The issue of legality
The issue of legality has been raised both in the Parliament and outside. However, I don’t quite understand the real intentions of raising the issue of legality of BOIC. If it not a case of waging a war with the PDP government, I have no doubt of the tremendous benefits that would go to the people of Bhutan if BOIC is properly managed and operated.
Even if there is this issue of legality, It is the job of our parliamentarians or decision makers in general to make the status legal. To me, nothing would rather encourage me to stop the functioning of BOIC as the very subsidized loan schemes would go a long way in helping so many aspiring entrepreneurs who are handicapped without the ability to secure mortgage requirements in financial institutions.
I would like to understand the operation of BOIC as any other donor-funded projects. I think it is only like a technical assistance (TA) from Indian Government to stimulate economic growth and we should be happy to congratulate and thank our present government for being able to secure such huge amount of funding. As such, I don’t really see the requirement of endorsement from the Parliament or the necessity for anyone to question the legality of BOIC. I think rather than trying to make things difficult we should make the best use of what is being offered to us very generously. To conclude on this issue, I would say “Even if BOIC is not legal, it is our responsibility to make it legal”.
Is it a case of lack of operational efficiecy?
Without any hesitation, I would conclude that it definitely is a clear case of lack of efficient management. For many Bhutanese, the initial dream of loan prospects only turn out to be an unfulfilled fantasy or rather a desert mirage. The initial announcement to the public sounded more like a soothing music but for many it ended up with bitter frustration having to spend so much time preparing project proposals and undergoing the long wait only to be rejected.
I have come across many people who have submitted proposals to BOIC and most of them tell the same stories that their project proposals are still pending even after making the submission about a year ago. By any measure, to take such a long time for appraisal and approval is not acceptable. My own experience tells me that BOIC needs to recruit and engage a team of better experts and managers. There are very few project analysts who are very young and in-experienced and who seem to have more questions than answers. Most of the employees working under BOIC only seem to make things difficult for the proponents. I think it is important to play more the roles of a facilitator in order to fulfill the desired objectives and for the benefit of the people at large.
Boic needs to be wiser not miser
BOIC simply should be equipped with adequate human resources to tackle the required tasks. The government must therefore not hesitate to allow BOIC to have as many staffs as possible to efficiently make the service delivery to the public. Many people still questions about the high salary of employees of BOIC but I would say that they deserve to be paid well as it is a project-based operations.
A resent post on Facebook talks about the high operation costs and meager profits. In this regard, people should never make the mistake of measuring the success of BOIC in terms of profits. On the other hand, I don’t see any problems in BOIC incurring high operational costs as long as it renders maximum benefits to the people. Even with Nu. 1 billion of the fund being loaned out, it has a capacity to accumulate an interest of about Nu. 3.3 million per month (at an interest rate of 4% per annum). So, BOIC still can afford a very high operation costs to ensure a very efficient service delivery.
The idea of boic-bdbl merger
From just the functional responsibilities of BDBL and BOIC, the idea of merger would only raise more questions than answers. I would rather desire for a supporting role by BDBL only in terms of banking requirements as it has established branches in all parts of the country. BDBL may also extend use of infrastructure facilities by BOIC in order carry out the activities.
1. Restructuring of BOIC
BOIC may still continue to operate as independent entity without having to merge with any other organizations such as BDBL. Since it is not going to be a permanent establishment, a Project Management Committee (a minimum of 5 members) may be established to manage BOIC under the umbrella of Ministry of Economic Affairs. Thus BOIC office may only play a secretarial role while the major decision-making including the approval of projects under Revolving Fund I may be undertaken by the Project Management Committee (PMC).
2. Strengthening BOIC to improve efficiency
To improve the pace of operations both in terms of project appraisal processes and project monitoring, BOIC definitely need to recruit adequate human resources. There is need to recruit more and experienced project analysts to undertake project appraisals in a very efficient manner. Separate field officers may be recruited to monitor the projects or alternatively supervision and monitoring may be off-loaded to domestic consultants. This would enhance employment generation and empower the growth of the private sector.
3. Maximization of fund utilization
BOIC must ensure that the available fund is utilized in a speedy manner so that funds don’t remain shelved and under-utilized. As mentioned earlier, the accumulation of interest even at 4% can easily cover up any anticipated operational costs.
4. Revisiting project appraisal and approval process
BOIC may revisit project appraisal and approval process so that the proponents are informed, advised and guided properly. Instead of having to submit a detailed proposal at the outset itself, initial project screening may be done. Any proponent may be required to only submit a short concept paper in the beginning without having to submit a detailed project proposal. This would prevent people from incurring un-necessary expenditures in writing detailed project proposals.
5. Injecting more funds to BOIC and expanding scope of operations
Although, the financial institutions must have benefited from the ESP in terms of improving the liquidity positions, there are no real visible indications that the economy has specifically improved because of the injection of funds to banks. As banks lending schemes have remained the same, and even otherwise, there is little hope that our economy would improve in a great way. Our banks still continue to finance lot of building constructions and purchase of vehicles and machineries, which have little or no income generation capacity for the country.
My guess is that today the Banks must be in comfortable positions to return the money to the government. Assuming that the banks agree to return the money, the government may re-appropriate to BOIC to explore and expand new avenues of operations. As un-employment is a serious issue, the government may also consider letting BOIC extend financing for service sector as well. The lending scheme for service sector may be limited to a maximum of Nu. 2 million.
CEO, Jackson Engineering & Manpower Pvt. Ltd