As the scope of the recently launched economic development policy (EDP) is limited to urban based formal business, its purpose is not consistent with the foreword on the document; and it’s more apt to be called a private sector development policy.

This was the verdict of the national council’s (NC) economic affairs committee, which reviewed EDP and presented it to the council yesterday.

According to them, the thrust of the policy caters to businesses like finance, construction, tourism, high-end health and education, ICT, which are already large and well organized, through their associations and the Bhutan chamber of commerce and industry.

“In a developing economy like Bhutan, private sector should go beyond established businesses. Individuals, households, both poor and rich, in rural and urban areas, should be supported and included in the policy,” said the committee’s chairperson, Naichu.

The policy also does not acknowledge the role of the private sector in poverty alleviation, the most important development priority of the country, according to the review. “The largest stakeholders, the rural populace, were clearly excluded. To be considered as a national policy, it should include a comprehensive section on poverty alleviation and rural enterprise development,” said Naichu. The committee recommended the inclusion of a conscious effort to stimulate enterprise at the grassroots level, especially in rural areas.

The committee also pointed out that the EDP goals were conventional development goals of any developing country, and that there was nothing unique to Bhutanese or gross national happiness (GNH).

The chairperson said that there was a need to define what terms like self-reliance, full employment, 9 percent growth and becoming a middle-income country (objectives of the EDP policy document) meant. He said that, from the PM’s foreword, economic self-reliance was understood as Bhutan’s ability to finance recurrent and capital budget expenditure from domestic sources, and not to have to depend on foreign aid. There are other dimensions to economic self-reliance that would include attaining a strong balance of payment position, building adequate convertible currency reserves, diversifying sources of tax revenues.

On the goal of becoming a middle-income nation by 2020, the chairperson pointed out that Bhutan has already entered the ranks of middle-income countries, going by the World Bank’s classification, and given that Bhutan’s per-capita GNI (gross national income) in 2008 was USD 1,900. The bank categorises nations as lower middle income, if their GNI was between USD 976 and USD 3,855. On the 9 percent growth rate goal, the chairman said that would be important to confirm that the 9 percent as growth rate per annum.”

The committee proposes to recommend setting meaningful outcome targets, such as poverty reduction, lowering income gap, and improvement in human development index ranking, rather than aggregate concepts like GDP growth rate, which they said do not capture development outcomes like societal welfare, environment, security, etc.

The chairperson said the objective of achieving 97.5 percent employment by 2020 also needs to be redefined. It also pointed out that enhancing labour productivity, an imperative strategy was missing from EDP.

EAC member Rinzin Rinzin pointed out that the government should review the impact of fiscal incentives to private sector development and employment generation during the 9th Plan. He said that, while incentive packages benefited entrepreneurs, it posed opportunity cost to the government and society in terms of revenue lost. He added that the incentives provided in the past to industries had not generated any employment, while industrial development was negligible.

The council also reviewed how the policy would be implemented and monitore,d and suggested having a clear road map. They suggested the target year be brought down from 2020 to 2013, since 2020 would be beyond the government’s term.

Rinzin Rinzin also pointed out that, although EDP claims to be in consonance with GNH principles, it was not clear what kind of society Bhutan was seeking to move towards by adhering to the principles.

Committee member, Tashi Wangyel, pointed out that civil society organisations could be vital agents of change at the grassroots level, especially in remote areas, in providing innovative business ideas and small grants. He said experiences in developing countries show that cottage, small and medium enterprises play a vital role in creating jobs, generating rural income and alleviating poverty. “EDP must recognise the roles of CSOs as agents of change and enterprise, and explore venues to support them,” he said.

Since access to micro finance is a major constraint in the country, there should be ways of enhancing access to micro financing and loans to small business, he said. The committee also pointed out that the Druk Holding and Investments should provide an interface between government and private sector to meet national policy priorities, while development partner’s assistance could be used to develop private sector.

NC will deliberate on the review document today and submit the report to the government. The report is also uploaded on the NC website, www.nationalcouncil.bt.  Source: Kuenselonline