Government is optimistic to reach the target of top 100
Reform: Bhutan’s current position of 125 on ease of doing business ranking only reflects the situation for limited liability firms and not the remaining thousands of unincorporated businesses in the country.
The joint secretary of economic affairs ministry, Sonam P Wangdi said the report is confined to case studies of 351 incorporated firms in the country under the Companies Act. However he said doing business report is a good indicator of the investment climate of the country on the ease and speed with which enterprises can be established.
Thus government established, in April last year, a task force chaired by the economic affairs minister with cross-sectoral membership including the private sector to review and recommend reforms.
The task force, in the short term will be reviewing the regulatory framework to amend policies, rules and regulations that burden businesses.
Sonam P Wangdi said there were a lot of factual errors in reporting in almost all the parameters.
For instance, he said Bhutan is placed last in the world in terms of resolving insolvency. It is the average duration of bankruptcy proceedings. He said the country has bankruptcy Act, movable and immovable properties Act and even few cases of bankruptcy. But the legal firms interviewed did not provide adequate information.
The ease of doing business report also mentions that it takes about 38 days to export and 37 days to import and the country is ranked 165 in terms of trading across borders. Officials from the trade department said in reality goods leave within an hour to India from the exit points.
Usually to assess the doing business index, the World Bank gets views and questionnaire from respondents from various organisations to crosscheck the information government provided. The joint secretary said some respondents did have much knowledge on the reforms and provided wrong information.
The task force, joint secretary said they would also ensure that all missing data are reported and reduce time taken to do business in all the indicators.
The task force is also reviewing the licencing requirements to start a business and waive off the requirement for low risk activities and monitoring the ex-post (after start of business).
In the medium-term, the task force would work on automating submissions and processing of applications wherever feasible. The G2B (government to business) portal would be the starting point by making the portal transactional for business related applications.
Digitising the registration records of property, easy access to financing and improving cross border customs co-operation by automating the customs procedures are some of the measure in the medium term.
Reviewing, amending and enactment of new laws are also on the cards. In the last parliamentary session, the enterprise registration Bill was endorsed and the companies Act was amended.
“However, the doing business report does not measure many other factors that influence investments such as market size, macroeconomic stability, proximity to large markets and so on,” said Sonam P Wangdi.
Meanwhile, he said the goal to reach the top 100 in doing business is based on a practical and realistic assessment of how the country can move from being in the bottom one third in the world to a median range within the shortest possible time. The target was set 2014 through an executive order.
The issues that are resolvable immediately are polices and legislative initiatives, improving the regulatory procedures and making public services online in all concerned government agencies that affect doing business.
“Targeting to be in the top 100 is just an initial step towards the overall review and reform of the investment climate in the country,” he said. “Thereafter, the government will focus on the second step of more deeper and wider medium and long-term reform initiatives.”
The World Bank, in the meantime has also approved a development policy credit of USD 20M to improve the investment climate. This initiative is expected to reduce the number of day it takes to start a business from 32 days to 15 days, facilitate partnerships between the public and private sector, while increasing opportunities for foreign direct investment by 50 percent by 2017.