Subsidizing profits

In their story about MPs calling for certain state-owned corporations to be privatized, Kuensel quoted me as saying that the government was giving too much subsidies to the corporations. “As if providing land was not enough, the government is even generous enough to provide them subsidy, which meant extra burden to the government”, I supposedly said.

The quote is correct. But the context is wrong. I didn’t complain about subsidies that corporations receive. In fact, I believe that we must do a better job of ensuring that corporations that provide a public service – BBS, for example – have access to more predictable and sustainable subsidies without having to put up with political interference.

What I did complain about, and what I objected to, was the Nu 144 million earmarked as subsidy for the Education City. The subsidy, we were told, covers costs for constructing ancillary infrastructure including road, telecommunications, water supply and bridge.

I objected to the Education City subsidy because the government is already supposedly allocating 1000 acres of prime land for the project. If so, that would be a huge contribution by the government. So the investors – DHI and their FDI partner – should pay for the rest, including the ancillary infrastructure.

Otherwise, the government may end up subsidizing the profits of the Education City investors.

 

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  1. typical of the twisted logic of jigmi thinley & his dpt sycophants..bend over backwards to favor foreigners & treat fellow bhutanese with contempt..
    bhutanese students have died of nutritional deficiency & the government wants to do all it can to bring in foreign students..no way it’s happening..with this government & its policies, bhutan will never be an educational hub..the mere fact that parliament needed a separate bill solely for this project speaks volumes about ground realities & the functioning of this government..totally inept at carrying bhutan forward & serving the public..

  2. Just Asking says:

    Subsidy is not bad. It can be used in meaningful way like subsidizing seeds and fertilizers to farmers, subsidizing power to small cottage industries etc.

    But subsidizing Education City demonstrate sheer arrogance on the part of government, to put it mildly. At worst it is a total abuse of power vested by the King and mandate given to them by the people.

    Still, my bet is, projects like education city will go on, children will die of malnutrition, our students will be killed in far away Indian cities, Sherubtse will rot forgotten in the east and all RUB colleges need better toilets and playground. And we are here pumping 122 million to creating a safe haven for 12,000 foreign students.

    At the end of it all, people will vote DPT into power in 2013.

    So whose is to blame anyway?

  3. I don’t know what our peoples representatives are doing. their voices are useless are most of them are not doing their home work. if they have done their home works, they would have not discussed the Education city bill. i don’t think every bill must be enacted.

    When the country cannot give good tertiary education in the kingdom, how can DHI and Gov. be so confident of educating the foreigners, what specaility do we have to offer and attract foreign students.

  4. Trash the education city project. It wont work in Bhutan. Look at the IT hub….USD 8 million investment.

    Because there is no market or prospect for such project in our country. Show me an example where such project has worked in our country. Even the recently completed 8 million USD IT Park remains an empty fortress so far. Obviously when our country do not have software programmers, there is no doubt that such project will fail. Similarly when we do not have professors and researchers or even good teachers (international standard) how can we have education city like the ones in Singapore. Just because Singapore or India has one does not mean that we can have too. On what basis they projected that 12000 students would pay hefty tuition fees to come and study in Bhutan. What will they study here when our education system is sub standard? I cannot get this logic of those DHI promoters. Show me a study document where it indicates that foreign students will come to Bhutan to study? None exists. So this project will not just fail but fail BIG. Please, please……do not waste any more rupees unnecessarily. We are already in trouble. Let us be pragmatic for once…….

  5. AND please privatize DRUK AIR. That corporation has been a burden to the country. It can easily be run on profits by Tashi Company if we sell to them.

  6. dhendhup says:

    Albeit every individual has his or her right to express and I am not against those who are not in favor of Education City. At the same time, we should understand that only few who are against the great idea of having such hub in Bhutan will take time to express their opinion in this forum. But there are more people and more wiser people who are in favor of the Education City. This can be clearly corroborated by the fact that more than 80 % of the NC members voted for the Education city while less than 5 % voted against it. Similarly, in the lower house, only two voted against it. These Parliamentarians are the representative of our people and their voice represents the voice of the people of this country. There are 1001 advantages of having the Education City in Bhutan which I do not want to write here as it will be too voluminous to read and comprehend. The fruit of it will be reaped by our children and grand children; and that time only those few people who did not buy the idea will realize their ignorance. It is however not bad, we need to have people with different opinion for the system to function and for that matter the laws of human dynamics to run, otherwise, the world will be too boring. These few people who are against the idea of such great initiatives and hard work by few individuals from DHI makes the scene quite interesting in the parliament house, not for the genuine cause but to show that they are vocal and to portray the image that they are more knowledgeable than others. For those people there are many other avenues to showcase their superiority complex. They would have bought the issue of insurance of our dzongs and monasteries in the parliament, they would have discussed about the preventive measures to be put in place for the dzongs and other important monuments in Bhutan, they would have not supported the vegetable ban, the pedestrian day, etc. and etc. which brings immense inconvenience to the people at large.

  7. dhendhub…..it wont be voluminous if you talk sensible stuff. If you jot down nonsense then it will be boring like after i read your justification. If you say that our children or children’s children will be benefited by this project, it is better to leave for next generation to consider. We have better investment to be made now such as feeding our boarding school children so that they grow to become a healthy and productive citizen. That is more urgent.

  8. I would like to raise some issues concerning education city.

    1. Is there substantive evidences to corroborate the statement made by the proponents of the city that it will attract foreign students and investment? Judging from similar cities elsewhere we need to provide more than land and other basic facilities to attract investments and students.

    To date, investor for the city is limited to only one or two firms from India that does not provide any competition in terms of scale and terms of investment. Also counterparts from Bhutan are selected arbitrarily without wider public participation. I think it would be more sustainable if the city is conceived on the basis of shareholding by various interest groups rather than limiting to few individuals. Limiting counterparts to few individuals deprives other Bhutanese to participate in this grand scheme.

    Terms and conditions for investment must be put up in public domain so that informed discussion could be initiated to broaden consensus and understanding. It seems deals are struck between few exclusive parties and public discourse is put aside to avoid criticism or public pressure.

    2. We do not know what impact(if any) such scheme will have on sociocultural landscape of Bhutan, especially on communities closer to the city. Will the city bring about decadence of local culture by infusing undesirable alien behaviors or norms and cause breakdown of local social fabric, because we know that substantial population of students will be from outside who are alien to our ways of living and doing things.

    3. On economic front, considering the present economic difficulties, education city could be delayed for future consideration. We have so many pressing considerations like up-gradation and improvement of Royal University of Bhutan and its affiliated colleges; construction of new Wangdue Dzong, improvement of nutrition and facilities of boarding schools etc. For instance, there are several schools in Bhutan that do not have decent toilets or wash room; and many students are suffering from malnutrition. In my mind, we need to improve what is there rather than jumping the gun and dreaming of grand city that may remain simply as “castle in the Air”. the present empty IT park is a case in point.

    There is no harm in dreaming and thinking big, but we should also know our limitations and short comings that are plenty at this point of time in Bhutan.

    Cheers

  9. I smell a rat in the manner how Tashi Air now gets to conduct international flights. The motive of Tashi Air was never to run domestic flights but the lucrative international flights. They have now conveniently discontinued the unprofitable domestic obligations and will be operating international flights from this October. I smell a rat here. Honourable OL should put in an enquiry into this

  10. Concerned Citizen says:

    First thing first it would be very good to know their target market. Students from which country are they targeting. Is there any market research conducted to see what sort of students and what sort of sujects they would be interested in studying.

    What uniqueness can we provide to them which they will not get from well establised institution else where?

    If the project proposal could answer this thn I cud see some potential. If it works, it wud b a wonderful investment.

  11. Come on OL, respond to the questions asked in this blog on this topic.

  12. PhuntshoD says:

    Education City Project is a Scam – The biggest beneficiary were the two Paldens (JYT’s son Palden and Lyonpo Gigi’s son Palden). But First: Read this message of grave importance

    Do you remember the Tobacco Control Act of 2012? How many people went to JAIL for it? All of us didn’t bother to think upon the consequences of such legislation. We thought it didn’t affect us and that we could get around it somehow. But affect us – it did – Big Time. How much hurt and anxiety we had to go through from such a draconian rule.
    Our indifference (lack of interest) cost us. Response from us was at best Reactionary BUT nevertheless LATE!!!

    The proposed Amendment to the LAND ACT of 2007 – is a Déjà vu – BUT with Greater Consequences.

    This time it is not a question about spending some time in jail but about taking the Country along a path of no return – a country where the difference between the rich and poor will be far too great that it will result in a revolution – disorder – a collapsed economy – a bleak future for our children – the very sovereignty our country will be compromised. This bill if passed is going to make DPT government an autocratic government and Jigmi Y. Thinley a despotic ruler. DPT’s ambitions are growing by the day.
    The very thought of the consequences of this bill sends chills down my spine. My fears are not unfounded: –
    Take for example – THE EDUCATION CITY SCAM (Corruption case at the highest level) – Lyonchhen stands to benefit both directly and indirectly.
    When the country is faced with Rupee Crisis, how could he go and spend Nu. 15 MILLION on conducting a GNH Conference in New York. Others of note are
    TROWA THEATER CASE
    GYALPOSHING LAND SCAM
    CHANG UGYEN’S OLAKHA LAND SCAM
    NOW THE GOVERNMENT WANTS THE POWER TO GIVE KIDU LAND. THEY HAVE NO DECENCY AT ALL!!!
    PLEASE TAKE SOME TIME TO REFLECT UPON THIS AND DON’T GET CAUGHT UNAWARE!!!

  13. I don’t vote for Edu. City project, our country now faces challenges that need more attention. Edu. city project, firstly is in Thimphu already burdened place. Let private agencies come up on their own with more colleges and edu. centres, through govt’s favourable policies and guidelines. Our private business know it is profitable venture. It will also save the money that goes out to various institutions outside the country.

    1. We need to work for sustainable economy, that addresses rupee crunch, over dependency, saves climate.

    It’s getting unbearably hot! We need green ideas, measures from all aspects –practical policy, business. Our farmers are having low yield due to climate change. There is too much of construction going on and will go on – yet there are no eco-friendly methods used and plan to use. Forests resources are renewable resources (and not others that are used now in shortage of wood for construction). But we have failed to understand this. What are concerned authorities doing?? We are not using other energy, like solar- if we do, we can instead of using the electricity, we can export all and earn good revenue. Promote solar.

    2. Better education: We need up improve our existing edu. System, facilities.
    Privatise schools in Thimphu, Paro and Phuentsholing (Thomdre). With this money build more schools in other regions. This will help the rural-urban migration. People will not want to come to Thimphu, because there is free edu. in Thimphu, Paro and Phuentsholing.
    Increase salaries of teachers teaching outside these regions.

    3. Promote Business –private sector. Support new business ideas, agro biz by youth with good policies. Allow domestic business in brewing alcohol for exports and even for consumption and increase tax on all imports of alcohol by huge %. So that the all foreign alcohol that are available in market by our own. But do impose tax on the local alcohols too so that the costs are higher to discourage mass consumption. Remove ban on smoking and tax high – very high. Remove ban on the local products like Meat, fish and eggs – we should be promoting our farmers’ business!! And keep the bans on its imports.

    4. Increasing tax in luxury item is good initiative.

    5. Community forests are good initiative- but that does not mean keep forests idle. Teach them the business. We are a small population, with huge resource of forests, but we adopting wrong measures, we should use the renewable forests and use less of other no renewable products.

  14. bugamsisi says:

    Did any one of you accusing the government of taking away Kidu power from HM actually read the draft bill? The Draft Mand Bill explicitly mentions that Kidu is the sole prerogative of the throne and not as the PHUNGZEY TL wrote in his paper. Don’t be naive and don’t try to patronise HM – He doesn’t need it. There is no other body more concerned about HM and the sanctity of the institution than the cabinet and no one more loyal than the PM. Your lip-service is of no use.

  15. Concerned Citizen says:

    ST.. well said.

    We need good economist and economic evaluator in our country.

    I liked wht ST said about umposing high very high tax instead of smoking ban. Then it will be individuals choice whether to quit smoking or continue with high price.
    If the govern. wants smoking ban, then there should be Smoking Cessation Public Health measure such as councelling, nicotine alternatives etc…

    I also like ST’s thought on letting privatisation of such project with ofcourse guidelines provided by government.

    Promoting Bussiness: As OL mentioned in one of his blog and Lyonpo Sangay Nidup has been saying for a long time that doing bussiness in Bhutan is very difficuilt. Implement ways to decrease difficulties etc…

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