Tshering Dorji

As the nation celebrates its 112th National Day, the historic Changlimethang stadium will once again reverberate with a feeling of unity, peace and prosperity.

It is a day to reflect 112 years of transformational journey, probe into the present and contemplate the future course of path for the nation.

When the world was busy minting money from stocks, mortgage financing and real estate, Bhutan was still finding a solution to liberate its people from compounding tax burden and better the barter system of trading.

While the Five Year Planning period has begun only in 1961, economic transformation has started from the day the first King Gongsar Ugyen Wangchuck was enthroned. Even as the country prepares to graduate from the group of least developed countries today, the socio-economic progress of the nation was engineered by the hereditary monarchs, beginning with Gongsar Ugyen Wangchuck.

“Our Monarchs have led us from a poor, under-developed and unknown nation to a well developing and highly esteemed country of the 21st century,” said Khandu Wangchuk who has been the country’s Prime Minister twice, trade minister twice and foreign minister once.

He said that the country has literally leaped several centuries of development witnessed elsewhere. 

Dasho Karma Ura’s book titled ‘leadership of the wise’ elucidates that economy was one of the priority for the first hereditary monarch. For instance, trade fairs were held along the borders of Tibet and Bhutan occasionally during the first King’s tenure.

At that time, the state was the net receiver of income from society. Today the state ploughs more money into the economy and society. Government revenue at the time composed of taxes imposed on grains, textiles, handicrafts, gun powder, metal, dairy produce, bamboo and timber and labour, among others.

As a result, the administrative centres, dzongs, had extra food stocks, and issued grain loans to the people.

Dasho Karma Ura, in his book, labels the Bhutanese economy as one gearing towards being self-sufficient primarily at the village level.

While the second King felt the need to modernize the Bhutanese economy, seeking aid from British India, who was actively engaged in the Second World War, was least expected. The Second Druk Gyalpo, however, changed the country’s labour and commodity tax system to alleviate the burden on the people. A lot of intermediary layers in the tax administration were eliminated.

Having lowered the taxes, His Majesty Jigme Wangchuck worked towards increasing the productivity of the farming system and providing medical services. From 1931 onwards, health workers were trained in India, drugs were brought in and clinics were established.

The Second King, however, laid a foundation for health care, education, a modern transportation service and adaptive agriculture. In fact, a small network of road was established in Pasakha.

“Given the turbulent geopolitics of the region and level of development at the time of its founding, only exceptional leadership could have achieved whatever our monarchs have achieved in the last 112 years,” Khandu Wangchuk said.

The modern era of socio-economic development

During the 35th session of National Assembly in 1971, His Majesty the Third King cautioned the members of the Assembly that development must consider the welfare of the nation rather than the interest of the people in power.

“If material progress of our country can be taken still further then its happiness and security will have to be assured,” a transcription of his speech from Kuensel archive stated.

The pursuit for industrialisation began as early as 1965 after which the Bank of Bhutan and Bhutan Post was established. Various infrastructure projects like schools, hospitals and irrigation schemes were then pursued.

By 1971, Bhutan became the member of United Nations. Industrial estate in Phuentsholing was considered, experts were called to conduct studies in Kheng, graphite mining in Chelela, resin and turpentine factory in east, dolomite mining and cement factory in Samtse.

However, local products like handicraft, forestry, and agriculture were given priority to the extent that deserved subsidy, tax breaks and incentives. 

But underlying challenge was the availability of firm power. 

That the materialist approach to measure a country’s development based on Gross Domestic Product is not the veracious yardstick, His Majesty the Fourth King has already recognised.

On the new year of 1974, addressing the people of Sibsoo, His Majesty said: “Initially, our government envisaged and carried development of larger towns and areas around dzongs. I now feel that we must aim at developing our villagers, since most of the population consists of farmers and cultivator. If the attention is firmly focused on these people and in bringing about general improvement of agriculture, then we can entertain the highest hope of becoming self-sufficient in food grains.”

His Majesty did not want to replicate the development philosophy that marginalised poor and benefited the wealthy in other countries. Development for him meant holistic, improving the living conditions as well as income.

Bhutan was fortunate to have walked that revolutionary path aimed at collective happiness and the path of Gross National Happiness, as a policy. 

“The very fact that a tiny country, sandwiched between the world’s two most populous nations, not only continues to exists as a sovereign independent nation but is often help up as a model of stability and sustainable economic management is a lasting testament to the statesmanship and political genius of the successive monarchs of the Wangchuck dynasty,” Khandu Wangchuk said.

The economy is long past the subsistence stage. From a record low GDP of USD 0.14 billion in 1980 (when first national income records were considered), the country’s GDP as reported by the World Bank, has almost crossed a couple of billions today.

“The elderly among us know that in our lifetime, we have literally leapt several centuries of development witnessed elsewhere,” Khandu Wangchuk added.

In the past decade, Bhutan’s GDP has grown at an annual rate of nearly seven per cent, a rate unequalled by many developing countries.

The establishment of Chukha, Kurichu and Tala hydroelectric projects, was the turning point. 

As a result, this has led to higher investments in hydropower and mineral based projects like slate mines, dolomite, limestone, gypsum, coal and marbles. The era also witnessed up springing of small-scale industries in the border towns such as distilleries, soap factories, match factories and wood processing units.

The large-scale industries include Bhutan Ferro-Alloys Limited, Bhutan Chemical and Carbide Limited and Penden Cement Authority, among others.

 The signing of agreement on Chukha hydropower project on March 23, 1974 in fact reflected that His Majesty The Forth King’s balanced approach towards development of social sectors and economic advancement.

HRH Ashi Dechen Wangmo Wangchuck, who signed the agreement on behalf of His Majesty, described the event as “a symbolic signing of Bhutan’s desire to achieve self-sufficient economy.” This is because the intent, from the day one was to pump the revenue to social development.

Private sector then consisted of only handful of shopkeepers at a time when there were no takers of loans. Given the importance of private sector’s role in the economy, His Majesty placed high priority on private sector development in all the plans and interacted regularly with the business community. Many government industries were privatised.

On November 6, 1978, His Majesty The Fourth King met the business community and told them: “Bhutan’s industries would be protected from imports until the industries become strong enough to face external competitions. Rigid quality and price controls would be exercised to ensure good quality and fair-priced products.”

Even the Bhutan Chamber of Commerce and Industries (BCCI) was established under the Royal Command.

After the release of first Bhutanese currency in June 2, 1974, Royal Insurance Corporation of Bhutan was established through royal charter in 1975 to meet the insurance needs of Bhutanese. Bhutan Development Bank was established in 1988 and the Union trust of Bhutan has been converted to Bhutan National Bank in 1996. His Majesty the Fourth King’s wish to encourage share ownership and capital market development has led to the formation of Royal Securities exchange of Bhutan in 1993.

The introduction of aviation services and Drukair in 1983 changed the reality of the once isolated Kingdom. Transport and communication networks has been yet another milestone that transformed the country.

Today the country boast of being attractive destination for FDI, it’s GDP has crossed USD 2.5B and the UN has rated the country very high on the human development index. The constitutional mandate on education and health system is an exemplary one.

 Amidst many other achievements, 112 years of Monarchy has rendered the nation and its people with best of unity, peace and prosperity.

“Never in the annals of modern history, has a country owed so much to a single lineage,” Khandu Wangchuk said. “My only prayer is that my children and their children continue to be blessed with the benevolent rule of monarchs from the Wangchuck dynasty, for therein lies the entire wellbeing.”