4 April, 2009 - Addressing the Bhutan chamber of commerce and industry (BCCI) yesterday, for the first time since the new government took over, prime minister Lyonchhoen Jigmi Y Thinley said that, while his government will create an enabling atmosphere for the private sector to grow, the private sector - big businessmen and industrialists - must also work to create a sustainable economy for Bhutan.

“The government will facilitate and support the private sector,” said Lyonchhoen Jigmi Y Thinley. There will be clear policies and laws and rules, and fiscal and other incentives, when and where necessary, and that his government was committed to transparency, he said.

“However, the effort must also come from the private sector itself to create a sustainable economy,” Lyonchhoen said. He said that the kind of role the private sector could play must be “beyond simply looking to make profit”.

Lyonchhoen was accompanied by the economic affairs minister, Lyonpo Khandu Wangchuk, and finance minister, Lyonpo Wangdi Norbu.

Former BCCI president Ugen Dorji raised issues on exemptions, such as on tax, loan interest and excise duty. He said that Pasakha steel and ferro industries needed that and also lacked working capital as they were hit by the global recession.

“Without additional capital, these industries cannot operate at usual production capacity and industrialists have taken huge risks along the border to set up, not just for personal gains but also for the betterment of the people and country,” said Ugen Dorji.

Lyonchhoen, in a speech, had earlier said that the government was disappointed “in that, so far, we’ve heard of no good ideas or any encouraging new ventures from the private sector”, except requests for tax exemption, excise refund, reduction in interest rates, relaxation of minimum requirements and rules, among others.

“The sector should come up with new ideas to promote the sector, which is more important than just making profit,” said Lyonchhoen. “Providing exemptions would raise questions of long term viability and profitability.”

Lyonpo Wangdi Norbu said that, if banks lend more than their capacity, going against the prudential regulations of the central bank, then it would fail them and affect the whole economy and development of the country.

BCCI members also said that most hydropower project works were awarded to Indian contractors and not domestic ones.

Lyonpo Khandu Wangchuk said this was not wholly true. He said that, during the Tala project works, works amounting to Nu 2.5 billion were awarded to local contractors and, in the forthcoming Punatsangchu project, already many works, including the road construction have been awarded to domestic contractors. “While awarding the work, we always keep in mind the benefit to the private sector,” he said. Works given to Indian contractors were those that domestic contractors did not have the capacity and technology to perform, he said.

Lyonchhoen said that the government was promoting Bhutan as a world class hub for a prospering neighbourhood, as a favoured location for ICT industry, as an organic brand with a huge range of possibilities and expansion in the energy sector, and as a human capital source in niche areas, with improvement of road networks and quality. Other opportunities being created for the private sector, especially for construction, transportation and retail, are the development of roads to every gewog and providing electricity for all.

Lyonchhoen stressed that the government discouraged fronting, tax-sheltered industries, anything environmentally hazardous and bar operations.