Gelephu has exported over 500 truckloads of boulder worth Nu 8 million since March 2020.
Additional 600 trucks of boulder were exported to India and Bangladesh after the export resumed two months back. However, only over 20 trucks of boulders and aggregates were exported to Bangladesh to date.
Samtse exported the highest, over 11,800 truckloads of boulders, followed by Phuentsholing, more than 10,400 trucks of boulder till December.
The export is yet to pick up in Gelephu. Mostly aggregates were exported to the neighbouring State of Assam in India.
The export to Bangladesh is yet to pick with the route being the main problem, according to the exporters.
General Secretary of Bhutan Export Association (BEA), Tshering Yeshi, said the export of boulders was operated in slightly different ways in three different dzongkhags. The export couldn’t begin as expected and the pandemic disrupted the trade.
There are 67 registered exporters in Gelephu but only 15 are active, of which 12 exported boulders to India and only three to Bangladesh.
“These are signs that showed the export was not good. This was because of the exporters having to cross two Indian States while exporting boulders. This is the main problem concerning the exporters,” he said.
He added that the association in consultation with relevant stakeholders is gearing to open new trade routes, in addition to four new trade points at Nagarkata, Agartala, Jogighopa, and Pandu to fasten the boulder export from Gelephu.
The trade route from Jogighopa would be a major boost for the exporters in Gelephu. However, building the required infrastructure at the riverine port is expected to take time.
Tshering Yeshi said it was difficult for the exporters to resume the trade if the boulder export rate is to be increased with lots of incidental expenses involved in the course of business.
A study conducted by the revenue intelligence division found that there were incidents of misreported taxes. This was because the exporters could not get valid documents for their expenses across the border.
“Those expenses were non-deductible as per the standing income and tax laws. The net income got flattened. Therefore, to offset the expenses the exporters might have resorted to under invoices,” Karma from the revenue intelligence division said.
An incidental expense that would help exporters meet expenditures involved during the shipment was proposed. This would enable the exporters to include their expenses as a deductible amount without having to produce a valid document.
An estimated incidental expense from exporters in Samtse, Phuentsholing, and Gelephu was collected. And it would be forwarded to the government, according to the officials from the ministry of economic affairs.
Export permit or certificate proposed
In absence of standard licensing regulation for boulder export, there were reports of revenue leakages, misdeclarations, and the need to have export permit regulation.
The start of boulder export in 2018 in three southern dzongkhags attracted individual firm owners to take up this new lucrative business in Samtse, Phuentsholing, and Gelephu.
Today, any individual or firm with a valid licence was allowed to undertake export and there is no separate export licence for goods allowed to export, as documented in the economic development policy 2016.
The exporters said this distorted the export course and caused disharmony among them. Officials from the department of trade said that it was hurting the entire business environment.
However, few exporters maintained the need to respect the liberal regulations for the benefit of the private sectors.
Bhutan Export Association also reported to the Southern Covid-19 taskforce that illegal activities were happening in the absence of a licensing or permit system in the export.
The export permit system is expected to allow only competent exporters to export, standardize the export business, ensure proper collection of data and information, help collection of taxes and minimize fronting and misuse of export documents.
Director general with the department of trade, Sonam Tenzin, said it would be a comprehensive approach to addressing fronting.
“It’s taken up seriously along all southern borders. Now that the parliament has come up with a new penal provision, our people should be mindful of fronting,” he said.
The officials also informed the exporters to come forward if they have any doubt of the misreported tax in the past years.
The study conducted by the revenue intelligence division suspected some incidents of misreported tax declarations.
“This is to improve compliance. Going by the percentage there is more case of tax leakages here. The exporters would be given a dateline to verify their misreported declarations,” said Karma.
When the exporters and the officials from the department of revenue and customs, department of trade and BEA met in Gelephu last month, the need to rebuild the image of export in Gelephu and to streamline the trade was discussed.