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State of the nation

DPT government’s second year performance report

Achievements

• Six performance compacts signed
• Five out of remaining 66 gewogs to be connected by road by the end of the cur­rent financial year with 29 more roads budgeted to be built by new year.
• Hundreds of km of farm roads built and restored
• Electrification of 31,298 households under various stages of implementation and completion
• 94 percent children of school-going age enrolled, with 15,841 children admit­ted in class PP
• Upgraded 14 primary, lower secondary and middle sec­ondary high schools, opened four community primary schools and extended 24 classrooms
• Met the millennium devel­opment goal of achieving gender parity in primary enrollment.
• More than 35 doctors re­cruited from abroad
• 23 ambulance vehicles obtained from development partners
• Built 238 new and rehabili­tated 51 safe drinking water supply schemes
• 394 new villages connected to mobile phone with new 80,754 subscribers
• Domestic revenue, for the first time, covered the recur­rent expenditures, as well as financed 30.5percent of the capital expenditure
• Foundation stones for Mang­dechu and Punatsangchu II projects laid
• Actual tourist numbers in spring increased by over 12 percent.
• Chiphen Rigphel project inaugurated
• Construction of the first IT Park began
• Pilot organic farming began in several places
• Total of 320,900 out of 331,900 workforce em­ployed bringing down unem­ployment rate to 3.3 percent
• Finalized and released EDP and FDI policies
• At COP 15 last December, Bhutan declared to forever remain carbon neutral and serve as a net carbon sink
• Bhutan pushed through the Thimphu Statement on Climate Change during the 16th Saarc summit
• Since the formation of the new government, 16 bills have been enacted, eight re­gional and international con­ventions ratified, eight bills are under consideration by the parliament, and 12 bills are being drafted by relevant ministries and agencies.

The new tax measures are expected to help develop and promote a tax-paying culture that would make citizens con­cerned about how their taxes are utilized by the state, said Lyonchhen Jigmi Y Thinley in his state of the nation address to the joint sitting of parlia­ment yesterday.

“Democracy in the end is about paying taxes and the right to hold the government accountable by the citizens as taxpayers,” he said.

Lyonchhen explained in detail the government’s recent decision to revise taxes in dif­ferent areas.

Levying new or raising taxes, he said, was important for progressive replacement of external development as­sistance by internal revenues. “The development partners have already made it clear that they will withdraw de­velopment assistance within the next few years having assessed that there is enough potential for increasing tax revenue,” he said.

The government’s decision to tax certain consumables, labeled as ‘junk food’, has hurt small businesses just as rais­ing taxes for luxury goods has pinched the affluent, Lyonch­hen said, adding that, in an economy such as Bhutan’s, af­fluence and luxury must have its cost. “The innocence of our children and our simple folks must not be exploited at the cost of their health,” he said.

According to him, while taxes that were being raised would contribute insignifi­cantly to the exchequer, the new tax measures were not aimed at increasing government rev­enues, but rather at making use of taxes as an instrument of policy to guide the economy in the desired direction.

On the development progress, Lyonchhen reported significant developments in many fields (check the bullet points), while admitting to some shortcomings in making Bhutan the regional hub for world class education, health and financial services.

Lyonchhen said there was no significant success in pro­moting Bhutan as a regional hub beyond just the expres­sions of interest that Bhutan attracted. The procurement rules and public criticism, he said, had greatly hindered any progress, especially in serious interest expressed by an external company to build an education city for some 40,000-50,000 students with the capacity to generate up to 100,000 jobs.

He, however, said that a modest progress had been made with several new financial institutions having begun operation or intending to do so. He added that after some financial and economic experts had advised against making Bhutan a financial hub, the government commis­sioned international experts to conduct a thorough study on the feasibility and desir­ability of pursuing the goals.

On FDI’s landholding policy, Lyonchhen said that it did not offer land to foreign individuals or companies and did not create conditions for the erosion of sovereignty over Bhutan’s territory.

He said that land used for FDI projects did not become the property of a foreign indi­vidual or entity. FDI projects must be legally registered and incorporated under the Companies Act 2000 and will be subject to all the laws, rules and regulations of the country.

Lyonchhen said that, if an FDI entity were to close its business, the land and all the assets on it would revert to the state or the original owner. It could not be owned and used by foreign share­holders as private property.

“Without FDI, there is no possibility for substantial economic growth while the capacity for equity participa­tion and shared ownership by Bhutanese is extremely low,” he said, adding that land, therefore, is the only asset that the Bhutanese must leverage as equity in the most opti­mal way. Otherwise, Bhutan is not and never will be an attractive destination for the much needed FDI even as it promotes its unique selling points, he said.

In his address, Prime Minister outlined the perfor­mance of the Druk Phuensum Tshogpa government in the fiscal year 2009-2010.

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