Mobile banking

Wouldn’t you be happy if you could get your bank balance on your cell phone instead of having to go all the way to the bank?

Wouldn’t it be good if you could instruct your bank not to honour a cheque that you’d issued mistakenly?

Wouldn’t you like it if your bank informed you every time money was withdrawn from or deposited to your account?

And wouldn’t it be convenient if your bank reminded you when loan repayments were due?

All this, and more, are available with the BNB’s mobile banking service which was launched yesterday. I’m excited about this new service, so I went there yesterday afternoon to congratulate BNB staff and register for their service.

The concept seems to be quite simple: you send instructions by SMS to the bank, and they respond with the required information by return SMS. Regular rates for outgoing SMS’s apply, but incoming SMS’s from the bank are free. Plus the bank sends SMS’s to alert you when money is withdrawn from your account, deposited to your account, or when loan repayments become due.

The beauty of this service is that it is free and easy. BNB has tied up with both Tashi Cell and B-Mobile to provide this convenient service free of cost. And while I will certainly find this service very useful, it could be even more beneficial to our farmers. Almost half our population, and most farmers, now carry cell phones. So mobile banking should now be possible throughout the country. And our farmers should finally find it worthwhile to open bank accounts.

But I’m already excited about the next level of mobile banking: fund transfer. Now wouldn’t you like that? Wouldn’t you be delighted if you could transfer money to your daughter’s account just by sending an SMS? Or if you could shop, buy petrol for instance, simply by using your cell phone?

I congratulate BNB for improving their financial services. And, more importantly, I thank them for making banking that much more possible for our farmers. Go ahead. Make your services even more accessible. And empower us, your customers.

The real Yangphel archery tournament

Last year, Yangphel organized its biggest national archery tournament ever: 900 archers from all over Bhutan made150 teams and played a total of 180 matches over almost two months. The tournament commemorated a hundred years of monarchy and celebrated the coronation of our fifth Druk Gyalpo.

Yesterday, Yangphel organized its annual internal archery tournament: 30 archers, all Yangphel employees, made six teams and played a total of five matches over two days. The final was played today. And, in true Yangphel style, prizes included television sets and cash.

But to me, everyone – proprietor, management and employees – was a winner. After all, the last two days was a celebration of the excellent relations between workers and management of a successful company … a GNH-company.

Funny money?

For over a decade now, every time I’ve fueled up in Phuentsholing, I’ve asked the petrol pump cashier to exchange various amounts of Ngultrums for Indian Rupees. I’ve had little problems changing small amounts, like Nu 500. But for larger amounts, say Nu 5000, it would sometimes get difficult to change my money.

I’ve rarely needed the Indian Rupees for my stay in Phuentsholing, yet I’ve made it a point to request for the informal currency exchange every time I visit our border town. I’ve developed this odd tradition to give me a very rough idea of the state of our economy.

My assumption is simple – petrol pumps in Phuentsholing should always have a ready supply of rupees. Why? Because many Indians fuel up in Phuentsholing. And they pay for it in rupees. Plus, since fuel is cheaper in Bhutan, some Indian’s take away petrol in barrels, presumably to sell at a profit … but that’s another matter.

So if I can change my money easily, it would mean that rupees are easily available; that the ngultrum is at least as strong as the rupee; and that, overall, we export more than we import from India. This is good sign.

But if I can’t change my money easily, it would mean that the rupees from the petrol pump are quickly diverted elsewhere; that the true value of the ngultrum is not at par with the rupee; and that, overall, we import much more than we export to India. This is not a good sign.

All things considered, I’ve had no cause to be concerned. Like I said earlier, changing small amounts of money has generally been easy.

But now I’m very worried. It appears that small shops in Phuentsholing are doing a brisk business charging a whopping 10% to change ngultrums to rupees (read The ‘swop’ shops of Phuentsholing). That means that you get only Rs 10,000 in exchange for Nu 11,000. That means demand for rupees outstrips supply. That means we import much more than we export to India, our principle trade partner. That means the market value of the ngultrum is not at par with the rupee.

Huge amounts of rupees have been pumped into our economy to construct hydropower projects. Even larger amounts of rupees come in as Indian aid. And most of our government’s revenue is realized through the sale of electrical power to India bringing in yet more rupees. And still we have difficulty changing ngultrums for rupees?

We should be very worried.

But there’s little point in treating the symptom. So trying to stop small business from selling rupees at a profit, for example, won’t provide real relief. It won’t be possible to forcefully stop them, anyway. Instead address the problem: reduce unnecessary imports; decrease dependence on foreign workers; increase farm productivity; support rupee generating businesses; and strengthen the private sector.

We have free and full access to one of the world’s largest and fastest growing markets. Use it. Tourism, education, health, ICT, manufacturing, finance, agriculture, and hydropower … any one of them should be able to generate more than enough rupees. Used together, we should be able to fulfill His Majesty the King’s vision of creating a robust and vibrant economy for our country.

Transforming our villages

I am delighted that the agriculture minister is traveling to our dzongkhags to discuss the 10th Plan and to identify viable products that our villagers can make (read Taking the 10th plan to the people). If villagers and local leaders are fully involved in the process and genuinely accept his idea, our agriculture minister could bring about a true and sustained transformation of our villages. Well done.

The following article, reproduced from the PDP manifesto, talks about how the One Village One Product movement could transform villages in Bhutan:

Ohita is a small village in Japan’s southernmost island of Kyushu, which is just about the size of Bhutan. Twenty years ago, Ohita was a sleepy backwater of Japan. Its young people were leaving for cities in droves, its economy was fast declining, and farmers increasingly depended on government subsidies that harmed Ohitaps’ spirit of self-reliance and self-respect.

Today, Ohita is a vibrant agro-based economy. It is a choice destination for Japanese looking for business and employment opportunities, and for foreign tourists looking for modern Japan steeped in tradition and pristine nature. “Made in Ohita” is recognized as the sign of unique farm produce of outstanding quality, and equally unique agro-industry products born of old heritage and new technology.

The One Village One Product Movement, started in 1979, is the power behind this transformation. The Movement was the brainchild of Ohita’s then-Governor Hiramatsu, who envisioned a dynamic and vibrant Ohita. But, he wanted to do it in ways that nurtured what he thought was the root of all sustained change: leaders who can inspire and move the community.

The Movement simply enables people and their community leaders to take up a product or an industry that is distinctive to their region, and transform it into a nationally or internationally accepted one. The government never used subsidies as a means to do so, for fear of hindering self-reliance and lasting success. Measures provided, instead, were leadership training, technical assistance, filling information gaps in marketing and distribution. (See the OVOP website for details.)

Around sixty communities of Ohita now produce more than 300 products of distinction bringing gainful employment and prosperity to the region. Among them are: “Shiitake” mushrooms regarded as the world’s best, commanding a lion’s share of Japan’s market; a flavorful “Kabosu” lime of ancient variety that is thought to have survived only in Ohita; a large number of processed products made from these unusual limes; “Bungo” meat that topped Japan’s Grand Championship; and various distilled barley spirits coveted for their smooth taste – like the best of our own ara.

The Movement’s success generated excitement elsewhere. It is spreading all over Japan and to many communities abroad – in Cambodia, China, Indonesia, Laos, Malaysia, Mongolia, Philippines, Thailand, and even USA and beyond.

Our people in villages are steeped in our cultural and natural heritage, in what they produce and how they live. One Product One Village Movement has a perfectly fertile soil, right here in Bhutan.

Possibilities are endless – limited only by our own imagination!

Is the GDP in our GNH?

Here’s some good news from the RMA: our GDP, which is about Nu 59 billion, grew by 21.4% in 2007 and increased per capita GDP to US$ 1900. Not bad. We now have the highest GDP per person in South Asia. But what does this mean?

Do you contribute your share to the GDP? If you do, you would have contributed US$ 1900 worth of goods or services to the economy. And if you do that, you would earn US$ 1900 in one year. Now US$ 1900 is roughly Nu 95,000 which is about Nu 7,900 a month. Do you earn that much? If you do, you earn your share of the GDP. If you don’t, you earn that much more, or less, of the GDP.

But let’s say you are married, that your spouse does not work, and that you have two young children. That’s a total of four people in your family living off only your salary – that wouldn’t be farfetched. Now how much would you have to earn to get your family of four to enjoy their share of the GDP? Nu 7,900 times 4, or Nu 31,600 a month. Do you earn that much? Probably not. Most families don’t.

What does this mean?

This means that we don’t work to earn much of the money that is pumped into our economy in the form of international loans, aid and hydropower exports. This means that imports dominate exports. That money does not circulate among us sufficiently. And this means that we don’t have enough people working outside our farms. This means that our GDP is not really that impressive.

I’ll be happier with a smaller GDP and a much more modest per capita GDP, but one which truly reflects our productivity. A per capita GDP that most Bhutanese can claim to earn.

And one more thing: I’ll be happy if my earnings, however humble they may be, grew at more or less the same ratio as the GDP.

Official business

I’m humbled by the quality of the responses to my last entry – they are insightful, meaningful and educative. And every one of them shows deep concern over how difficult it is to do business in our country.

But your responses scared me. I suddenly realized that Doing Business ranking for Bhutan may be terribly inaccurate. Why? Because Doing Business measures regulations and procedures that affect business activity, regardless of how well or poorly the regulations are applied.

Your responses all say the same things in various ways: that regulations are not our biggest constraint to doing business; that that distinction goes to our officials, the enforcers of the regulations; that doing business is really difficult because officials do not do their job properly, or are simply absent from work; and that unless one has proper connections it is very difficult to get down to business.

Yes, our regulations and procedures are not business friendly…that’s why Bhutan is ranked 124th in the world. But what Doing Business does not measure is the attitudes of officials. If attitudes are factored in, expect our already poor ranking to plummet all the way to the bottom.

So yes, let’s review and improve business regulations. Let’s keep those that enhance business activity. And discard those that constrain it.

But, more importantly, let’s improve the way our officials conduct their business. Let’s change the mindset in officialdom: from enforcer to service provider; from the person in charge to the person serving; from commander to servant.

Last year, both parties convincingly articulated their promises to change the mindset of the government and the civil service. It’s time to walk that talk.

Getting down to business

Everywhere I look I see people, thousands of them, buying and selling goods and services. It must be easy to do business in Thailand. In fact it is: Doing Business 2009 ranks Thailand 13th out of the 181 economies that the World Bank studied.

Doing Business investigates government regulations that affect the following 10 aspects of business activity: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

Bhutan, as we know very well, is ranked 124 (read Doing business isn’t easy anywhere). Here’s how we fared in each of the 10 dimensions covered in Doing Business 2009.

First, the good news…In Bhutan, it’s relatively easy to:
Employ workers (13th in the world)
Enforce contracts (37th); and
Register property (38th)

And now the bad news…but, it’s difficult to:
Start a business (63rd)
Pay taxes (82)
Deal with construction permits (116th)
Protect investors (126th)
Trade across borders (151st)
Get credit (172nd); and
Close a business (ranked last at 181st)

So what do these rankings mean? How did we get there? Why? What can be done? I’ll post a few entries on some of these areas to initiate public debate going. Let’s get down to business. Let’s make doing business easier. Let’s strengthen our private sector.

Happy world?

20th August 1987. It was getting dark. I’d reached my university in Pittsburgh earlier that day. I fought to control my jetlag and hide my culture shock. I was tired and hungry.

So I made my way to a MacDonald’s and timidly requested for the set meal that offered a cheese burger, fries and coke. The lady taking my order tried to protest. But I respectfully insisted that that’s what I’d have…I was too nervous and shy to construct a full meal by ordering a la carte.

I understood what the fuss was about as soon as my food arrived. It came in a paper castle. And dinner included a toy. I’d ordered a Happy Meal!

31st January 2009. We’re at Paro Airport. I’m going to Thailand on a short holiday with my family. My children are excited. I’m excited too – it’s been almost two years since traveling out.

I can hear my daughter and her cousin plan their holiday. They are quite thorough. They’ve already decided what they will have for dinner tonight: Happy Meal! And they even know what toy they want – Kung Fu Panda.

Globalisation is real. The world is, as Friedman famously puts it, flat. Even for us, mountain folks. So, like Po, the bungling panda, we’d better learn to negotiate our new terrain – our happiness will depend on it.

Stayin’ online

It happened again. Druknet was down this morning. It was down yesterday too. And I was frustrated – I couldn’t check my emails, or update this blog, or confirm my Druk Air reservations.

But many others must have been even more frustrated. The sudden loss of connectivity with the rest of the world would have prevented them from attending to much more important and urgent work.

We should expect, and demand, higher quality of services. So I called Druknet. And I learned that their internet service was interrupted while they were upgrading their system. Apparently, while installing an advanced back-up power supply unit, an electrical leakage caused their system to short circuit…a small glitch really.

But I also learned that Druknet has improved the reliability of their services considerably since the two major interruptions last year. In January, the fiber optic connection to London was disrupted when submarine cables in the Mediterranean were destroyed by ships anchoring off Alexandria. And in August, landslides above Takti knocked down a power pylon damaging the fiber optic cables it carried.

Since then, Druknet has improved the existing link to London and established a new fiber optic link to Hong Kong. To backup the fiber optic network, it has installed a high capacity microwave radio connection between Phuentsholing and Thimphu. And it continues to use the Satellite Earth Station link to British Telecom, and a VSAT link to Telesat in Hawaii.

Druknet has done a lot of good work. But that’s not good enough. To make full use of the wonders of ICT, we must have quicker and more dependable internet connections. For that, we, customers, must demand for better services. Otherwise, expect more glitches.

Doing business isn’t easy anywhere

But it’s getting even harder in Bhutan!

In “Really hard business” (read blog entry) I had grumbled that doing business in our country was really hard – the World Bank had ranked Bhutan 119th of the 178 countries it had evaluated on ease of doing business in 2008.

Guess what? Doing business in Bhutan has become even harder!

Doing Business 2009 report now ranks Bhutan 124th out of 181 countries that were investigated (see ranking). And in South Asia, Bhutan, ranked 7 of 8, fares better than only one country, war torn Afghanistan (see ranking).

So what, you may say, our economy has grown rapidly. True, we have enjoyed unprecedented growth – the size of our economy has more or less doubled every 5 years since 1980, and per capita GDP, at US$ 1900, is the highest in our region.

That our economy has grown fast is good news indeed. But the far more important question to ask is: how did it grow fast?

Our economic growth has been fueled by loans, foreign aid and hydropower; not by productivity; and not by the private sector. The private sector has not been able to drive economic growth because it is weak. And it is weak because it so hard to do business in Bhutan.

Meanwhile, our vision of strengthening the private sector and making it the “engine” of growth remains just that – a distant vision. And, in spite of the impressive numbers, our economy is actually very weak, which manifests quite clearly in rising inequalities, youth unemployment and widespread poverty.

So what should we do? Make it easier to do business in Bhutan. Make it easier for our people to realize their full entrepreneurial potential. Make it easier for businessmen and women to contribute to the economy. Review rules and regulations. And make them business friendly.

Only then can we expect Doing Business to declare better results for Bhutan.

That said, Doing Business report is, at best, only a test that provides indicators to the state of our domestic business environment. But we should take these indicators seriously. After all, potential investors all over the world take them very seriously.