 250 per night from 2011 onwards. Liberalizing tourist tariffs would have undermined Bhutan’s valuable brand image and affected our economy and society significantly.

But I’m alarmed at how the Government changed its decision. Just one meeting with stakeholders and the Prime Minister decides, during that meeting itself, that liberalizing tourist tariffs is not such a good idea. Just a simple show of hands of those present at the meeting, and the PM decides to increase the minimum tourist tariff. Just like that, the most important provision of the PM’s Executive Order is rescinded.

Obviously I’m satisfied with the final outcome of the recent meeting. But I can’t help wondering how our government takes important decisions. Did, for example, the PM fully understand the issues before signing the 13 November Executive Order into “immediate effect”? And, did the PM consider those issues again, carefully and thoroughly, before reversing his decision?

It’s important to know that our government does not act arbitrarily. And, that it is not fickle-minded.

Bhutanese power

water potential

I was happy to read about DHI’s plans to carry out major investments in power generation, power transmission, construction, information technology, aviation, mining, cement production and telecom in the next four years. These investments will add considerable value to the commercial interests of the Royal Government, while also leading and stimulating private sector growth.

Of these investments, which, in total, are estimated to cost DHI about Nu 53 billion, I am most excited about DGPC’s project to start a hydropower construction company.

Our country is blessed with perennial, fast flowing rivers perfectly suited to generate environmentally friendly run-of-the-river hydropower. Our rivers are capable of generating as much as 30,000 MW of hydropower, almost 80% of which has already been identified as technically feasible. And our people have been harnessing hydropower since 1967 when the 360 kW minihydel at Jungshina, Thimphu was constructed.

But virtually all the work, from that first minihydel to the 336 MW Chukha hydropower project (commissioned in 1986) and the 1020 MW Tala hydropower project (commissioned in 2006) were carried out by foreigners, mainly Indians. Similarly, almost all the work on the 1200 MW Punatsangchhu hydropower project is being done by foreigners.

So I welcome the news that the DGPC will soon start a hydropower construction company. That, coupled with the government’s power training institutes and DHI’s investment ambitions, could mean that we may eventually be able to become specialists in run-of-the-river hydropower schemes. And that could mean that we may some day become a recognized authority in planning, designing, constructing, operating, maintaining, financing and marketing clean, sustainable hydropower in Bhutan and beyond.

Up for adoption?

That Ratan Tata has said that he is interested in investing in Bhutan may or may not be good for us. That will depend on how the Government eventually finalizes its foreign direct investment policy.

But the Prime Minister, it appears, has already decided that Tata will be good for us. In fact, he’d gone so far as to tell the Chairman of the Tata Group that: “A country like Bhutan would be happy to be adopted by Tata”.

And to make certain that Ratan Tata did not miss the Government’s invitation for adoption, all our major newspapers – Kuensel and Bhutan Today and Bhutan Observer and Bhutan Times and Business Bhutan – carried the PM’s tempting offer, word for word.

FDI? Maybe.

Adoption? No!

Mass tourism

Liberal guests

A recent entry, which was basically a reproduction of the opposition party’s Press Release on the Government’s tourism policies, generated a lot of comments. As of now there are 44 comments, the last of which belongs to “10000eyes” asking:

OL: do you read all the comments made by the blogger…or you just glance on it? just want to know…

Yes, I do read your comments. I read every one of them. And I benefit immensely from your comments, especially those that are critical of and challenge my views.

Obviously what’s more important is that other people – concerned citizens and decision makers – are also reading your comments. And benefiting from them.

But I suspect that what “10000eyes” really wants to know is why I did not post any comments, why I didn’t participate in the discussions. It was intentional. The discussions that “Press release” generated were good, so I preferred to sit back, be quiet and listen. But, be assured, I paid close attention to the discussions. And, I hoped that other readers were following your conversations as well. In fact, that’s why I’ve refrained from posting too many new entries since then.

My views haven’t changed: I still think that liberalizing the tourist tariff is a terrible idea; that requiring hotels catering to tourists to upgrade to at least a 3-star category is insane; and that unilaterally dictating how the entire proceeds of the TDF will be used is illegal.

All said, however, every one of us seems to agree on one thing: that we do not want mass tourism. Okay. But what is mass tourism? How would you define it? Nepal!

Of course, Nepal. And, yes, we do not want to go Nepal’s way, because mass tourism has ruined their country.

But answer this: how many tourists visit Nepal in a year? One million? Two? Three?

Wrong!

In 2008, Nepal had less than 550,000 tourists. And that was an all time record.  And, it included Indian tourists, some 100,000 of them. And, Nepal has about 30 million people.

Now, think about our own country. We have barely 600,000 people. And we seem to be targeting 100,000 tourists per year. And that does not include Indian visitors – they don’t need visas, they don’t pay the daily tourist levy (inappropriately called “royalty”), and they could arrive in much larger numbers.

I don’t know about Nepal. But for Bhutan, liberalizing tourist tariffs and aiming for 100,000 tourists per year amounts to inviting mass tourism. And that must not be acceptable.

PRESS RELEASE

The Opposition Leader called on the Minister of Economic Affairs, His Excellency Lyonpo Khandu Wangchuk, yesterday to express the Opposition Party’s concerns on the Royal Government’s recent policy decisions on tourism. The Opposition Leader reported that, after studying the Royal Government’s Executive Order of 13 November 2009 and consulting a wide range of people, representing a cross section of society, the Opposition Party has concluded that:

On the Royal Government’s decision to “Roll out of the integrated channel, price and supply policy that liberalizes the minimum package price and mandatory package via tour operator requirement…”

  1. Liberalizing the tourist tariff will undermine the positive brand image that our country has carefully cultivated and enjoyed over the last three decades. Most foreigners, including those who have never visited Bhutan, perceive Bhutan as a high end, exclusive destination. They consistently applaud the existing tariff policy as responsible and sustainable measures that are also in line with the principles of Gross National Happiness. Liberalizing the tourist tariff, even if it actually amounts to increased tourist spending, will harm Bhutan’s brand image. [Continue Reading…]

Banking on vouchers

Happy banker

Happy banker

B-mobile’s strategy to market their cellular phone services in rural Bhutan is aggressive. In Sombaykha, for instance, where they introduced their services recently, B-mobile had a representative traveling from village to village dishing out free SIM cards and offering recharge vouchers at initial discounted rates.

Our farmers were delighted. Everywhere the B-mobile representative went, farmers rushed to welcome him. In addition to giving free SIM cards, B-mobile automatically doubled the value of each farmer’s initial purchase of recharge vouchers, subject to a maximum purchase of Nu 500. This meant that if a farmer was willing spend Nu 500, she’d walk away with a free SIM and vouchers valued at Nu 1000.

Obviously, astute farmers wanted to double the value of their money by buying as many recharge vouchers as possible. And they did. How? By simply getting hold of people – friends and relatives – who weren’t otherwise going to subscribe to the cell phone service, and requesting them to purchase the maximum Nu 500 worth of vouchers.

Take my cousin, Sangay Dorji. He got 7 people, including himself, to get SIM cards. For each card, he purchased Nu 500 in vouchers. B-mobile matched every Nu 500 with an equal amount of free recharge vouchers. So, he ended up getting a total of Nu 7000 worth of recharge vouchers.

“Wai, Sangay!” I chided him, “Do you really need so much talk-time?”

“I’ll need to buy vouchers anyway,” he replied, “so I might as well get them now at half the price.”

“Besides, I won’t use up all the vouchers for talking,” he continued, “or for sending text messages. I’ll use most of it as money.”

“Money?” I enquired, “What do you mean?”

“You see, if I want someone who is in Samtse – say, my neighbour Aum Kunza – to buy me Nu 200 worth of tea leaves, I can just transfer that amount of talk time to her phone, instead of sending her cash. It’s simpler. It’s quicker. And it’s much safer.”

“Similarly, I can transfer my talk time to Ap Nado when he ploughs my fields, or to Ani Gaki for a bottle of her ara, or to Zow Samdrup for husking my paddy. And naturally, they could use their talk time to pay me for using my mules.”

Voucher banking. The possibilities are endless. And for our village folk, who still don’t have farmers’ banks, this unintended service might become essential.

It’s good thing that B-mobile is aggressive.

Starry-eyed plan

Almost all your comments on “Visiting tourists” expressed concern about the Prime Minister’s executive order to prepare a blueprint to do away with the minimum tourist tariff. The poll asking, “Should the minimum tariff for tourists be removed?” drew a similar response with 82% saying “No!”

Thank you for your comments. As promised, I’ll share your views with the government.

Today, I wish to draw attention to another blueprint that the Prime Minister has ordered. In the same executive order (of 13 November 2009), the Tourism Council of Bhutan was directed to constitute:

A cross sector implementation team consisting of the MoEA, MoF, TCB and ABTO to frame and present the blueprint for … Mandate all hotels catering to tourists to upgrade to at least 3 Star category.”

The idea, ostensibly, is to ensure “high value tourists” even after liberalizing the minimum tariffs by forcing them to stay in expensive hotels.

But how would we monitor that tourists, who will no longer be required to use tour operators, are actually staying in 3 Star hotels? How could we do so without becoming a police state?

Will all hotels currently catering to tourists be willing and able to upgrade to at least a 3 Star category? What will happen to those that are unable to upgrade?

And, what will happen to the guest houses in Bumthang? Where would tourists stay when they visit Bumthang? Where would tourists be allowed stay when they travel almost anywhere outside Thimphu and Paro?