NC turns down FDI land ownership

25 June 2010

Economic Affairs Committee of the National Council, in its report on the impact of foreign land ownership yesterday, said that the policy of granting land ownership to foreign direct investment (FDI) should be revoked.

The committee chairperson said granting land ownership to FDIs could hamper policy of the government and the country. The recently launched FDI policy allows FDI businesses to own land in Bhutan.

The chairperson said that it was vital to ensure that the policy was aligned to Bhutan’s development needs and context and not be driven by large corporate interests, local or foreign.

The review report says that, otherwise, FDI can be exploitative in nature, whether companies seek to extract mineral resources, water resources or cheap labour.

The Economic Development Policy states that businesses shall be allowed to register land in the name of the company, and in case of FDI, this will enable the local investors to put land as equity component.

Gasa MP Sangay Khandu said that, foreign direct investors and corporate businesses owning more than 25 acres of land would be unfair on the Bhutanese citizens while rich Bhutanese entrepreneurs and industrialists could seek to buy more land. “It is not in line with the constitution that gives equality to every citizen,” he said.

Lhuntshe MP Rinzin Rinzin said there are at least 12 other overriding factors more important than access to land when companies consider investment. Major factors that FDIs look for are market access, infrastructure and availability of skilled human resource that are competitive in terms of wages. He submitted that, if the country wanted to attract foreign investment, it would be vital to invest in infrastructure, education and training, among others, that contribute to an enabling environment for the private sector rather than rushing to provide foreign land ownership rights.

The report emphasized that foreign land ownership could complicate the sovereign control as FDI businesses are often based on legally binding bilateral, regional or international investment agreements. If the FDI agreements are not scrutinized professionally, there is every possibility that the state could lose legal cases against foreign businesses when they have control over land.

According to Zhemgang MP Pema Lhamo, risks clearly outweigh the potential benefits of allowing foreign land ownership. She said it was not in keeping with the country’s primary interest to promote security and sovereignty.

The report recommends that the government revoke the clause that allows foreign land ownership. It says that, as an alternative, Bhutan should ensure clear and transparent processes to provide stable and long-term lease of non-agricultural government land to attract foreign investors.

The house will continue deliberation on the review report today.

By Namgay Tshering

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