Cottage and Small Industries (CSI) and the Civil Society Organisations (CSO) must take center stage to ensure a sustainable LDC graduation for Bhutan.
This was one of the main messages from the 14thRound Table Meeting that concluded yesterday.
To do so, most of the bilateral and multi-lateral development partners have assured that their partnership and support would continue even after graduation.
However, economic vulnerability is still a challenge while there is stark inequality among the dzongkhags and communities. For instance, poverty in Dagana and Zhemgang is as high as 30 percent while it is less than one percent in Paro and Thimphu. Similarly, more than 20 percent of the children under five are stunted, youth unemployment is at 13 percent and death from NCDs has increased to 69 percent.
Case in point is that even as the country prepares to graduate, the country still needs to tackle fundamental issues.
The secretary of Gross National Happiness Commission (GNHC), Thinley Namgyel said the 12th Plan is formulated to address such challenges and as the country moves forward, alternative source of development financing needs to be explored.
Foreign Minister, Dr Tandi Dorji said six of the seven indicators of economic vulnerability index are challenging to achieve. However, he said economic diversification through CSIs would not only contribute to economic growth but also harness the demographic dividend.
The Deputy Governor of the Royal Monetary Authority, Yangchen Tshogyel said while the hydropower will continue to remain an important driver, CSI sectors have huge untapped potential to make the economy inclusive and resilient. To materialise the untapped potential, she said an integrated ecosystem is needed.
She highlighted on the need to enhance entrepreneurial culture, technological intervention and quality with reference to certification and standards. “We have Brand Bhutan but now we have to start filling the brand with products,” she said.
Besides bank financing, she also highlighted on innovative financing such as crowd funding, public private partnership (PPP) and angel investors to further enable access to finance.
Revision of FDI policy, she is required to accommodate the CSI sector. Development partners, she said could come in to support technology, market and investor linkups and even funding.
On the disparities and issues in the social sector, the foreign minister said more targeted interventions would be made in the 12th Plan.
UN resident coordinator, Gerald Daly said that in some countries, inequality leads to instability. Bhutan’s approach to reach the needy demonstrates astuteness and common sense.
However, he said that with increased funding to the LG in the 12th Plan, disparity might decline. But, he said some funds should also be allocated to the CSOs for targeted intervention because CSOs are closer to the people and understand how and when to support.
Many partners, he said are looking for new partnership such as business to business contact. This, he added indicates the reorientation of relationship with development partners from donor-recipient to true partner.
Sustaining financing of development, he said should be innovative and that climate financing has to be part of the solution. Investment in social sectors, he said does yield economic dividend. One USD investment in ECCD would yield a return of 12 USD in ten years.
To address the financing need, the finance secretary Nim Dorji said, that the government has already identified innovative ways of financing through endowment funds, climate fund, green bonds, PPP and GNH certification of business.
While development financing is at crossroads, he said there are no fund managers in the capital market, begging the question of capacity again. The need to rationalise tax policy is also underway to enhance domestic revenue.
While it was pointed out that whatever the country exports, cheaper substitutes are available across the border, tax on more than 37 percent of imports are zero rated.
“The reason why we can do great development in this country is that Bhutan has political stability, transparent development, best environmental values, young educated population and it is going to be impactful,” said Gerald Daly.