In less than four months, fronting of any sort will be treated as a criminal offence and penalised as the Penal Code of Bhutan 2021 comes into effect.
Fronting between Bhutanese will be charged for violation for the first conviction and petty misdemeanour and cancellation of licence if convicted for the second time.
It would be a felony of the fourth degree or value-based sentencing, whichever is higher, if fronting takes place between Bhutanese and a non-Bhutanese, and between non-Bhutanese licence holders.
However, the problem with fronting today is that it is so widespread in the country as holders lease out their licences to others for some profit.
Fronting exists in grocery stores, hotels, garment stores, pastry shops, electronic and hardware shops, scrap dealers and micro-businesses, tourism, and even in large industries and the construction sector.
The dominance of fronting in Phuentsholing was clear when almost all shops in the town remained closed whenever there were festivals in India or the border was sealed during elections or for that matter the early days of the border closure due to Covid-19 last year. But today it is everywhere and mostly in major thromdes like Thimphu, Gelephu, Mongar, Samdrupjongkhar.
Fronting is a term unique to Bhutan, which generally describes a business practice where a licensed person leases the business to another person for a fee or commission. The unregulated and unlicensed person who is the owner actually controls the business from behind the Bhutanese signboard.
Lack of monitoring and alternatives largely resulted in the failure of many a ban like those on tobacco and plastics. The moratorium on the issuance of bar licences has led to a multitude of illegal activities, such as leasing or selling of the licences, sale of alcohol without a licence, etc.
Liberalising licensing could to a great deal ease the problem. On that front, the economic affairs ministry’s efforts seem to be on the right track. But there is a need to look at terms and conditions of obtaining licences for other businesses as well. One is cutting down on the excessive bureaucratic processes and formalities.
We also know through experience that many licence holders will do everything possible to bend the law and make easy money. So we should expect that they would still try to fine-tune their tricks to sidestep the rules.
So we should also advocate our people on the dangers of such a practice in the longer term.
Rampant fronting activities will have grave social, economic and political consequences as foreigners running the businesses take advantage of the opportunities in Bhutan, evade tax, repatriate profits, and render the locals as lowly paid employees or cheap commission agents. Every business licence holder in the country must realise that.
To achieve that we must have many more awareness campaigns, not only with a select audience in towns but even in the villages. And repeatedly.