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Undercutting is illegal but mostly hearsay: PM

Undercutting is illegal, according to Prime Minister Tshering Tobgay.

Answering media queries on the government’s stand regarding the alleged rampant undercutting in the tourism sector during the meet the press session on December 27, he said that the government has put in place a robust system to prevent undercutting.

“That begins with tour operators being required to transfer the full amount of funds to Tourism Council of Bhutan (TCB) to avail the visa,” he said.

Lyonchhen said tour operators must collect the full tariff from tourist and transfer the amount to TCB’s account before TCB grants the visa. “We hear of undercutting cases but unfortunately that is all hearsay.”

He said undercutting should not be allowed for the simple reason that it is against the policy of high-value low impact tourism. “A minimum tariff has been determined so that it could control the numbers of tourist and also allow tourist that visit Bhutan the best possible experience when they are here.”

However, Lyonchhen said that unless there is proof of undercutting, there is nothing that could be done. “Only tour operators can catch those who transgress.”

There has to be a ‘peer-to-peer’ oversight in the tourism industry, he said, so that they can report on those who break the rule and law. “So far only one case has been reported. The TCB has investigated and established undercutting and the license has been cancelled. So we take it seriously.”

He also said it is difficult to know the extent of undercutting, as people only talk about it but there is no concrete evidence-based complaint in reality. “Even if we receive complaints without evidence, we will try to investigate. Better if there is evidence.”

Lyonchhen also questioned the rampancy of undercutting. “We are told undercutting takes place but I would question how rampant it is.”

He said that it is not in the interest of tour operators to undercut, as it means forgoing their profit.

Tour operators, however, claim that a system called ‘money parking’ facilitates undercutting, as tour companies keep their hard currency in the TCB account and use it whenever they have a guest to avail visa.

A tour operator said that section 3.9.1 of the revised Tourism Rules and Regulations 2017 specifies that it shall be an offence if any person engaging in tourism activities charges less than the minimum daily package rate. “But what kind of offence undercutting will be considered and whose job is it to monitor?” the tour operator said.

Another said that without anyone serious about the issue while everyone boasts of the policy, it would affect Bhutan as a high-value destination. “The country’s image is at stake for short-term benefit.”

Meanwhile, the Prime Minister said that the government is also emphasising on domestic tourism.

He said the government is supporting River Guides of Panbang to run an eco-lodge, which was initially run by the agriculture ministry. “We have asked the TCB to explore the possibility of advertising their activities and discuss with BBS.”

Lyonchhen said the government is writing and publishing booklets on sacred sites in the country to inform people about the places. “His Majesty The King has recently inaugurated the Rangtse Nye in Sangbaykha.”

He said that TCB, in collaboration with Association of Bhutanese Tour Operators (ABTO) would conduct familiarisation tours to Aja Nye in Mongar and Nyes in Lhuentse for members of ABTO. “They will visit the sacred sites and study the resources and support Bhutanese people visiting holy sites in the country.”

Agriculture minister Yeshey Dorji said that the trail to Aja Nye has been improved and about 100 people visited the Nye this year. “In Lhuentse, Singey dzong, the trail was improved and the dzongdag said more than 540 people visited the holy place.”

He said that parks would improve the services like route, drinking water and cooking facilities at the sites.

Tashi Dema

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