Govt. to be selective about sectors in which foreign speculation would be invited

Investment: Despite the government’s renewed thrust to fish foreign direct investment (FDI), it also admitted that the quest to emerge among the top 100 on ease of doing business ranking remains uncertain.

Ease of doing business index is one way to assess a potential investment destination for investors and the higher the ranking, the more conducive is the country for business.

The economic affairs minister, Norbu Wangchuk, said there were so many laws and policies entangled in making it easy for doing business. “We have to open each of these knots and it might take some time, but we’re working hard on this,” he said. “But I’m not sure whether we’ll be able to achieve the target.”

The enterprise registration bill and the amendment of companies act, lyonpo said, were also efforts put in to promote the ease of doing business.  He also said that works on four special economic zones would be expedited.

However, the government is going to compress the process for FDI in some selective sectors that would be identified in the revised economic development policy (EDP).

Lyonpo Norbu Wangchuk said, instead of competing for FDI in all sectors, the government would now focus only on sectors where Bhutan can provide competitiveness across the world.

This, he said, was because, when every country, including the USA, India and China, is competing for the FDI pie, it is a “cutthroat competition” for Bhutan.

“Instead of wasting resources competing for FDI recklessly, we should focus on areas, where we can compete and be the best,” lyonpo said.

The probable sectors could be agriculture, renewable energy, hospitality and high-end education. “But we aren’t just going to identify the sectors broadly; we’ll pinpoint the activities,” he said.

Lyonpo also said that the Japan External Trade Organisation (JETRO) has agreed to facilitate a FDI workshop.

Having identified several activities with all approvals cleared before hand, a complete FDI proposal would be presented to potential investors in Japan during the workshop.

On whether the government plans to offer any incentives for FDI, other than tax incentives, the minister said investments did not necessarily respond to incentives.  He said other factors, like a skilled workforce, consistent policies and conducive legal environment, also equally contributed to FDI growth.

While critics point out that the ground reality was different.  For instance, the country has no labour force, capital, technology and market and it makes no business sense to invest in Bhutan.

However, lyonpo said it was for these same reasons that Bhutan needed more FDI for economic development.

Meanwhile, in the last five years (2010-14), 33 FDI projects worth Nu 24.77B (billion) were approved, and 18 new projects are approved in principle as of January.

Figures from the international monetary fund (IMF) reveal that Bhutan’s net FDI was about USD 74M (million) in 2007, which dropped to USD 3M and USD 6.5M in the following two consecutive years.

In 2010, when the FDI policy was revised and liberalised to an extent, the net FDI increased to USD 18.9M and in 2011 it dropped to around USD 16M.

By Tshering Dorji