On state land lease rates

A group of industrialists based in Balujora within the Pasakha LAP has voiced concerns over the newly revised state land lease rates, petitioning the Phuentsholing Thromde office for a 10-year deferment.

Representing the affected promoters, the General Secretary of the Association of Bhutanese Industries (ABI), Pema Namgyel Ghaley, highlighted the significant increase in lease rents, which surged by 130.90 percent. This escalation, from Nu 4 to Nu 10 per sq. ft for industrial estate land, and from Nu 5 to Nu 11.64 for industrial state land (SL), according to Pema Namgyel Ghaley, is a considerable financial burden on businesses.

In a letter addressed to the Phuentsholing Thrompon, Pema Namgyel Ghaley stated that such a sudden rise threatens the sustainability and growth of enterprises, impacting annual lease costs substantially. As per the newly revised lease rates, the annual lease cost for a one-acre plot of industrial state land increased from Nu 217,800 to Nu 507,038.

There are six industries established in Balujora,and 39 industries in Pasakha. Balujora also falls within the extended area of Phuentsholing.

Pema Namgyel Ghaley said that these industries are challenged by ranging infrastructure investments to operational disruptions caused by natural calamities, and have intensified due to the unforeseen hike in rents. He also said that many businesses have undertaken significant loans based on the stability of historical lease rates, making the sudden hike in rents a destabilising factor that jeopardizes their ability to fulfill long-term repayment obligations.

The affected promoters have proposed a strategic framework for lease rent adjustment, suggesting a 10-year deferment on the application of revised lease rates for businesses that have made significant upfront investments in utilities without state support. “This aims to ensure financial stability and continued contributions to Bhutan’s economy,” the Secretary General said.

Beyond seeking relief, according to Pema Namgyel, promoters are committed to enhancing business sustainability and contributing to Bhutan’s national development goals. “We aim to sustain local employment, promote import substitution to improve the trade balance and support Bhutan’s transition to a prosperous middle-income country through sustainable growth and equitable development.”

The promoters urge a partnership approach in re-evaluating the lease rent increases, advocating for a strategy that supports both the vitality of the industrial sector and Bhutan’s broader economic objectives.

However, the local governments (LG) do not have the authority to make such a decision. “We have asked ABI to follow up with the relevant ministries for appeal consideration as the Thromde has no authority on taxation policies taxes endorsed by parliament,” Thrompon Uttar Kumar Rai said.

The revised State land lease rates came into effect on  January 15 this year. The revision comes after over 14 years. The last revision was in February 2009.

Contributed by

Rinzin Wangchuk