Fishing for FDI

As a small fish in a big pond (read India and China), Bhutan has its work (of attracting funds) cut out for it 

Investment: Without changing the ground realities, the country cannot gain investors’ confidence and trust even with revision of FDI policy, says the opposition.

Officials from the ministry of economic affairs (MoEA) said the new policy would improve the investment climate in the country because restrictive provisions had now been relaxed.

Figures from the ministry also reveal that 18 new FDI projects have been approved in principle.  In the last five years (2010-14), 33 FDI projects worth Nu 24.77B were approved.

However, the opposition maintains that incentives and policies were quite liberal even earlier. “Because of past policy quite a number of FDI came in by Bhutan’s standard,” the former finance minister, Wangdi Norbu said.

Sources said that, following lyonchhoen’s address at Vibrant Gujarat, some investors showed interest and discussions were held.

Opposition member Khandu Wangchuk said that the investor’s first priority was the returns on investment made, not the environment.  The former economic affairs minister said that investors initially got carried away by the clean, green and sustainable policies of the government.  But after going back and doing their maths, they drop their investment.

“We mustn’t fool ourselves by thinking that ours is a fantastic country to invest in,” he said, adding the county has no capital, no market, technology and only a small labour force.  He said little changes and relaxation in the policy may help a bit, and this is so much the country could do, because bigger economies like China, USA and India are also competing for the FDI pie.

“But we can’t give up ….a lot of work needs to be done and we must find ways within this limitation,” said Khandu Wangchuk.

While MoEA officials maintain that FDI is not the ultimate solution for the country’s economic development but a means for propagating growth, Khandu Wangchuk said that, for Bhutan, growth is related to FDI because the country does not have capital to invest for itself. “Without investments, economy can’t grow.”

Opposition member Kinga Tshering said there has always been a policy to attract investors.

While deals worth billions of USD were signed at Vibrant Gujarat, he was skeptical as to how much of that was coming to Bhutan.  Apart from 2000 cows, he said he had never heard of any substantial deals being signed with Bhutan.

The opposition leader, (Dr) Pema Gyamtsho, said that cosmetic surgery was not going to do any good, indicating that the government must identify what kind of projects were clean, green and sustainable, instead of being vague.

Meanwhile, figures from the International Monetary Fund (IMF) show that Bhutan’s net FDI was about USD 74M 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, the net FDI increased to USD 18.9M and dropped to around USD 16M in 2011.

By Tshering Dorji 

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