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Rajesh Rai |  Phuentsholing

Export of potatoes has started earning INR (Rupee).

Between September 5 and October 25, the auction yard of the Food Corporation of Bhutan Limited (FCBL) in Phuentsholing exported 2,571 metric tonnes (MT) of red and white potatoes, worth Nu 62 millions (M) and 917MT, and other vegetables worth Nu 23M.

In total, FCBL received INR 85M. This reportedly happened for the first time in the history of potato-trading.

This comes after the Royal Monetary Authority’s (RMA) directive to the exporters to make financial transactions through formal banking channels starting September 5 this year.




However, the payment scheme, which is just two months old, is already facing problems. It has not only irked the private exporters but it has also promoted an illegal scheme of payment.

Kuensel learned that potato is being exported at an undervalued (manipulated) rate and weight.

As per the RMA directive, exporters have to maintain trade receipts with the importers across the border in Rupee through banking channels as per Section 24 of the Foreign Exchange Rules and Regulations (FERR) 2020. Exporters exporting to India must obtain a Bank Export Registration (BER) before processing the export declaration at the customs point of exit.




Exporters submit a filled BER to their respective banks, following which the banks will endorse the form. Exporters will then submit the endorsed BER form at the customs point of exit for processing the export declaration. All these procedures will have to be carried out after Bhutanese exporters receive purchase orders from their parties.

Kuensel learned that private exporters in Phuentsholing and importers across the border are undervaluing the rate and weight of the potatoes.

For example, if the cost of the potatoes is Nu 1,500 per packet, they reflect only Nu 750. Similarly, the total weight of the potatoes being exported is also manipulated and decreased on the bills.

In this modus operandi, the importers from across the border pay the amount reflected on the bills through channelised banking, and the remaining in Ngultrum. While Bhutan loses Rupee payment, both exporters in Phuentsholing and importers across the border evade taxes, a loss to the government.




Observers say that such manipulation, if not checked and done away with quickly, will help convert black money into white.

There are three types of potatoes – large, medium and small – which have different prices, but there is no fixed or floor price that banks can follow.

A potato exporter said that this is happening because of the six months’ time RMA allowed for traders to make the payment through formal channels.

“We get pressure from the farmers,” he said, adding that the importers across the border have the upper hand. “So private exporters give in. There is no other option.”




The exporter also said that if they don’t agree, their counterparts might even not make either of the payments. The new payment mode is good for the country but it is really giving the private exporters problems, while the season is coming to an end, he added.

Another exporter said he is following the RMA rules strictly but it has cost him dearly.

“I have been receiving calls to agree and accept half the payments in Ngultrum and the other half in INR formal payment,” he said. “But I have not agreed and this has delayed the payment. Farmers need upfront payment.”

The exporter said he respects the government’s decision to make formal payments, which is adding to the INR reserves of the country, but it has caused problems for his company.




“While the importers have the potatoes anyway, we haven’t received the payment, and I have many employees to pay,” he said.

“We wish that the agencies concerned would monitor the situation urgently. The vendors across the border now have the upper hand over us resulting in loss of business, non-payment and delay.”

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