Committe recommends doing away with driver switching system, reducing quarantine period,and importing workers.
The Private Sector Development Committee (PSDC) recommended forming a high-level committee within the government to come up with an action plan for opening up the economy in the aftermath of the Covid-19.
“There is no direction or plan in place, and the general public and business entities do not know the next course of action that they need to take, or at least prepare for,” a detailed proposal from the committee states.
The committee stated that with the possibility of the pandemic protracting, especially in India and neighbouring countries, the problems that Bhutan is currently facing as a fallout of the pandemic will likely continue into the near future if interventions to address them are not put in place.
It stated that while the earmarked economic resilience fund of Nu 30 billion (B) will be adequate to cover the interest waiver and the Druk Gyalpo’s Relief Kidu (DGRK) for another 11 months after June 2022, continuing the interest waiver and the DGRK will lead to immense stress on the reserves and burden our limited resources.
“The economy has to be brought back on track within at least the next one and half years.”
For immediate action, the committee recommended looking into the increasing price of commodities, import bottlenecks, and unavailability of labour in the construction and manufacturing sector, without compromising on the public health safeguards.
The recommendations will be submitted by the PSDC under the Bhutan Chamber of Commerce and Industry’s secretariat to the government.
Import and Export
To enhance import and export, the committee recommended that about 290 vehicles be handled at the mini-dry port (MDP) by 120 to 140 loaders to ensure minimal disruption of import and export. Today about 60 workers are handling 100 vehicles a day. Phuentsholing handles almost 80 percent of Bhutan’s imports, and around 65 percent of its exports. Imports and exports from the gateway decreased by about 14 percent and 40 percent respectively in 2020, compared with 2019.
The committee suggested using the MDP, with a capacity to hold 180 loaders, and the Bhutan Exporters Association’s self-containment facility at Toorsa to house the increased number of loaders at the MDP.
They also recommended resolving the issue of wage disparity for loaders in all transit facilities. It was found that dissatisfied loaders at the MDP were quitting their jobs.
The committee also recommended more covered sheds to protect goods in transit at the MDP.
Reducing transportation cost
The committee has a list of recommendations that they say could bring down the cost of transportation and goods.
The committee stated that the necessary protocols put in place for movement of vehicles in Phuentsholing, and from Phuentsholing to Thimphu, have increased transportation costs. For example, a one-way trip for goods in a Jumbo truck from Phuentsholing to Thimphu currently costs Nu 37,500, compared to Nu 14,000 in 2019.
“An additional increase in cost of Nu 6,000 for a Jumbo truck translates into a 50 percent increase in the overall transportation cost as compared to 2019,” stated the paper. “About half of this increase is due to an increase in fuel price and the other half, because of the driver switching modality at Sorchen.”
Without the driver changing modality, the committee stated, costs could be minimised. Clearing of incoming vehicles in transit facilities in Phuentsholing, the committee stated, should be increased to 290 vehicles from 100. “Indian vehicles bound for Phuentsholing would not be stranded in Jaigaon or Kolkata and demurrage charges would not be applicable,” it stated.
Trucks stranded in Jaigaon for more than three days pay between Nu 2,000 and Nu 8,000 per day in demurrage charges, depending on the size of trucks.
Moreover, the committee stated that if goods are loaded and stacked onto the receiving Bhutanese trucks properly after being unloaded from the Indian trucks, it will save on costs. It was found that besides a large truck, an additional DCM truck has to be deployed to ferry goods to Thimphu from Phuentsholing, as opposed to pre-pandemic times.
Import of foreign workers
The PSDC is recommending the allowing the import of workers to meet what it claims is a shortage of 13,000 foreign workers in the country. It recommended immediately allowing 1,700 foreign workers in to curb the shortage at the Pasakha Industrial Estate, and about 400 in the manufacturing and service sectors.
The committee also recommended shortening the quarantine duration from 21 days to seven. “Foreign workers could show proof of two doses of an approved and acceptable Covid-19 vaccine (certified by the Ministry of Health) taken at least within the last six months, and show a negative RT-PCR test result conducted within 72 hours prior to entry,” it stated.
Further, it recommended that the next batch of foreign workers of about 7,400 be allowed in the construction sector, followed by 3, 500 in the hydropower sector. They also recommended reducing the cost of a RT-PCR test from Nu 3,000 to about Nu 1,000 per test, and for two rounds of testing to be conducted.
“It is anticipated that with 1,000 bedded quarantine centres, the foreign workers cooking for themselves in the facilities (including rations) would cost Nu 400 per person per day,” it stated.
They said that if the quarantine protocol is reduced to seven days, the cost of quarantining foreign workers could be reduced to Nu 4,800 per person compared to current Nu 20, 700.
To address the manpower shortage, the committee called for linkages between the private sector and the de-suung skills programme.
The committee also recommended interested private individuals and businesses to allow the construction of quarantine centres on identified and designated private land, or land provided on lease by the government, to address the peak requirement of about 31, 900 foreign workers in the construction sector.
The economy contracted by 3.9 percent in 2020 as gross domestic product dropped to Nu 171.75B from Nu 178.56B in 2019.
The mining and quarrying sector was the hardest hit and it saw negative 76 percent growth, followed by hotels and restaurants by negative 69 percent, the construction and manufacturing sector by negative 20 percent in 2020.
The overall prices (CPI) of goods increased by 8.3 percent in 2020 compared to 3.11 percent in 2019. There is an immediate shortage of 13,000 foreign workers in the country.