Thinley Namgay

At the National Assembly yesterday, Finance Minister Namgay Tshering addressed two critical issues concerning life insurance claims and youth entrepreneurship in Bhutan. The government is currently engaged in discussions with the Royal Insurance Corporation of Bhutan (RICB) regarding the potential enhancement of rural life insurance claims.

Chumig-Ura MP, Karma Wangchuk, voiced his concern over the recurrent discussions surrounding the life insurance scheme in the parliament, emphasising the need for tangible progress. He said,”Increasing the claim amount will greatly benefit rural citizens.”

Last year,  Finance Minister informed parliament that rural insurance claims were expected to rise from Nu 30,000 to a minimum of Nu 150,000 per individual.

Karma Wangchuk expressed the willingness of the people to pay additional premiums if the government were to agree to this proposal.

Historically, individuals paid an annual premium of Nu 30 until 2009, with a total claim of Nu 10,000 in the event of death. After raising the premium to Nu 45 per individual, the claim amount increased to Nu 15,000.

In 2017, the claim amount was further raised to Nu 30,000. Presently, the government contributes Nu 108 as a premium, while individuals contribute Nu 87, resulting in a total annual premium of Nu 195. The life insurance claim scheme was introduced in the 1980s.

The Finance Minister reported that in 2022, the government disbursed Nu 67 million (M) to the RICB as life insurance payments for 615,000 individuals, which accounts for 79 percent of the total population. However, the Minister raised the question of who exactly belongs to the rural population, stating the need for clear categorisation.

During the session, Khar-Yurung MP, Tshering Choden, raised concerns about the government’s strategy to encourage youth entrepreneurship. She highlighted the challenges faced by youth groups who struggle to secure land leases and face difficulties obtaining loans from financial institutions without collateral.

She noted that bureaucratic processes and obstacles in product-selling further discourage youth from pursuing entrepreneurship.

The Finance Minister acknowledged the complex nature of issues related to youth entrepreneurship, citing various factors that contribute to the challenges faced by aspiring entrepreneurs.

Minister explained that when citizens are unable to repay loans, the question arises as to whether the government should support the borrower or the lender. Additionally, he pointed out that transportation costs pose a significant challenge for exporters.

From 2020 to the present, the National CSI Development Bank has disbursed loans amounting to Nu 1.8 billion. However, during the past two and a half years, individuals have struggled to repay Nu 459 million, accounting for 25 percent of the total loan amount disbursed.

“The National Credit Guarantee Scheme has encountered difficulties with 11 percent of the total loan amount remaining unpaid,” added the Minister.

As the government grapples with these pressing issues, finding effective solutions to improve the life insurance claim process and provide necessary support for youth entrepreneurship remains a priority in Bhutan’s development agenda.