KuenselOnline

Saturday, February 28th, 2015 - 12:52 PM
Yangphel Housing Banner.gif

Drukair proposes dividing domestic market

Both airlines share the view that the local market is too small for competition

Aviation: While the government is yet to make a decision on whether Tashi Air should resume domestic air services, national airline Drukair has informed the civil aviation department that it cannot operate to the Yonphula and Gelephu domestic airports.

Drukair has also proposed that the domestic market be divided between the two airlines.  It has suggested that, while it continues operating to Batpalathang airport in Bumthang, Tashi Air can monopolise the Gelephu, Sarpang and Yonphula, Trashigang sectors.

Drukair is attributing its decision to shortage or unavailability of aircraft.

The airline uses a 48-seater ATR aircraft to fly domestically.  Currently, Drukair only operates to Bumthang, given that Yonphula airport is closed for major structural work, and Gelephu is not yet open.

The ATR aircraft is also used for flying internationally to Kolkata in India, Kathmandu in Nepal and, most recently, Dhaka, Bangladesh.

Drukair flies to Bumthang thrice a week.  However, flights are currently suspended until February as the aircraft is undergoing maintenance in India.

“Now, if we try to do Gelephu and Yonphula, we find it’ll be a big challenge for one aircraft,” Drukair CEO Tandin Jamso said. “As far as Gelephu and Yonphula are concerned, I don’t think we’ll be able to operate, and we feel that Tashi Air should start operating to Gelephu and Yonphula.”

Tashi Air was allowed to suspend its domestic operations in 2012, on condition that it recommenced a year after it started its international services.  It was supposed to have recommenced domestic services in October, last year.  However, the airline has appealed to the government for either a two-year deferment on the requirement, or for the entire domestic sector to be monopolised by either Drukair or Tashi Air, on grounds that the domestic market was not large enough for both airlines, and that its international service was yet to even break even.

Drukair CEO Tandin Jamso said that, if Tashi Air operated to Gelephu and Yonphula, Drukair would not compete on these routes until the market required a second airline and Tashi Air was not able to handle the extra demand.

“I don’t think that we, in anyway, would want to compete and operate to Gelephu and Yonphula, when Tashi is operating, because we’ve seen that it isn’t really feasible for two airlines to go into the same small market,” Tandin Jamso said.

On why Drukair will continue to operate to Bumthang, the CEO said that the national airline had consistently been operating there for the past year, and that its pilots have gained much experience and confidence.  He added that continuation of services meant higher safety and reliability for passengers.

However, the Batpalathang, Bumthang route currently provided the most reliability in terms of demand as Yonphula is scheduled to reopen only next year, and demand for Gelephu is yet to be determined.

In fact, road-widening work on the East-West highway led to a significant jump in demand for flights to Bumthang the last tourist season.  On some days, as many as four flights had to be conducted.

But Tandin Jamso also pointed out that from Drukair’s perspective, Batpalathang airport was not adequately constructed to handle two airlines.  He said the lack of a taxi way and apron meant aircraft had to be parked on the runway, allowing for only one aircraft to use the airport at a time and that storage facilities for equipment were not provided, requiring the airline to build it themselves.

However, he also said that Drukair would not try to stop Tashi Air from operating to Bumthang if it so chose, that is, if it has to resume domestic air services.

Tashi Air CEO Phala Dorji said that he was unaware of Drukair’s proposal. He said that Tashi Air would only respond once a government directive has been issued.

However, he pointed out that if the proposal is “true” then it would be similar to asking Tashi Air to operate to two untested markets and bear potentially more losses. He added that the private airline as a new start up is already struggling on its international services.

Phala Dorji said that Tashi Air will continue to insist that the domestic market be granted as a monopoly to only one airline. He said that it is expected that a joint meeting will be called to further discuss the issue.

Information and communications secretary Dasho Kinley Dorji said that the ministry would make a decision following a study. “Now we’ve proposals from both, we’ll study and analyse both,” he said.

Dasho Kinley said that the ministry would make a decision that was in the best interest of those who would be availing domestic air services.  No time frame on when a decision will be made was provided.

Gelephu airport is scheduled to open for scheduled flight operations next month. So far, almost Nu 240M has been spent on its construction.

Likewise, Yonphula airport, which was closed more than a year ago, is scheduled to reopen only in July 2016. Around Nu 12M or around USD 200,000 has been spent on its development. A further USD 1-4M will be spent to enhance it.

Gyalsten K Dorji, Paro

Factors that influence inflation

Despite nine fuel price cuts last year, the fall in the price of goods and services was a mere 0.5%

Inflation: The country’s annual inflation last year was at 8.27 percent, a drop by 0.5 percent from 2013.

The year-on-year inflation in January last year climbed to 10 percent, which, by the yearend, slid to 6.38 percent.  This means, the price of goods and services between January 2013 and 2014 increased by 10 percent, and this dropped to 6.38 percent in the same period in December.

Director general of the National Statistical Bureau (NSB), Kuenga Tshering, said inflation is sometimes seasonal.  For instance, the price of vegetable shoots up when the farming season is off.

Another factor contributing to the inflation, he said, was the fuel price, which saw nine straight falls within a year.

“The fuel price drop has led to cheaper transportation and goods ultimately became cheaper,” he said.  The consumer price index also reveals that price inflated by five percent between August 2013 and August 2014.  However, as fuel prices dropped, Monthly inflation has declined, from 2.6 percent in September to 1.8 percent in October and 0.3 percent in November.

Consequently, because of cheaper transportation, inflation on food items also fell from 11 percent in July to 6 percent in November.  Similarly, in nonfood group, inflation dropped from 8 percent in August to 7 percent in November.

Economists said the electricity tariff revision by 15 percent last July, tax revision, increase in house rents, following the pay revision, and lifting of various import restrictions could have upturned further decrease in inflation, which was why the change compared with 2013 was only 0.5 percent.

Kuenga Tshering also agreed that, theoretically, the lifting of import ban should impact inflation.  However, there is monetary policy in place to control inflation, which the banks can implement.

For example, when banks circulated huge amounts of money, purchase of consumer goods increases and the banks can control the money supply by increasing the interest rates.  An increase in the supply of money typically lowers interest rates, which, in turn, generates more investment and puts more money in the hands of consumers, thereby stimulating spending.

Another tool is the cash reserve ratio (CRR), or the minimum requirement that commercial banks must set aside from their deposit with the central bank.  Higher CRR requirement translates into less money with banks to lend.  Usually when inflation rate increases, the central banks increase the CRR to reduce money supply.

The director general, however, said inflation had a lot to do with elasticity of various goods and services.  A good or service is considered to be highly elastic, if a slight change in price leads to a sharp change in demand or supply.

For instance, inelastic goods like fuel, where there are no substitutes, would impact inflation, since demand may not fall, irrespective of an increase or decrease in price.

Another economist also said the fluctuation in exchange rate between INR and USD could also affect inflation.  This was because, when USD appreciates against the INR, Indian firms acquiring goods from third countries, end up paying more.  The increase in expenditure that Indian companies bore is then transferred to their buyers, including Bhutanese.

Meanwhile, in 2012, the country recorded the highest annual inflation of 10.9 percent, which is largely attributed to the rupee shortage.  Rupee shortage inevitably led to scarcity in goods imported from India and, in turn, led to a price rise.

While policy makers and economists have been linking the country’s inflation to that of India, price rise in housing and electricity equally contributed to it.  Which means that domestic inflation also equally contributed to the overall inflation.  Almost half, of the inflation is derived from within or domestically, according to NSB.

By Tshering Dorji

The elephant in the room

The government has lived up to its promise, even if partly, when it comes to providing a power tiller for each of the 1,040 chiwogs in the country.  The tillers arrived, literally with a bang, as 25 of them roared away from Mongar town last week.

About 70 have been distributed so far, covering the six eastern dzongkhags.  More are on the way.  The power tiller, called the agent of change in rural Bhutan, will do wonders as it ploughs fields, pumps water, threshes rice and transports produce to the market.  Known for efficiency and reducing farm drudgery, the power tiller is one machine many a farmer would wish to have outside his home.

The message is clear from those representing the government when the tillers were handed over to the gewogs.  It is to help optimise land utilisation and intensification, and promote commercialisation of agriculture.  The government wants results, in terms of how much farmers produce after they are issued the machine.

Eastern Bhutan has been given preference, given the small number of power tillers in the region.  It could be also because there is shortage of hands on farms, leading to fallowing of fields.

The power tiller will bring changes, certainly, in reducing the dependence on hired hands, which are in acute shortage, and enhancing production.  But going by the current trend, there is a bigger problem in our villages.  Farmers are not complaining so much about not being able to produce, but about reaping what they produce.

Predation from wildlife is a bigger issue for most farmers, which even result in farmers not taking up cultivation.  Rural Bhutan has modernised a lot after decades of planned development.  They have farm road, electricity and some farmers also have machineries.  But they cannot protect what they grow from wildlife and, in the conflict between humans and wildlife; humans are at the losing end.

The tak tak sound of the power tiller might scare the monkey and the elephants during cultivation.  But when the machine goes silent, and it is time to reap the benefits of a year-round toiling, there will be not much to harvest if measures are not in place.  For some, power tillers are not the priority.  They are just concerned about reaping what they sow, without having to kill the animals and come in conflict with the law.

There are enough reasons to believe the farmers.  Besides the farmers, researchers and even agriculturists believe this as a main cause of a bigger problem in the villages.  Fallowing fertile fields and the migration towards urban centres are attributed to the predation of crops and livestock by the wild.

How will they increase production, when most of their time is spent on guarding the little they hope to reap?

Pvt. media considers merger

Companies could warm to the idea if the govt. were to provide incentives

MOAB: The Media Owners Association of Bhutan (MOAB) is considering a merger of private media companies.

The association wrote a letter to the prime minister on the idea after a meeting of members on January 27.  The idea of merging media companies was suggested by the prime minister himself during a meeting with the association on January 20.

On Tuesday, the association, with its members, discussed the idea, but a majority of them were skeptical of the idea.  The members felt that the merger was not economically feasible, given the huge loans individual firms had, the losses, and over ownership and editorial issues.

However, there was general consensus that companies would show more interest in a merger, if the government provided some incentives.

In the letter to the prime minister, the association put forward three conditions that could make the merger more practicable for the companies.  The first was if the government could put a seven-year moratorium on issuing any more media licenses.  The reason was the association feared that new companies would come into the market after the merger.

The second was if the government could transfer the existing high interest loans from banks to lower interest loans like that of the Business Opportunity and Information Centre.  The third condition was a one-time grant from the government to help with the costs and technical difficulties of the merger.

The president of MOAB, Tenzing Lamsang, said that, if the government could provide the three incentives, there would be a few companies, which would be interested in merging.

Meanwhile, MOAB is working on registering itself as a civil society organisation (CSO). “The association’s main focus at the moment is to get a CSO status. Hopefully, within the next three to four months, we can expect a call,” Tenzing Lamsang said.

MOAB was formed on January 6 this year.  Currently the association has 14 media houses as its members that includes 10 newspapers and four radio stations.  The association’s objective is to look after the sustainability and economic issues concerning the private media, and also media in general.

By Younten Tshedup

Bank of Bhutan recognised for good tax compliance

Finance: Contributing more than Nu 1.2B in taxes in the last five years, the Bank of Bhutan Limited (BoBL) was awarded with a certificate of recognition for good tax compliance records on Janaury 26 in Phuentsholing.

The amount of taxes it has paid also makes it one of the top taxpayers in the country,

Finance minister, Lyonpo Namgay Dorji awarded the certificate. The finance ministry has been awarding certificates to some of the country’s largest taxpayers who have shown “excellent” compliance, substantive business growth and revenue contribution.

A BoBL press release states that the bank over the years has demonstrated outstanding voluntary compliance maintaining 100 percent consistency in filling returns and timely remittances of due taxes as well as registering good growth in their revenue contribution.

BoBL’s CEO Pema Nadik, in the press release, said that the recognition stands testimony to the highest standards of corporate accountability and governance the bank adheres to.

The bank has a nationwide presence through 44 branch offices including extension offices and 62 automated teller machines (ATM) serving about 300,000 customers.

The bank’s business growth has been substantive with increasing revenue contribution, of about Nu 270M in 2013 and has also created employment opportunities every year, the press release states.

BoBL currently has 671 employees spread all over the country.

By Thinley Zangmo

Picture story

The three-day Tashi Chophel Leling tshechu in Ngatshang gewog, Mongar ends today with Guru Tshengye mask dance.
Hundreds of devotees gathered to witness the performances on the first two days, including the National Assembly Speaker Jigme Zangpo and parliamentarians.

     

Study recommends digital cable TV as way forward, not DTH TV

Being carried by the optical fibre network, greater bandwidth will be available

Television: While Direct-to-Home (DTH) TV may be legalised soon, a study carried out by a local consultant for the Bhutan InfoComm and Media Authority (BICMA) suggests that improving and expanding the cable TV network by digtalising it and allowing local cable operators to also supply broadband internet is a feasible alternative.

The study, “Enhancement of cable TV in Bhutan: Its technology and business model” recommends digitalising the current cable TV system and consolidating all local cable operators under a single Multi System Operator (MSO).

The study recommends digitalising the cable TV system from the current analog one as it offers several advantages and opportunities for both the local operator and customer.

As a digitalised system will use  optical fibre cables, rather than the analog copper-based ones used by operators today, the bandwidth available for data transfer would be significantly higher. In theory, more than a thousand TV channels could be provided.

The higher bandwidth will also allow for better picture quality or high definition TV, more channels, movies on demand, interactive gaming, telephony and broadband internet, among others.

The study also points out that by offering such value added services, especially broadband internet, cable operators can increase their revenue and continue to survive. It is also pointed out that cable TV operators in the West have been able to stay in the business only because they began offering broadband internet.

Currently, the average revenue per person for local cable operators is one of the lowest globally. Besides that, the operators are also facing threats such as increasing use of DTH TV. The study also states that if DTH TV operators begin providing broadband internet, business of Bhutanese internet service providers (ISPs) like Druknet may also be threatened and therefore ISPs would also have to be licensed to provide TV channels.

Another reason for migrating to a digital system, the study says is that production of analog equipment may eventually stop. Bhutan is one of the last few countries where analog technology is used to distribute cable TV.

However, given the high costs of digitalisation, the study says that it may be financially impossible for smaller companies in the dzongkhags to make the transition. Some of the larger cable TV companies have already begun laying fibre optics for their core networks but still use copper-based cables to reach their subscribers.

But it is also pointed out that the government has created a national optical fibre network which is yet to be fully optimised. This network reaches all 20 dzongkhags and almost all the gewogs. The study recommends that the government review how the optical fibre cables are allocated, and that usage is not only limited to ISPs and that other ICT players, such as a cable TV operator, also be considered.

For a business model, given the high costs of digitalisation and the risk of assuming that they can continue to acquire and maintain customers despite improvements in technologies, the study recommends that local cable operators be consolidated into a single multi system operator (MSO).

Strong government support in the form of tax incentives, subsidies, and loans, is recommended but the primary support suggested is to allow the MSO to use the national optical fibre network.

The MSO would then obtain TV signals from India, as is the current practice, and provide them to the local operators. A source for internet and other value added services would have to be found.

However, the study cautions that a single MSO raises the risks of monopolistic behavior, but that opening the market to competition also risks business sustainability. Therefore, the study says that BICMA will have to play a close role in monitoring the MSO and ensuring that both the MSO and consumers are protected.

The report concludes by pointing out that Bhutan cannot leave the cable industry to market forces. It says that the small customer base, lack of technical expertise within the industry, and lack of awareness about the future of TV will only lead to an inefficient industry. There are already problems associated with cable TV such as non-uniformity of number of channels provided and quality of channels.

A BICMA official said that the recommendations of the report are yet to be implemented as it still has to be studied.

The report is available on the BICMA website. The study was carried out by iDruk consultancy.

By Gyalsten K Dorji

Paying the price of being a guarantor

IMG_7352Removed: The occupants of a hut in Taba, being demolished by Thimphu thromde, carry out furniture and other belongings as police personnel keep close watch

Thimphu thromde demolishes two huts in Taba

Thromde: Following a high court order, Thimphu thromde demolished two attached huts in Taba, yesterday.

The high court issued the order in December, last year.

There were a series of arguments between the thromde officials and the occupants. About eight people who resided in the hut pleaded thromde officials to give them a few more days before they demolished the huts.

The arguing and pleading went on for almost an hour.

The head surveyor Samten Dhendup said that following a high court verdict in 2012, the thromde had given several notices to the occupant, Tashi, who once owned the land.

The first notice was issued on October 28, 2012. After Tashi failed to demolish the hut and handover the land to the present owner Rinchen Jungden, the thromde partially dismantled the hut on September 4, last year.

Sometime in 2007, a friend of Tashi’s, Wangchukla borrowed Nu 2.4M from Rinchen Jungden. During the borrowing, Tashi who had stood as a guarantor also mortgaged his 18 decimal land, which he jointly owned with his elder brother Chencho. The elder brother is currently in France working in a monastery.

After borrowing the money Wangchukla disappeared. He has not been traced so far. Rinchen Jungden then sought legal means to get back his money. He appealed to the court. In 2012, the high court awarded Tashi’s land to Rinchen Jungden.

Thromde officials dismantle the huts

“He was again given time to demolish on his own but instead it was re-roofed,” said the surveyor.

When Tashi did not vacate and demolish the hut, Rinchen Jungden appealed to the court again. Following his appeal, the high court issued another order on December 4, last year. The court order stated that Thimphu thromde did not implement the previous order of demolishing the hut and handing the land over to Rinchen Jungden.

In a December 16 notice, the thromde gave Tashi 21 days to remove the hut and vacate the land. Tashi responded by asking the thromde for a time extension. When thromde informed him that it was not authorised to give a time extension, he was told to produce a stay order from a “competent authority” within seven days. But Tashi failed to produce a stay order.

Thimphu thromde executive secretary Minjur Dorji said, according to the final notice, after seven days (January 28), thromde could go ahead and demolish the whole structure without any further notice.

“Thromde is just following the court’s orders. We’ve been asked to enforce the court order and report back,” he said.

Thromde officials helped Tashi’s family members to pack their belongings. A DCM truck was lent to the family to transport their belongings to another location.

By Nirmala Pokhrel

One more community police centre for Wangdue

Police: A new community police centre (CPC) was opened at Zawakha, yesterday.

Zawakha is located 32 km from the Wangdue Bridge.

This is the ninth CPC in the country. Currently, there are six CPCs in Thimphu, one in Nobdhing, Wangdue, and another in Kanglung, Tashigang.

The Zawakha CPC is the largest and boasts improved infrastructures.

The new CPC, according to the police chief, brigadier Kipchu Namgyel, will provide faster and timely services to people of the Athang, Dagar, Rubesa and Tshogwom gewogs, and also areas under the Punatsangchhu hydropower project authority II site.

The CPC is expected to provide the police with a faster response time and contribute to reducing the crime rate in the four gewogs. The centre will have 37 police personnel including a commanding officer.

Constructed on government owned land with PHPA funding of more than Nu 91M, the centre has 36 residential units for police personnel, officer quarters and a two-storied office building.

The construction of the centre began in July 2012 and was completed in 2014.

Police records show that the four gewogs: Athang, Dagar, Rubesa and Tshogwom have reported 32 criminal cases in 2012, 57 in 2013 and 32 in 2014.

Meanwhile, the police chief, dzongkhag and Punatsangchhu hydro project officials, local leaders and residents, and Wangdue police attended the ceremony.

The police plan to open more CPCs this year.

By Dawa Gyelmo, Wangdue

More than a thousand attend Sarpang tshechu

tshechuA scene from the Raksha Mangcham

Festival: More than thousand devotees attended the three-day Sarpang tshechu held at the Tali dratshang courtyard in Gelephu.

Not many people turned out On the first day of the tshechu but on the second day more than thousand people attended.

While the elderly were more interested in the mask dances, the younger generations spent more time in the stalls outside the dratshang.

Karma Dema, 66, said that not many people attended the tshechu during its first few years, but in past few years attendance has increased. “I think it is because we have many more people resettled in the dzongkhag,” she said.

A few lhotshampas also attended the tshechu. Prakash, 32, said that not many lhotshampas attend the tshechu as they do not know the meanings behind most of the dances of the tshechu.

The Lam Neten of the dratshang, lam Lotay said that the Sarpang tshechu is held on the eighth day of the twelfth month every year. “It was first started in 1999 by the Je khenpo Tulku Jigme Chhoeda,” he said.

The annual festival is considered the most popular event in the dzongkhag, when people from all its twelve gewogs can gather together.

Yeshey Dema, Gelephu