Infrastructural gaps in the urban areas hampering private sector growth

Tshering Dorji

Urban centres in Bhutan are not well equipped to provide quality services which affects livability and competitiveness, according to Harnessing Urbanisation, a World Bank report.

The report stated that four largest municipalities face infrastructure and service delivery backlogs, traffic congestion, shortage of land and affordable housing, and environmental pollution.

These Gaps in connectivity infrastructure, across towns and regions are also found to be hampering the economic diversification and private sector growth.

“As Bhutan gets more urbanized and its economy becomes more urban centric, the four existing thromdes and other municipal governments will become key institutional actors to ensure good quality services, attract private investments to cities, and provide proximate and accountable outreach to citizens,” the report stated. “Cities are a critical driver of economic growth.”

The World Bank in reference to the Population and housing census stated that 37.8 percent of the populace resided in urban areas. The average annual urban population growth rate was 2.5 percent, four times the overall population growth rate of 0.6 percent.

Thimphu is home to 15 percent of the entire population and around 40 percent of the total urban population.

Urban-rural divides in poverty and the quality of services was also spotted. For instance, median household incomes in the urban areas (Nu 150,000) are nearly triple those in the rural areas. The poverty rates in rural Dagana, Zhemgang, and Mongar districts are up to 10 times higher than Thimphu municipality.

A critical concern for policy makers, according to the World Bank is how to strengthen and extend Bhutan’s structural transformation toward an economy driven by the private sector and based on employment in manufacturing and services, with sustainable jobs for the educated, the skilled, the youth, and women.

“Bhutan is reaching the point where gaps in urban planning, service delivery, and affordable housing within cities can start to negatively affect economic growth and competitiveness as well as quality of life over the long term,” the report stated.

For tier I thromdes such as Thimphu and Phuentsholing, the World Bank suggested that efforts should be on improving livability, reducing disparities in access to services, and leveraging urban agglomerations for deeper and more diverse private sector investments.

The local governments in these urban centers, as per the report, need to be equipped to play a greater role in planning and managing their land resources and assets and strengthening their service delivery mechanisms.

The World Bank has also identified thromdes with locational advantages and nascent economic clusters, such as Gelephu, Samdrupjongkhar, and Mongar, as tier II. The focus here should be on improving the conditions for private investment to link to potential markets in emerging sectors such as agribusiness and scaling up SMEs.

While access to finance and customs procedure, access to value chains, knowledge, skills, and technology could prove challenging, the World Bank stated that the cities need to boost capacity in urban planning, land administration and service delivery.

For rural and remote regions and regions with low endowments (Tier III), higher levels of poverty, and infrastructure gaps, the report points out that efforts should focus on equitable access to basic public services, especially health and education services. This is expected to improve human capital, enhance the quality of the labour force and provide skills that residents can use to move to larger centers.

Thromdes will also require greater human resource capacity and staffing expertise for planning and management of investments and services. “The government may consider a trained cadre of municipal staff, especially focusing on core competencies such as revenue, expenditure and financial management, urban management, service delivery, and so forth,” it stated.

Availability of serviced, affordable housing is critical to inclusive and equitable urbanization. The location of housing relative to jobs and services not only determines a significant portion of its cost but also affects the urban form and function of the city. Housing that is far from jobs and services may be more affordable, but requires additional time and costs for travel which contributes to congestion and pollution.

Environmental and natural hazards, the report states could pose greater threat to sustainability of the cities.