Licensing policy to remove bottlenecks for businesses

Trade: To reduce administrative burden on entrepreneurs and ease the ways of doing business in the country, the cabinet recently approved a new licensing policy.

The Licensing Policy 2015 aims to do away with duplicative works involved in acquiring a license and operating business.

Economic affairs’ joint secretary Sonam P Wangdi said, “The policy was just approved by the Cabinet.”

As part of the ministry’s reform process to remove hassles for businesses, it is also framing a system called eRegulations that will allow entrepreneurs to understand the exact steps and documents required to set up a business and obtain necessary permits. This is supplementary to the investment guide (iGuide) the government had launched earlier.

Once the eRegulation is implemented, investors– local and foreign alike – can access process and steps involved in setting up a business with the click of a mouse.

Business units often complain about the burden of having to comply with existing regulations that have become duplicative over time.

According to the 2015 Doing Business report on Bhutan, starting a business in the country requires eight procedures, which takes 17 days to complete.

It takes two days and cost Nu 3,000 to obtain a business license. Seven documents, including project approval from the economic affairs ministry, should be submitted.

Another four days are taken to submit a project proposal and get it approved by the Regional Trade and Industry Office (RTIO). An application form along with the project proposal is submitted to the Industrial Department Division (IDD) under the economic affairs ministry.

Approval is required to verify that the proposed industrial project is in line with industrial development plans of the country, and for issuance of an industrial license. If sector clearance is required, the industry department sends a letter to the relevant sectors requesting such clearance for the proposed project.

Globally, Bhutan ranks 92 among the 189 economies on the ease of starting a business.

The licensing system in Bhutan is still characterised by the lack of a common understanding on what constitutes an efficient and effective licensing system.

There is no standard set by the government on acquiring a license. This practice results in contradicting information, multiple visits to the authorities, delays and frustration on the applicants’ side.

Although much progress has been made, businesses in Bhutan are still hampered by many inefficient and ineffective regulatory requirements that do not achieve policy objectives. “Bhutan needs clear, structured and rigorous criteria that govern the licensing system.” With the adoption of this Policy, high priority will be placed on harmonising these multiple licensing requirements.

The Licensing Policy is a response to requirements of the economic development and the findings of an International Finance Corporation (IFC).

Licensing reform needs to be coordinated with the adoption of an Enterprise Registration Act. The draft also states that there is a “high potential for corruption” in future, due to lack of proper licensing policy.

A major reason for the redundant information collection is the lack of coordination between issuing authorities. Each issuing authorities starts from scratch with an applicant. The policy is expected to address these gaps.

By MB Subba

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