Cottage and small industry, which constitutes more than 96 percent of the industries licence issued, has grown from 17,364 establishments to 20,143 between May this year and June last year.

This means a total of 2,779 licences were issued in the 11-month period. However, the nature of businesses lacks diversity.

The CSI sector, however, is dominated by the service sector, accounting for more than 66 percent of the total CSIs. Production and manufacturing accounts for only 12 percent.

By definition, business establishment with a capital investment of less than Nu 1M, employing one to four people, is called a cottage industry. A small-scale industry should have an investment from Nu 1M -10M and employ five to 19 people.

The department’s earlier report on the CSI stated that Bhutan’s small-scale manufacturing industry is characterised by low-tech and heavy dependence on the natural resources.

For example, in 2015, more than 50 percent of the CSIs are forestry-based, which include sawmills, furniture making, wooden crafts and household items, hand-made papermaking, cane and bamboo craft, and household items.

Even in the service sector, an overwhelming 43 percent of the service industry is hotel and restaurant businesses.

Businesses like air ticketing, tour operators, and clearing agency, constitute 21 percent of the CSI. In addition to this, businesses like real Estate and renting constitute the service sector. This is why service sector is considered more diverse in nature.

Of the total loan of Nu 91.99 B disbursed by the financial sector, loan to medium enterprises constitutes of 21.80 percent (Nu.20.06billion), followed by large enterprises with 14.15 percent (Nu.13.02billion). Loan to micro, cottage and small enterprises comprised of only 18.07 percent (Nu.16.62billion).

This means that almost half the loans disbursed by the financial sector are towards non-enterprise sector like housing, personal, transport, staff loan and education, among others.

As per the employment survey conducted by the department of cottage and small industries in 2015, average number of people employed by the CSIs in the country is 3.6 for cottage and 5.45 for small-scale industries. Based on this figures, it is assumed that CSI employed 92,322 people as of May 2017.

While the growth in CSI in the past has been attributed to the Business Opportunity and information Centre’s (BOiC) revolving fund-I, designed to cater to CSIs in the production and manufacturing, the fund was handed over to the Bhutan Development bank after the centre’s dissolution.

Bankers believe that the CSI sector in the country will mushroom as the RMA has drafted the rules and regulation for CSI banking.

The draft rules state that CSI banks can lend collateral free loan up to Nu 400,000 against cottage industries, and up to Nu 2M for small industries.

CSI banks will engage in providing loans to CSI sector, which includes manufacturing, services, trade and commerce, and agriculture.

Tshering Dorji