Challenges for Bhutan in 2009.

An eventful 2008 is over. 

Bhutanese will most remember the historic centenary celebrations, the coronation and our first democratic elections. Many in the West will  find it hard to forget the unravelling of the financial markets which now has the global economy in a full recession. The fact that our manufacturing and the tourism industry has been affected proves that Bhutan is not very isolated from the global markets.

2009 is predicted to be a difficult year for all the major economies around the world: UK, US and most the EU would be in a recession while most of the emerging nations would grow at a slower rate. The priorities of the Governments of advanced economies are to reduce the impact of the recession using all the fiscal and monetary tools available.

I list some of the challenges that the Government should tackle in 2009 that just comes to the top of my mind (not in any particular order) ---

1. Unemployment - The current rate is 3.7% and is still increasing.  This has led to increases in many youth related problems in urban centres. MoLHR, since its establishment, hasn't delivered anything tangible to ameliorate this problem. There is a need to have a strategy to tackle this problem.

2. Education - The education sector has been riddled with many problems in 2008. Our seemingly 'trail and error' approach hasn't improved anything. There is a lot of work.

3. Private Sector Development - I look forward to the new industrial policy and the assessment of the impact of the our FDI policy. The  Government should put in programmes to develop entrepreneurial skills, and support individuals to start and own small businesses.

4. Making GNH workable - We have a GNH commission, GNH conferences and a lot of talk. Come out with guidelines on how to integrate GNH in decision making processes by the Government and the Private sector.

5. Corporate Governance and Ethics code for public companies and corporations so that the directors and managers of a company act for the benefits of the shareholders. Such a code can also encourage transparency and ethical conduct in the operations of the corporations. What about insolvency and bankruptcy procedures? Who looks after the bankruptcy proceedings of a public company?

6. Building good infrastructure - Infrastructure is the key to economic development. The problems in the construction industry are not limited to procurement and should be looked in its entireity.

7. Why not explore new opportunities and diversify our sources of revenue? I can think of sustainably managing and using our forest resources.

8. Development of local industries and SMEs - I can't think of many. The Government should support development of local industries and SMEs through technical and financial assistance. Bhutan has one of the highest rural to urban migration rate  and this can stem this problem. This will also reduce poverty.

9. Reduce Bureaucracy - I met some villagers who spend precious time and money (for accommodation) in Thimphu just to push a paper in some office. They often travel for several days.

10. Use IT effectively - This might sound crazy but IT isn't used effectively in the Government. Internet is just used to access mail (mostly personal) and it hasn't made anything easy. Something needs to be done or don't spend huge amounts having a leaseline to some office unless absolutely necessary. There are good models everywhere how IT has been used to improve the delivery of public services.

Some may not agree to what I listed and there may be many others. But if we get a few of these done, we will be better off by the end of 2009.

Electric Buses and Taxis in Thimphu

Why do we have the penchant for complex solutions? 

I heard about trams and monorail  in Thimphu and now it is electric buses and taxis.

NEC's plans to introduce electric buses and taxis electric buses and taxis in Bhutan in a few years may put Bhutan on the global 'environmental movement' radar but it is an expensive proposition. There will not be significant reductions in air pollution because most of the current vehicles are either privately owned or owned by the Government. Not many people use the public transportation and everybody wants to own a car.

Why doesn't NEC look for a workable and an achievable solution?

The easiest way is to make the public transportation system in Thimphu efficient, accessible to all places, clean, safe and economical to use. Once the people find the public transport reliable to use the number of people buying cars would reduce. Electric buses and taxis can work only if people use the public transport...

Of Incinerators and appropriate technologies

Is incineration the only solution to our waste problem? Incinerators are not new to Bhutan -  

An incinerator was installed in Gedu by Tala Hydro-electric Project Authority (Waste Incinerator for Tala Town) in Feb 2004 to burn 100 Kgs. of waste every hour. I don't know if it still functions. This might provide some good pointers on the proposed incinerator.

Almost six years ago in May 2002, over Nu. 8.6 millions (Thimphu Crematorium, Wasted Resources)  was spent on installing incinerators at the Thimphu crematorium. These were reported to be non-functional as late as June 2008  (Incinerators to be resurrected). The project was a total failure. It brought out the stark realities of starting a project without proper needs assessment and planning. It also informs on the capabilities (or rather the deficiencies) in project management. Remember that there were four Government agencies involved.

Were these incinerators needed in the first place? Cremations have been conducted without incinerators for the last six years. There were definitely shortcomings in the project feasibility studies. Availability of good fuel, stability of power supply and technical manpower were critical elements for this project, and none of them were assessed. They were not difficult to assess either.  There is an imminent need to reflect on our abilities to handle complex projects.

(image from www.le2.ac.uk)

The obsession with incinerators only shows that we still haven't learnt any lessons from our past experiences.  Just because a technology works elsewhere doesn't mean that it will work in Bhutan. 'Any' technology wouldn't work.. what we require is the 'right' technology. Right technologies will solve problems, fulfill the needs of the community at lower costs (economical, cultural, environmental and ethical) and justify the investments. They are also manageable. We should explore technologies aptly described as  'appropriate technologies' by the economist E.F Schumacher in his book Small is Beautiful (I did a brief review here). Identifying the right and appropriate technologies often require a great deal of local knowledge, technical expertise and project management skills. 

Many (read the post by the Leader of the Opposition) do not see and believe that an incinerator will solve our waste problem? Given the waste composition, enormous costs involved and potential problems in running an incinerator, recycling is seen as a better and a manageable solution. 

I would very much detest another non-working idle incinerator in Bhutan.

Corporate Social Responsibility (CSR)

I welcome the news that Singye Group of companies proposes to open a free private school in Bjemina. This is an indication that companies in Bhutan realise the importance of working with and engaging the communities in which they operate.

Rather than view this initiative with suspicion, let us give credit to Singye -- this will definitely benefit the community in Bjemina.

No respite for Steel Industry in Bhutan

The decision by RMA and the Banks  not to bail out the steel factories  in Bhutan is a welcome one. As rightly noted, this could have set a precedence for other industries (like the tourism industry) and also encourage imprudent risk taking in businesses.

It is natural that there will be constant renewal in any industry and this is no different. Only top firms manage to survive and generate profits in the long run. Top firms are characterised by the following:

1. Leadership with clear vision and strategy

2. Shared values and distinct firm culture so that the employees identify with the firm.

3. Good understanding of the markets and competition.

4. Proper structure and systems for effective communication and implementation of strategy.

5. Skills and resources which give the firm a competitive edge.

6. Constant organisational and individual learning.

I wonder how many of our firms had these things in place. Giving financial assistance at this moment would be throwing good money after bad money. The steel market will not pick up soon. Any demand that is generated by a fiscal boost in India would just suffice the manufacturers there unless our products have built a niche market through branding, better quality and lower costs.

As for tourism we may not have enough next year to service our 400 tour operators. The strong dollar may bring in some die-hard and persevering tourists home but many will do with a trip to cheaper and closer places. $200 (forget $250) per day currently is asking too much. Many in the west are either getting unemployed or having their bonuses slashed.

A different kind of hike..

Finally, a (there were two) pay hike proposal has been released to elicit 'public opinion' before the final debate on January 19 in the Parliament. What about the other one? Had it been made public now, the discussions could have been more meaningful. I hope it is not released later (you never know) as an after-thought.

This pay raise has been entirely different from the ones in the past. There were many discussions, online debates and questions which is an encouraging sign. Much of the public opinion (without much effort) can be found on various online fora which to a certain extent reflect the sentiments of the public especially of the professionals, which the pay commission report identifies as the 'most productive' among the civil servants' (assumed that professionals in the civil service access the Internet and participate in online discussions).

The hikes ranging from 40% to 77% (or 130% if politicians are included) are seen to be more generous towards the politicians and the top civil servants and the increase in the compression ratio (ratio of salaries at EX/ES-1 to salaries at 0-4 level) from 6.74 to 8.51 seem to confirm this view. There may be explanations but in the absence of proper communications, civil servants can only get disillusioned and feel un-acknowledged.

One of the good recommendations in the report is using the CPI to determine the annual increment. This will take care of inflation but accommodation costs are not taken care of. Unlike goods and products, rents are dictated by the whims of the house owners. There is an urgent need to regulate the residential rental market through a mechanism of a more effective tenancy act and building more housing stocks for the lower income group. Otherwise any pay raise will just be illusional when your house owner raises your rent.

The report would have been more complete and satisfying if disposable incomes available to Bhutanese are taken into account.  I bet that disposable incomes for an average Bhutanese would be quite limited. Disposable income pays for savings, occasional picnics, swimming (in the Thimphu swimming pool), eating out, etc. and contribute to physical and mental well being. Just paying taxes and and barely meeting the essential needs isn't a good life and definitely not GNH.

Whatever, the final proposal will demonstrate how much of the feedbacks have been incorporated. This exercise has taken long enough and shouldn't be delayed further.

Related Posts:

1. pay revision deserved or undeserved

2. another day, another proposal

3. messages from payhike

(NB: 1st image from Ministry of Finance website and 2nd picture from www.cartoonstock.com)

Bank No. 3 - Druk PNB

The banking sector in Bhutan is set for some intense competition. 

The limited market, two laid-back incumbents (BNBL and BoB) and an entrant with considerable experience in Banking from India makes it a good stage. Bhutan National Bank Ltd. (BNBL) and Bank of Bhutan (BoB) have at least a year, before Druk PNB starts their operations.

So how prepared are BNBL and BoB? If they are not, I think it is quite urgent that they do so.

But what is that Druk-PNB (or PNB) sees in Bhutan? There are a few thousand civil servants who can save, small commercial establishments and some corporations and these aren't attractive enough. PNB must see Bhutan offering a lot more in the future. I can only think of a few:

 

- Bhutan as a destination for large foreign investments when we liberalise our markets more.

- Project financing of hydroelectric projects (I doubt if BNBL and BoBL has project finance capabilities).

- Financing of SMEs where both our banks have failed or even haven't started.

The existing banks should evaluate their strategies, their competitive positioning, service and product offerings and their approaches to banking. They must seek and not wait for customers to come to them (as they are used to).

We will have to wait and see how the sector unfolds.  Of course the ultimate beneficiaries will be the customers.

Hydroelectricity - Sustainable?; A climate challenge for Bhutan

Developing countries like Bhutan desired more from the the UN Climate Change Conference in Poznan, Poland. We can only hope that in Copenhagen-2009, countries agree on a worldwide deal to reduce carbon emissions and take the climate change head-on.

Floods triggered by melting glaciers and snow caps in our northern mountains threaten our settlements and infrastructures in the valleys. The hydroelectric projects - a major source of national revenue - may not be very sustainable as we think so. Power comprises over a 1/3rd of our exports and this proportion will only increase as Bhutan builds more projects.

There is a need to thoroughly assess the risks of climate change to Bhutan and develop a long term strategy to address them.

A Business in Bhutan

At the most it can take upo 8 months to start a business in Bhutan. The  doing business site from World Bank   provides the detailed procedures and timelines for starting a business in Bhutan.

It also provides information for other countries in the world.

The football way to fire yourself?

After 6 months, 17 games (managing just 3wins) and with the club precariously 19th in the league, Paul Ince has been axed by Blackburn Rovers. I hope Ince's replacement, Sam Allardyce, can do a 'Harry Redknapp' at Blackburn. Recent sackings (Roy Keane moved off) of managers in the Premier League only shows that the League is unforgiving and the competition intense. Here you are challenged week in and week out and you either deliver or you go.

In football there are hardly any second chances. 

This is also true for our work. What would your answers be if you were asked the following?

1. Do you have a game plan? Is it effective?

2. How many games have you won? Have you been losing too many?

3. Are your owners happy? What about your fans? and what about your team?

4. Is your team in a precarious position because of undelivered promises and underachievement?

5. Do you think you deserve a sack (even if you haven't been sacked yet)?

Congratulations if you don't. 

And finally --

6. Have you been acknowledged or recognised for winning and keeping the team in the league... if not .. 

Sack yourself, the club is obviously not a Manchester United or a Milan and is not the right employer for your talents.

Notes for my CV

Reading through my old stuff I came across my old notes on preparing and sending a cover letter and a CV. I still remember the reasons why the following tips hold true.. here are the points from my notes. Remember some may not apply in Bhutan but are good practices.

- Tell the employer what they want to know (what you bring to them, your skills and knowledge)

- Remember the PYRAMID – send to people who can offer you a job, refer to someone who can offer you a job, tell you of a job opening or can can refer you to a job opening

- Do not right-hand justify your CV and cover letter

- Do not tell them you know Microsoft office, everybody knows it

- Be specific about achievements 

- No references on CV

- Have a long set of questions to ask during an interview

- Visit their websites and meet people from the company - understand what they do and what you want

- Arrange your CV in reverse chronological order

- Layout is important. Should be easy to read

- Highlight achievements and use active words

- Be specific in interests (Not just travelling, mention where travelled. Not just reading - mention if it is English literature etc)

- Do not repeat CV points in cover letter

- Look to provide good titles

- Write for the reader

-Check spellings

-Use sentences of 12 words only

- Use Short words

- Do not illustrate anything negative – don’t lie

I do not profess to be an expert but am willing to help if you need a pair of eyes to review your CV or application.

A skill that I should have learnt...

I regret that I never learnt to swim. It wasn't my fault. There was nothing much I could do. The fees were just enough to keep me out. 

And this is still happening. 

The exorbitant rates keep out majority of the population in Thimphu and deny them an opportunity to learn this life-saving skill and sport. Most of them are young children often condemned to the banks of Thimchu during the summer(sometimes resulting in loss of lives). Only a few people afford to use the facility and if it was to be like this, the pool rather be a part of a commercial establishment.

Agreed that there are costs to running and maintaining this facility but can we not come up with a mechanism which would make the pool accessible to more people? Do something about the fees. What about the timetable? We can build a few more pools if required... In taking decisions, it sometimes pays well to look at social rather than economic reasons. 

Insignificant Political and Security Risks in Bhutan

According to Riskmap published by  Control Risks, a leading international risk consultant, the political and security environment in Bhutan is conducive for businesses. The political and security risks in Bhutan are rated as insignificant.

This is a good news for our country looking to attract more foreign investors.

Confused - FDI Vs. WTO

The Government claims that joining the WTO is (may be) in conflict with the principles of Gross National Happiness. But it is very enthusiastic about attracting FDI into Bhutan. This is contradictory and has me confused.

It is difficult for a country to attract foreign investors without opening our markets/industry sectors. This may be one of the reasons why we have seen limited foreign investments in Bhutan since the FDI policy was adopted in 2002.

I hope the consultant has some meaningful lessons for our policy makers. Meanwhile, the Government needs to abandon ambivalence and take a clear position vis-a-vis WTO, GNH and FDI. 

Relevant earlier post: FDI in Bhutan - Benefits 

List from the Economist

Another List..

A list of books from 2008 selected by The Economist at Pick of the Pile

And a few others written by the people at The Economist.

I managed to read just a few.... and the lists are pretty long.

Pay Revision - Deserved or Undeserved?

There has been much talk of pay revision over the last few months and the news this weekend was different. An end to this saga is nigh and it was interesting while it lasted for the following observations:

1. It took over eight months before the indication, this weekend, that the exercise is almost over. By any standards, eight months is a very long time for decision making. I can't even remember if there was a pay commission looking into this exercise.

2. The uncertainty is over. Messages emanating from the pay commission and the government were hard to comprehend. We saw (read heard) two proposals, many meetings and a reluctance to make the proposals public. These led to confusions and even aroused suspicions among the civil servants. So much so for all the hard work. 

3. Finally the civil servants are unlikely to get the raise which I think was clearly due and deserved (the proposals put up by the pay commission and the finance ministry suggests so). Blame it on the financial crisis. We now know that Bhutan is also susceptible to catch a cold when Wall Street in New York sneezes.

This long drawn-out exercise has achieved nothing and demonstrated the inability of the Government to deliberate efficiently and make decisions swiftly. I opine that the exercise would have been prolonged if it wasn't for the financial crisis. 

The Government immediately needs to develop and communicate a plan to look at pay revision in the next year or two so as to mitigate consequences that will be reflected in the sapping confidence and performance of the civil servants. But it must make sure that the plan is realistic and practicable.

End of 2008 lists...

2008 - an incredible year. 

The financial crisis which started in the 2nd half of 2007 is not yet over and the pains are more likely to be prolonged. There were also pains in Tibet, Georgia, Congo, India and many other parts of the world. There were many things to celebrate as well. The US elections, the Olympics and the Euro were some of the events witnessed the world all over.

Most significant of all to us, the Bhutanese,  are the election of the first democratic government, centenary occasion of our monarchy and the coronation of our beloved king. 2008 will remain etched in our memory forever.

Now is the time of the year when many organisations and individuals come up with lists (of events, individuals, books, music, feats, etc.). Visit  a list (of books) published by The Financial Times. There will be many such lists and they provide good pointers to reflect on the past year and look forward to the new year.