A new SOE would takeover the BOiC affairs in few months time
SOE: The Cabinet has decided to close down Business Opportunity and Information Centre (BOiC) and institute a ‘special financial agency’ as a state owned enterprise (SOE) to continue the services offered by the centre.
Economic affairs minister, Norbu Wangchuk said the state enterprise would obtain a financial license from Royal Monetary Authority (RMA) and continue to offer collateral free loans at four percent interest.
A suitable name for the state enterprise and the human resource strategy would be coined and developed by the board, which would be formed soon. The finance ministry would process the registration and a team would be formed to initiate the subsequent processes.
However, to facilitate smooth transition and maintain continuity of services, the BOiC would continue to undertake loan appraisals until the state enterprise is all set to takeover the affairs of the Centre within a few months.
The pace of delivery, Lyonpo said could be affected in the process but the closure of service, even for brief, is not anticipated.
While lending rates of financial institutions in the country is guided by the RMA guidelines on base rate system, issues were also raised regarding the four percent interest on BOiC loans.
However, to promote the flow of credit towards priority sectors, the guidelines exempt loans in agriculture sector, small businesses, artisan schemes, entrepreneurial development, staff incentive loan and loans against fixed deposits from applying the base rate.
Base rate, is the minimum interest rate below which it becomes unviable for banks. It was introduced to prevent undercutting in interest rates due to competition and overcharging customers.
Lyonpo Norbu Wangchuk said the RMA would come up with a different framework and that the base rate may not apply.
As for the employees, Lyonpo said that BOiC has its own service conditions and salary package. But once it becomes a state enterprise, the SOE guidelines would be applicable. “This means a change in terms and conditions,” he said adding that it may or may not translate into a pay cut.
“If the board finds merit and think the BOiC employees fit in the new SOE, they would be given preference over others,” Lyonpo said.
However, Lyonpo said that depending on the levels, some BOiC employees might not agree to the SOE terms and conditions. He said that there is a possibility of a new team replacing the BOiC employees also.
Lyonpo also pointed out that the government has always maintained legal precedence in setting similar agencies like the Agency for Promotion of Indigenous Crafts (APIC).
Even the consultation with lawyers and advocates in the bureaucracy, Lyonpo said has revealed that BOiC was legal.
“The issue of legality never came up until BOiC was established and actively operational,” he said adding that both houses of the p rliament also endorsed the economic stimulus plan.
Since the National Council decided to forward the issue to His Majesty for Supreme Court’s interpretation, Lyonpo Norbu Wangchuk said the Cabinet decided to close BOiC respecting the views and opinions of National Council.
“Unless the matter is very important and as rare as possible, the matter should not end up in Supreme Court interpreting the Constitution,” he said. “It is not healthy for democracy and it would curtail deliberation and debate in the society.”
The funding and modulus operandi of the new SOE, lyonpo said would be the same as that of BOiC.
Lyonpo said many success stories has further enhanced government’s urge to promote rural economy and that this could lead to up scaling of fund too.
Meanwhile, this would be the third new SOE formed after Royal Bhutan Lottery Limited and Bhutan Duty Free Limited in a span of three months.