The central bank’s decision to tighten vehicle loans is a good move.
A decision such as this should have come sooner given the situation we are in. Records with the Road Safety and Transport Authority show that we bought about 24 cars everyday in 2016.
That we buy a car every hour is alarming, especially when we are aware that we have more roads that are becoming unpliable by the day. Today, we have 88,227 cars, which is more than double the number Bhutan had a decade ago.
With more than half of these cars running the streets in the capital, the central bank’s decision could help control the vehicle number. However, with consumers availing other loans to buy cars, this measure may not work to the extent it is hoped for.
But the complaints we hear of traffic congestions is not only because of the increased number of cars. It means that our infrastructure development such as road space, parking space or alternate transportation options such as public transport have not kept pace with the growth of vehicles. Compound this with the urban population growth rate of 13 percent annually and we have situations that are we in today.
This is a development failure. It is a policy failure. And in such a case in a country that has to be travelled by road transport, we can hardly blame people or stop them from availing loans to buy cars.
Instead, we must work towards putting in place other measures to keep the number of vehicles from growing. One of the reasons that should fuel these measures is that the impact of increasing number of cars on the economy and the environment could be severe. Studies show that at the current rate of increase in vehicle numbers and the subsequent import of fossil fuels, Bhutan’s commitment to remain carbon neutral will be severely challenged.
There is also an urgent need to improve our public transport system. The recent case of public transport operators submitting a petition to the government to improve the road condition with one even suspending services indicates the frustration of the bus operators. These are signs our policy makers need to be wary about. An unreliable and inefficient public transport service has been one of the main factors behind the increasing number of cars in the country. ‘
One study observed that taxi movements along the Norzin Lam in Thimphu are about 50 percent of traffic movement; in Chang Lam it is about 45 percent. The high proportion of taxi movements indicates the poor quality of public bus services in the city. It means that the service providers must review their routes and meet the mobility and accessibility needs of the public.
Besides the central bank’s recent measure, the government could also explore other fiscal measures such as taxation and revisit the vehicle quota system. Speculations are already on about vehicle quota fetching a higher rate in the market while taxation would be a political suicide with elections approaching. The fiscal incentive saga shows that our governments could be quite liberal in granting tax exemptions and not collecting it.
The recent decision of the central bank shows that our policies are more reactive than planned. How effective such decisions would be is yet to be seen. The traffic situation would be a good indicator.