Policy: Call it a “game changer” or the revised economic development policy (EDP), its goal will be to achieve a minimum average economic growth rate of 10 percent and achieve the nation’s ambition to emerge as a middle-income country by 2020.
The EDP, which the Cabinet approved on December 21, last year, encompasses major economic reforms including the restructuring of the macroeconomic base to take on board the five jewels-hydropower, agriculture, cottage and small industries, tourism and mining.
The new EDP has a total of 252 policy provisions and following this the finance ministry has already drafted the new fiscal incentive policy. The two policies will be formally launched toward the end of this month.
The director general of hydropower and power systems, Sonam P Wangdi, who was the chairman of the core group involved in revising the EDP said there are about 36 game changers, at least two in every sector, stipulating a major drift in all the five jewels of the economy.
In mining, for instance, a major change in the ownership pattern is expected. “A private party cannot get the full ownership of any medium or large mines,” he said, adding that a percentage would be worked out to divest some shares to the community and minority shareholders.
Another major development is in the tourism sector wherein the royalty fee has been replaced with a sustainable development fee. Sonam P Wangdi said the fee would be used as a promotional and marketing tool.
The new EDP states that the volume will be determined by the absorptive capacity of the country in terms of infrastructure, culture, and environment. Although it is left to the Tourism Council of Bhutan to determine how to use this instrument, Sonam P Wangdi said fees should differ based on the season and if possible there should be concessions on double visits and lesser fees to visit places least visited by tourists. This, he said, is to promote tourism and related infrastructures across the country with due regard to regional balance and equitable benefits.
In terms of trade and investment, the new EDP offers an impetus to up the country’s ease of doing business ranking to the 50th position by 2019. Sonam P Wangdi said the country needs to score 72 percent to achieve the rank against the current score of 65 percent. “It is not so difficult but once we do that our status would be at par with countries like Thailand, Mexico and Mauritius, among others.”
All bureaucratic red tape, he said, are expected to be removed since the policy would drive relevant agencies to bring procedures and services online besides the one-stop shop. “One document submitted to one agency would suffice for all other purposes, for instance,” he said. “There would be preferential treatment to those helping domestic production and employing locals.”
The new EDP also directs the country to come up with an entrepreneurship development institution with linkages both abroad and within.
The new EDP also seeks to have laws harmonised and intimates the need to have new laws and policies. For instance, the EDP solicits the government to adopt a Tourism Policy by 2017 and a Tourism Bill to be considered a priority. The timber allotment policy is suggested to be reviewed.
A review of the foreign exchange rules and regulations is probable in order to re-look at the allocation of foreign currency. To boost the agriculture sector, the policy also directs the Royal Monetary Authority to provide easy financing to the agriculture sector.
Import of used but energy efficient and non-polluting machines are allowed for the manufacturing sector. Sonam P Wangdi said this provision has been there before but the National Environment Commission guidelines somehow placed some restrictions. “So the new EDP seeks for harmonisation of laws,” he added.
The land Act, immigration Act, road safety and transport Act, intellectual properties Act and local government Act are a few laws that shall be reviewed within a year after implementation of this new EDP.
In hydropower, the EDP ensures maximum benefit to local contractors and producers. The policy states that while implementing hydropower projects, mechanisms shall be built into the contract to ensure maximum benefit to local suppliers of construction materials, transporters, contractors, manufacturers, and other service providers.
It shall be mandatory for foreign contractors to engage local firms for skills and technology transfer. The chairman of the core EDP group said that the policy gives Bhutan an opportunity to showcase its image as a knowledge centre for hydropower, be it in terms of repair and maintenance or consultancy services.
In the construction sector, the policy has room to train local contractors to imbibe a sense of professionalism in them. To address the labour shortage and lower maintenance costs, the policy encourages mechanisation. “With this the contractors would be given three years of mandatory liability period should they take any works,” Sonam P Wangdi said.
The local government, as per the policy would be asked to identify industrial areas by 2017. Sonam P Wangdi said that currently government land and state reserve forestland are allotted on a case-by-case basis.
The new policy would eventually demand planning and zoning of land, as industries, farmland and commercial areas would be clustered differently. “This way it becomes easier to provide services,” he said. The state reserve forestland however would be allotted for standalone big industries.
Meanwhile, 80 percent of the EDP 2010 has been amended since most plans of the old EDP has already been implemented.
The EDP, Sonam P Wangdi said is a broad policy that sets direction for the country’s economy thereby setting the tone for other laws and policies in relation. He said the policy provides a timeline and places accountability on all government agencies.