Financial services … for who?

A joint sitting of the Parliament passed the Financial Services Bill. 66 members voted for the Bill. Only one member voted against it. That solitary member was me.

I voted against the Bill because it is discriminatory – it favors foreign investors over our own people.

Section 50 of the Bill specifies that a Bhutanese individual cannot own more than 20% of a financial institution’s shares; and that a Bhutanese company cannot own more than 30% of a financial institution’s shares.

But the Bill does not specify the amount of shares a foreign company can own in a financial institution. That has been left up to the Foreign Direct Investment policy. And the present FDI policy allows foreign companies to own as much as 51% of a financial institution.

So basically, the maximum amount of shares Bhutanese individuals and companies can own in a financial institution are clearly defined by law. But the amount of shares that foreign companies can own is not defined by law – instead, it’s left up to a government policy. Today’s policy allows foreign companies to own a lot more shares in a financial institution than what our own companies can own. And tomorrow’s policy could allow foreign companies to own even more shares.

It’s important to specify – clearly specify – the maximum amount of shares that a Bhutanese individual or a company can own in a financial institution. And it’s even more important to clearly specify the maximum amount of shares that a foreign company can own.

Our laws should favour Bhutanese companies over foreign ones. But if, for whatever reason, that’s not possible, both of them – Bhutanese and foreign companies – should be treated equally. Foreign companies should never receive preferential treatment over our own companies.

But that’s exactly what the Financial Services Bill allows.

Foreign investors already have more money, have more expertise, and have more experience. Now with more ownership of our banks, they will, in time, dominate and control our financial sector. That cannot bode well for the security of our economy.

Here’s Section 50 of the Financial Services Bill:

No person shall hold more than the following percentage of interest in shares of a financial institution:

(a)     in case of a Bhutanese individual, 20 percent,

(b)     in case of a Bhutanese company not being a financial institution, 30 percent.

(c)     in case of a Bhutanese company being a financial institution, as per the limit provided under section 53 below, and

(d)     in case of a foreign financial institution, as per the RMA regulations in line with the Foreign Direct Investment Policy.

 

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  1. OL seems futuristic!

  2. thinley says:

    The job of opposition is to oppose and you did it rightly! Moreover, every individual MP has a fundamental right to cast their vote and you did it based on your opinion and view. So, absolutely not necessary to justify.

    Your basis of vote was based on the fear of unknown i.e. ownership of foreign investor which is left open….i think there is nothing wrong in keeping open as future governments can amend FDI policy based on the situation therein and allocate the ownership…..
    As far as 30% limit is concerned, i am 100 % with the majority….Our limited resources like, limestone, coals, etc.. are increasingly going to few individuals…we are becoming too capitalist!….For me, middle path is the best!……

  3. Karma 1 says:

    Dear OL,

    Where have you been till now?!!!! This has always been the case (discriminatory) – both in policy and in action. Here are few quick examples:

    1. Foreign hotels like Aman, Uma and Taj were allowed to import everything free of tax, even those things available within the country. Whereas hotels owned by Bhutanese people are not allowed to import or heavy taxes are levied on even the most essential items.

    2. Foreign hotels like Aman, Uma and Taj are allowed to employ and have many foreign employees but for hotels owned by Bhutanese people, it is almost impossible even if an expert foreigner is needed to improve professionalism or for the transfer of knowledge and expertise to our own people.

    3. Foreign contractors like Dantak can bring in as many foreign laborers as they want but the Bhutanese contractors can never get enough imported laborers. And then they get penalized for not completing the work on time.

    4. Foreign consultants like McKinsey are given millions and millions of dollars consultancy work but it is difficult for our own Bhutanese consultants to get work worth few thousand dollars.

    5. Our government officials would spend hours and hours chatting with a foreigner during their office hours but have no time to meet our own people even if it causes a lot of difficulties, inconveniences and losses to the individual and to government.

    6. Anything and everything gets done for foreigners and our own wealthy and well connected people, but for ordinary citizens it’s very difficult to get anything done—even the simplest things.

    This is just a quick list. If we take time and do some research, there will be many, many more..

  4. Did’nt someone once said:
    “Offering Oneself on a Platter”.

    Yours sincerely

  5. Dogchok-gi-dokchog says:

    We can also look at it from the other side of the coin. No incentives means no foreign money; no fioreign money means no economic growth; no economic growth means no employment and income, no employment means more social problems; more social problems means no peace for OL and all of us!!!

  6. pem tshering says:

    Unfortunately and hopelessly, most of our MPs seem to be using their asses instead of their heads. Bhutan is not becoming any better even after so many years of developmental programs. I have lost all my hope and trust in most of the senior MPs including the minister and the PM. They say something and do just another, perhaps, to tell us that they are trying to become real politicians. God save this land of the GNH.

  7. Tokimada says:

    this reminds me of the application to the Dasho.

    I lay down humbly for Dasho’s necessary action.

    First it was the new Economic development Policy, which was a load of bullshit, exactly like the finanacial bill, tilted in favour of FDI !

    A Foreign investor can get foreign exchange and tax hoildays and labour permits in the new EDP.

    A local enterpreauner is subjected to a lot of restrictions and also skeptism from the bureaucrats.

    the Govt policy of encouraging locals business is all but lip service, exactly like the tourism policy.

    the PM, leading the way, bullshiting the larger world and the MP’s doing the same locally.
    the slogan” think globally, act locally “

  8. Demissa says:

    Haven’t seen the Bill to make any judgement on your voting. But MPs voting en bloc frightens me.

    Either the Bill is perfect, which will never be the case

    Or

    The MPs have either no read the Bill or have not understood tye content. Isn’t this worrying?

  9. thinker says:

    The love for ‘FOREIGN’ is so visible in this present government. The Mckinsey, FDI, Foreign workshops, Foreign seminars, Here in the eastern part of the country, our fellow brothers and sisters are struggling for one meal a day. And in the capital, the government officials are concerned about vacation(foreign workshops and seminars) to outside country.

    Foreign coming in terms of tourist are okay. But too much of other than that should be restristed. Well, if our government officials really loves vacation, than why not organize a week trip to the remotest parts of our country and see the problems and find out solutions..

  10. So if a foreign company can own 51% they effectively have complete control over the company – the Bhutanese are just sleeping partners.

  11. @Karma 1

    Thais is why 5 star hotels like Aman, Uma and Taj are very little benefit to the country. They may bring high tariff visitors into the country, but most of the money they spend goes outside.

    A much larger percentage of money spent by more ordinary visitors staying in more ordinary hotels stays in the country – but those behind theses luxury foreign owned hotels want to limit ordinary visitors so they can maintain their exclusivity.

Trackbacks

  1. […] are more problems looming. Tobgay has just tweeted on planned laws that would strangely give foreign investors bigger stakes (51%) in financial services than the (20%-30%) […]

  2. […] are more problems looming. Tobgay has just tweeted on planned laws that would strangely give foreign investors bigger stakes (51%) in financial services than the (20%-30%) […]

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