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Bhutan and the GST conundrum

The assurance from tax commissioners to smoothen the Goods and Services Tax (GST) procedures for Bhutan could help allay the anxieties of the business community.

As Bhutan’s biggest and main trading partner, any change in polices across the border has a ripple effect at home. Bhutan felt the impact of GST even before it could understand the nuances of the regime. Cumbersome customs procedures stifled trade in the border town of Phuentsholing .

The country was compelled to adjust to the tax changes happening in India. But it has cut the competitive edge of Bhutan’s export-oriented industris. With a free trade agreement binding the two countries, it becomes important for the two governments to remove bureaucratic hurdles that hinder free trade. Bhutan has been assured that the central authority would urgently discuss with all the tax commissions in North East, Guwahati and Siliguri to clear the issues.

While these issues are being looked into, Bhutan must also look within and assess its business setting. We must accept that it has become a norm for our business community to cry foul and run to the government for every issue they encounter. This indicates how weak the business community’s resilience to change is.

We sense almost a denial to see opportunities in change but rather an eagerness to complain of the challenges. With this environment to do business and the same business houses leading the business society for years, we should not be surprised with the private sector’s stunted growth.

Efforts to improve the ease of doing business do not target those at home. When they are targeted, our dzongkhag administrations do not give it priority. Fiscal incentives granted to boost economic activities are mired in controversy. How do we then create an enabling environment for businesses to spur private sector development? We are quick to lament poor private sector development when policies from across the border impact us.

It is time an in-depth study is done to assess Bhutan’s business environment, its challenges and opportunities for it is this sector that has the potential to create employment opportunities and trigger a wave of entrepreneurship culture in the country.

We must also accept that GST is a reality and that there are only so many exemptions they could give. The celebrations that are being held to mark Bhutan and India’s 50 years of diplomatic relations offers a right time to address teething problems that hinder free trade. For the business community has pointed out that it has now become easier for them to trade with Bangladesh than with India.

Free doesn’t necessarily mean easy. But when free trade is a hallmark of relations between the two countries, efforts must be made to ensure that it is an exemplary one, just as the special relationship the two nations share.

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