Dechen Dolkar  

The National Assembly’s Economic and Finance Committee (EFC) recommended that state-owned enterprises (SoE) refrain from venturing into businesses that offer better prospects and opportunities to the private sector.

The chairperson of the committee and MP for Gangzur-Minjey, Kinga Penjor, said that most of the SoEs operate in commercial sectors such as manufacturing, energy, natural resources, financial, communication, aviation, trading, and real estate sectors.

According to section 74 of the Public Finance Act 2007, SoE should undertake significant commercial activities which are not catered for by the private sector or are required to be undertaken solely or partly by the government for social policy or security.

However, the committee observed that SoEs are undertaking businesses which is a violation of the Act.

Kinga Penjor said that private sector development is discouraged due to the existence of huge competition from SoE. “The greater dominance from the state in the economy will lead to market distortion, limiting competition.”

He said that, for instance, Bhutan Livestock Development Corporation Limited imports livestock products and competes with the farmers; the farmers so are not able to sell their products.    

He said that in the southern part of the country, 70 percent of the chickens were sold to India since farmers could not sell the eggs and compete with BLDC.

He said that instead of competing with farmers, BLDC could facilitate and import chicks, piglets, and fingerlings and let the farmers do the poultry business.

MP for Bartsham Shongphu constituency, Passang Dorji, said that going by the record of the past four years, most of the companies didn’t perform well financially. “In 2020, the government injected a capital amount of around Nu 1.5B for the SoEs but their profit is less than capital injected.”

Passang Dorji said there are 38 SoEs and suggested that some SoEs could be closed down. “Some of the SOEs’ social mandate could be undertaken by the private sectors, which will also boost the economy.”

Agriculture Minister Yeshey Penjor said that the government reviewed the requirements of SoEs several times.  “During the pandemic, the government felt that if they close down the SoEs, the unemployment rate will increase.”

Lyonpo said that the mandate of the SOEs related to the agriculture ministry is to showcase innovative and technological farming to the farmers. In the case of Farm Machinery Corporation Limited, it focuses on show casing to farmers on commercial farming with the use of technology.

Lyonpo said that BLDC has been engaging in business to continue the supply chain in the market.

Opposition Leader Dorji Wangdi said that the government should review the mandates as and when required and focus on strategic areas and social mandates.

Meanwhile, the government has merged Royal Bhutan Helicopter Services with Drukair. The government will also merge the National CSI Development Bank with the Bhutan Development Bank, and Farm Machinery Corporation Limited with the Food Corporation of Bhutan.

The committee also recommended initiating and facilitating the establishment of service industries along the southern borders as an alternative business.

The committee also recommended waiving Sustainable Development Fees for visitors from India to border towns, providing they do not halt more than a certain number of days as prescribed in the rules.

The Committee also recommended that the government not levy SDF on non-tourist categories stating that the SDF on non-tourist categories is observed as not in accordance with section 4 of the Tourism Levy Act 2022 and Article 20(8) of the Constitution of the Kingdom of Bhutan. It was also supported with a majority show of hands

The House endorsed the decision on the Committee’s recommendations on the Balance of Trade with 36 “Yes” and 1 “No” from 43 Members present and voting. Six abstained from voting.

The 11 recommendations will be submitted to the government. The status of implementation will be reported in the next session of Parliament.