Business on pedestrian day

The central secretariat complex outside the Tashichhodzong wore a deserted look on pedestrian day, this afternoon. No doubt, our civil servants were busy in their own offices, working, since they wouldn’t be able to attend the otherwise unending number of meetings that plague our government.

Norzin Lam, Thimphu’s main street, also wore a deserted look this afternoon. I saw students walking home and taxis zipping around, but I saw little else. Shops were empty. And some, like these shops on upper Norzin Lam, were closed for business.

There are many things wrong with pedestrian day. And one of the most damaging is its effect on businesses. Restaurants, grocery shops, hardware stores, commercial offices, even the small pann shops, are reeling under the effects of Pedestrian day. That’s why, during question hour this morning, I’d wanted to ask the minister for economic affairs this question:

Will the Hon’ble Minister please report on the amount of business that has been lost in Thimphu because of the implementation of “Pedestrian Day”? Furthermore, will the Hon’ble Minister kindly explain the Royal Government’s measures to facilitate business on “Pedestrian Day”?

However, my question was not included for discussion in today’s question hour. Perhaps the minister for economic affairs was of the opinion that my question was not relevant. And, perhaps, he convinced the Hon’ble Speaker to reject my question. But the question remains: is pedestrian day affecting businesses?

The government cannot continue to ignore this question. The question is relevant. And it is important. But it’s not just Thimphu businesses which are suffering – businesses in other dzongkhags, especially those in the South, are also reeling from the impact of pedestrian day.

Real losers

Remove the rot

Does anyone know why the government insists on permitting only FCB to import vegetables? I don’t. The prime minister had explained that only FCB would be provided Indian rupees to import vegetables as FCB would be able to buy in bulk and would not be motivated by profit, which would make prices come down.

But vegetable prices have not come down. Instead, they’ve skyrocketed, because FCB’s prices turned out to be much higher. Plus, a lot of their vegetables had turned bad even before they reached Thimphu. As a result, consumers paid higher prices, but received poorer quality, and vegetable suppliers suffered big losses. In addition, the government now has to bear the cost of 65MT of vegetables that were rejected by the vegetable suppliers.

FCB’s first attempt at importing vegetables has failed terribly. So you’d think that the government w0uld learn from the experience and finally accept that importing vegetables from Falakata is not as easy as it seems. You’d think that they would revert to letting the vegetable suppliers do what they do best, i.e., import vegetables, a specialized trade that they’ve mastered over decades of doing the business.

But what does the government do? They dig in their heels and redouble their efforts to force FCB to import vegetables in spite of the fact that they obviously do not know how. So FCB has reportedly hired an Indian vegetable supplier to “help” them. And the government has forced our vegetable suppliers to pay as much as 70% of their orders upfront, in advance. The idea, it seems, is to coerce vegetable suppliers to buy from FCB, regardless of the quality and the price of the vegetables.

Doing business in Bhutan is difficult as it is. But the government seems hell-bent on making it even more difficult. They should know that businesses, even if they are small time vegetable suppliers, do not stand to lose much; they’ll simply move on. The  real losers, the government should know, are the consumers, the people of Bhutan.



Really important business

Doing business in Bhutan is already difficult. But it’s getting even more difficult.

Each year, the World Bank publishes a “Doing Business” report in which they rank countries according to the “ease of doing business” in those countries. Here’s how our country has fared in their report over the last few years.

In 2008, Bhutan was ranked 119 out of the 178 countries that the project studied.

In 2009, we fell to 124 out of 181 countries.

In 2010, we were placed at 126 out of 186 countries.

In 2011, we plummeted to 146 out of 183 countries

And in 2012, we improved slightly to 142 out of the 183 countries that were studied.

Our overall ease of doing business ranking fell from 119 to 142 during the period 2008 to 2012. Not good.

But it will get worse. Bhutan’s ranking is probably set to fall again.

Why? Because it’s getting harder to do business in Bhutan.

Why? Because the series of policy measures introduced by the government in light of the rupee crunch all make it much more difficult to do business in Bhutan.

Banks, for instance, cannot lend money. That means that businesses now do not have access to credit.

Informal trade across our borders have come to a standstill. And that has affected hundreds of small time business across the length and breadth of our country.

Import of a range of goods have been suddenly banned. That threatens the investments of a range of businesses.

And most recently, vegetable vendors will no longer be allowed to import vegetables; only FCB will. That means that dozens of vegetable vendors will soon lose their jobs to a government-owned company.

So Bhutan’s ranking in the next Doing Business report will probably take a beating.

Obviously, the ranking, in and by itself, doesn’t matter. What does matter is that it really could be getting really more difficult to do business in Bhutan. And doing business – good business, and lots of it – is what we desperately need to overcome the current rupee crunch.

What also matters is that potential investors refer to the Doing Business reports. And investment – foreign and domestic – is what we desperately need to strengthen our economy, and ensure that we do not face another rupee crunch in the future.

Viva la Shoe Vival!

Enterprising role model

I like business startups. These places have an air of excitement about them. They show confidence, enthusiasm and courage. And they give off infectious optimism.

But I like new businesses for another reason: they are critical for our economy. They create employment. They help reduce poverty and distribute income. And they contribute to improving and strengthening our economic conditions.

That’s why I try not to miss invitations to visit business startups or attend their opening ceremonies. And over the years I’ve had the opportunity to visit a wide range of new businesses ventures from restaurants and bakeries to workshops and factories.

Yesterday, I got to visit another startup. Shoe Vival. This small enterprise, located in lower Norzin Lam, offers a unique service – they launder and refurbish footwear.

Shoe Vival was officially launched yesterday. But they’ve already been in business for a few successful months. If you visit their Facebook profile you’ll see some of the work they’ve been doing.

And if you visit their workshop in Norzin Lam, you’ll see why I’m so excited about their work. Here are the top five reasons that make Shoe Vival my favorite start up:

5.     Dawa Dakpa, the owner of Shoe Vival. He dropped out of college, and spent several jobless years drinking too much. But he didn’t give up. Instead he looked for a business idea, learnt about that business, established it, and is now running it successfully. Today this self-employed entrepreneur is a role model for out-of-school youth.

4.     The Loden Foundation helped Dawa Dakpa start Shoe Vival. That’s the kind of work I like to see our NGOs do – helping us help ourselves.

3.     I can now get my shoes repaired – and repaired well – by a fellow Bhutanese. I no longer have to take them to a foreign cobbler.

2.     Shoe Vival will clean and refurbish my old favorite shoes, making them good enough to wear or give away. I no longer have to throw them away or store them indefinitely.

1.     I’ve finally figured out a way of cleaning my traditional boots, especially the white brocade, without damaging them – viva la Shoe Vival!

World class advice

McKinsey's client

McKinsey's client

Jack recently posted a comment in “Double vision” asking for my “…opinion regarding the government paying USD 9.1m to a global management consultancy firm, McKinsey and company”.

I’m afraid that I know very little about “Accelerating Bhutan’s Economic Development”, the project that McKinsey will implement. And, the little I know comes from what Kuensel had reported a few days ago. The project must be interesting. And exciting. So, I’m already looking forward to learning more about it.

But let’s look at what we know. In “Really hard business”, we talked about how difficult it was to do business in our country. The World Bank’s Doing Business report 2008 ranked Bhutan a dismal 119 out of the 178 countries studied for ease of doing business.

In “Doing business isn’t easy anywhere” we noted that doing business in Bhutan got more difficult during the previous year. The World Bank’s Doing Business report 2009 put Bhutan at 124 of the 181 countries. We inferred that rules and regulations needed to be reviewed to make them business friendly.

In “Getting down to business” we looked at the ten dimensions of doing business that were covered in Doing Business report 2009. Six of the ten areas needed drastic improvements if doing business in Bhutan were to be made easier.

And, in “Official business” I suggested that, to make doing business easier, we would first need to change the mindset and the attitudes of our officials.

Why do I mention these previous entries? Because, let’s face it, all of us, in the private sector and in the government, know, more or less, what must be done to make doing business easier in Bhutan. Now, if McKinsey is needed to get the job done, so be it. But, be warned, don’t expect any magic. Ultimately, it’s up to us.