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.

But nat!

At school, we, like all children, all over the world, loved playing pranks. Our arsenal boasted an impressive range of innovative pranks. But the simplest and the most popular of them by far was the very versatile but nat! prank.

This is how it was administered: We’d go up to a fellow student and excitedly declare, “I found your wallet!” And then, very slowly, add, “But nat!”

Or we’d tell him, “Our math test is postponed … but nat!” Or, “She says she likes you too … but nat!”

The but nat! was meant to negate whatever news had just been delivered.

For obvious reasons, the prank would work only if the victim had really lost his wallet. Or if he hadn’t prepared for the upcoming math test. Or if he had confided that he was in love with a certain girl. And if, by some chance, the victim had lost a lot money, or really hated math, or was madly in love, the prank would triumph.

The prime minister, who, incidentally, also attended the same school, has pulled off a but nat! on the entire nation.

Last month, he went on live TV and confidently broadcast that the government would ban the import of vegetables from this month onwards. But last week, a month after his announcement, he seems to have changed his mind, and slowly added … but nat!

There’s no doubt that we can grow our own vegetables. In fact, we must grow our own food. But we’ve done precious little to encourage domestic production. So we’ve been relying almost exclusively on imports.

We can, and we must, grow our own food, especially vegetables. But that’s not possible overnight. Our dependency on imported food has come about from years of inefficient farming combined with lazy government policy.

Yes, we can, and we must, work towards substituting imported food with domestic production. But we must work carefully, deliberately and intelligently. An immediate and outright ban on vegetable imports will do more harm than good.

So I wasn’t surprised to hear the government say but nat! and negate the vegetable import ban.

But I am surprised at their decision to allow only one agency, the Food Corporation of Bhutan, to import vegetables. The FCB, as far as I know, does not have any experience in importing vegetables. As such they will find it difficult, if not impossible, to negotiate, buy and transport a wide range of perishable goods every week to Thimphu and other parts of the country. They don’t have the experience to do the job. And they don’t have the incentives to do a good job.

It’s clear that we will be compelled to import vegetables for some time. As such, the government should permit the vegetable vendors to continuing importing vegetables. They, not FCB, are the people who know how to do this business the most efficiently.

But in the meantime, the government must encourage domestic vegetable production. The government must take food self-sufficiency seriously.

Playing but nat! at school, with students, is one thing. Playing around with government policy, without understanding the ground realities, is quite another.