…the fourth and fifth new SOE since September last year
Corporation: The government is planning to corporatize the Agriculture Machinery Center (AMC) and form another state owned enterprise (SOE) to take up greening of the urban towns.
This would take the number of companies with government shareholding to 33, including those under the Druk Holding and Investments (DHI) radar.
However, the finance minister, Namgay Dorji said the formation of the two new SOEs are still in conceptual stage and that the details were yet to be worked out.
AMC was established in 1983 to realize national food self-sufficiency and it embarked on the programme to mechanize Bhutanese agriculture through the use of appropriate farm machineries and tools.
Sources said that the corporatizing does not mean compromises in AMC’s mandates but would promote efficiency.
The other SOE will be taking up greening activities in the towns across the country. But no details were shared as the SOE is still being conceptualized.
Meanwhile, the 42 employees of the Royal Education Council (REC) who were affected after the merger of REC with education ministry’s curriculum and research development department (DCRD) in 2014, would be given preference to join the new SOEs. The new SOEs also included Royal Bhutan Lottery Limited and Bhutan Duty Free Limited.
Should the government decide to establish two more SOEs, it would be the fifth new SOE with 100 percent government holding since September last year.
After the boards of Royal Bhutan Lottery Limited and Bhutan Duty Free Limited were formed, the Cabinet also decided to close shops of Business Information and Opportunity Centre (BOiC) to be re-established it as another SOE.
Including the DHI companies, there are currently 17 government owned SOE operational, five companies with more than 50 percent share holdings and seven with minority share holdings. DHI itself is fully owned by the government.
Excluding the new SOEs, the government’s equity investment in 28 companies, in the last budget year amounts to Nu 48B, of which Nu 44.3B pertains to DHI.
During the income year 2014, the total assets of SOEs reached Nu 213.9B, accounting for 192 percent of GDP. SOEs also recorded combined total net worth of Nu 88.3B and reserves of Nu 32.4B in the same year.
Contributions from SOEs constitute the major source of revenue for the government. However, over the years, share of SOE contributions to the national revenue are on the decline because of the increase in revenue from other sectors due to diversification of the economy.
In 2014, SOEs contributed more than 41 percent of the total domestic revenue.