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Engines of economy

Print edition : May 09, 2008 T+T-
A dolomite plant in the Pugli hills near the industrial town of Gomtu in south-west Bhutan.-RUPAK DE CHOWDHURI /REUTERS

A dolomite plant in the Pugli hills near the industrial town of Gomtu in south-west Bhutan.-RUPAK DE CHOWDHURI /REUTERS

The initiatives of the government and a socially committed private sector brighten up Bhutans economic prospects.

A QUIET but steady economic transformation is taking place in Bhutan as the tiny Himalayan country gears up to face the 21st century as a constitutional democracy after 100 years under monarchy. The political transition is matched by an equally impressive transformation in the economic sphere from a feudal system to a modern one. And for any major economic development, the main factor is the availability of power, and in this Bhutan is fortunate it has abundant hydroelectricity, which is even exported to India. Power and information technology are the main propellers of Bhutans growth.

Druk Green Power Corporation Ltd (DGPC) was formed on January 1 by amalgamating three hydropower corporations Chukha, Kurichhu and Basochhu. The initial plan was to call it the Druk Hydro Power Corporation; but since the corporation had a mandate to oversee renewable sources of energy such as solar and wind power, the word green was chosen. The DGPC handles power generation and the Bhutan Power Corporation takes care of transmission and distribution.

Our mandate is not just to take over smaller power-generating units and ensure their proper running, but to accelerate the rate of development of power in Bhutan, Chhewang Rinzin, managing director, DGPC, told Frontline. At present, the DGPCs total generation capacity stands just below 1,500 MW. The government of Bhutan plans to increase this capacity to 5,000 MW by 2020. The Indian government has entered into an arrangement with Bhutan to buy a minimum of 5,000 MW from that year. Once we reach that target, we have an even more ambitious plan of enhancing our capacity to 10,000 MW by 2028, said Rinzin.

Bhutan utilises only 30 per cent of its total generation; the remaining 70 per cent is sold to India. According to Rinzin, the power generated now is more than sufficient to meet domestic requirements: Our future plans for capacity enhancement are mainly meant for export to India. We may never be able to consume the entire electricity that we produce.

The new democratic government will soon be coming up with a hydropower policy. This will be a very important policy for us, as hydropower is the main revenue-earner as well as the main source of power in Bhutan. The policy will probably allow independent power producers to invest in Bhutan. Already many Indian companies have evinced interest in investing in this sector, said Rinzin. He, however, made it clear that it would not be possible for Bhutan to achieve a capacity of 10,000 MW without private sector participation or foreign direct investment (FDI).

The Rs.5,000-crore Jaypee Group, the Indian conglomerate with a formidable presence in engineering and construction and also in the power, cement, hospitality and real estate sectors, is setting up a hydropower project in Bhutan. The groups engineering and construction wing is an acknowledged leader in the construction of multi-purpose river valley and hydropower projects.

The 1,020 MW Tala Hydroelectric Project is the single largest power-generating station in Bhutan. The agreement for the joint project enterprise between the governments of Bhutan and India was signed on March 5, 1996. The Tala Hydroelectric Project Authority, an autonomous body, was constituted for construction, operation and maintenance of the project and evacuation of surplus power from it. The estimated completion cost of the project is Nu. 43,270 million (the Bhutanese currency Ngultrum has the same value as the Indian rupee), and the funding is provided by the Indian government 60 per cent as grant and 40 per cent as loan.

In an age of information revolution, the Draft Constitution of Bhutan guarantees its people a fundamental right to information. The government has developed a number of policies, laws and regulations in the information sector. Individual Ministries and organisations have launched websites as well as a comprehensive portal to ensure an interactive and transparent government. But it will still be a hard climb, for a number of reasons.

Infrastructure and access are limited, particularly for rural residents; it is not easy for people to approach many government offices; and it is even more difficult for them to access the Internet, since computer literacy is still low.

Since Bhutans Ministry of Information and Communication was established in 2003, there has been a nationwide consultation with various international private agencies to develop IT. In July 2004, the government drew up the Bhutan Information and Communication Technology Policy and Strategies (BIPS).

Four overall policy objectives underline the initiatives in the BIPS Report first, to use Information Communication Technology [ICT] for good governance; second, to enhance economic growth and create employment [which is a challenge, particularly after the success of our education system]; third, to take us towards our ultimate objective, that is, Gross National Happiness, by providing both economic and cultural service to better our living and social conditions; and fourth, to create greater equality, as technology is one of the great levelling forces of our age, said Tenzin Chhoeda, Director, Department of Information Technology, Ministry of Information & Communications, Bhutan.

In order to fulfil these objectives, the IT department has taken a number of important steps for human resource development. Schools are being encouraged to impart computer training, and private companies are being invited to set up training centres.

The initiatives are aggregated under five strategic and logical headings:

1. Policy: Policy activities focus on making governance more efficient, transparent and inclusive; introducing a modern, legal and regulatory framework; strengthening the relevant policy and regulatory bodies; and exploring ways to fund ICT and reduce the costs of ICT services.

2. Infrastructure: The infrastructure activities focus on implementing the liberalised and competitive infrastructure market, increasing coordination between infrastructure providers, and ensuring an ICT infrastructure that is affordable, fast, secure, sustainable and appropriate.

3. Human capacity: Human capacity activities are aimed at ensuring appropriate ICT awareness and skills from basic computer literacy to high-level technical skills to boost the ICT industry. Activities outlined in this area aim at improving the quality and coverage of training institutions by developing, among other things, a Centre of Excellence to accredit ICT training institutes and boost their quality.

4. Content and applications: To enable Bhutan to harness fully the benefits of ICT for its development, the government plans to establish a framework for e-business, use ICT to preserve the nations cultural heritage, enhance the quality and accessibility of health and education, broaden national media and web presence and support good governance.

5. Enterprise: The planned activities are expected to boost the competency of the local private sector in the ICT sector, and provide them business opportunities by outsourcing the Bhutan governments ICT work. Access to finance will be enhanced and a strategy to encourage export of ICT services and application of ICT in non-ICT businesses will be evolved.

Bhutan will also be coming up with its first-ever IT park.

The efforts of the IT Department is clearly paying dividends. IT has captured the imagination of the youth of the country, and in schools more and more students are opting for computer science as their optional subject. Zangmo Karma, principal of the government-run Motithang Higher Secondary School in Thimphu, told Frontline: We introduced computers in our school two years ago, for students of Class IX and above; but in private schools they introduce it at much lower levels.

Apart from the growth in the IT and power sectors, private industries have also developed with encouragement from the Government of Bhutan. The Lhaki Group and the Singye Group are successful examples of this.

The Lhaki Group of Companies was promoted by Ugyen Dorji in the late 1980s. The group initially started its venture in the construction business (Lhaki Construction Company) and in the manufacturing of cement (Lhaki Cement). In 15 years, it has emerged as one of the major players in the industrial sector with multilateral manufacturing activities.

The group produces sacks woven with polypropylene (PP) and high-density polyethylene (HDPE), multifilament and monofilament yarn through Bhutan Polymers Co. Ltd; produces polyester-textured yarn through Jigme Polytex Pvt. Ltd., and manufactures MS tubular poles and ACSR (Aluminium Conductor Steel Reinforced) conductors and a line of accessories for electrification through Lhaki Pole & Allied Industries.

The groups Jigme Mining Corporation is the only company authorised to mine dolomite in Bhutan, and its Jigme Industries Private Ltd produces dolomite-based industrial products and fertilizers. A unit for manufacturing ferro-silicon is also under construction. The group is also into the export of minerals, yarn, medicinal herbs and other Bhutanese products through its company, Jigme Export House Pvt Ltd. It plans to set up one of the largest iron and steel projects in the country with a capacity of 350 tonnes a day, in collaboration with a foreign direct investor. The group has also played a pioneering role in the area of tourism and hotel industry through Bhutan Tourism Corporation Ltd.

The Singye Group of Companies Pvt. Ltd. is a unique and powerful business house that is governed by the philosophy of returning to society a sizable portion of the wealth it generates. The company belongs to a family with a very strong religious background. Right from the time we started our enterprise, we have made it a point to contribute a minimum of 20 per cent of our earnings back to the community either through scholarships, or medical aid, or money for the sick, Ugyen Tsechup Dorji, vice-chairman of the group, told Frontline.

The group was built by his father Ugyen Dorji, a first-generation businessman who initially ran a timber business in Tibet and Coochbehar in West Bengal, India. He was also into small-time constructions. Over the years, the company expanded to take up construction of roads and bridges and manufacture of construction materials, and diversified into automobiles (the only dealers of Mahindra & Mahindra and Maruti in Bhutan), billet manufacturing, silicon carbide, ferro silicon, and most recently, milk and fruit drinks in tetrapacks.

We have plans to collaborate with foreign companies in hydroprojects and also get into agro-business, said Dorji. The group is also diversifying into tourism and has bought land to set up hotels in a number of picturesque places. A plan to start a domestic airline is also on the cards, said Dorji.

Education is another area that the Singye Group is keen on. It runs a boarding school the Ugyen Academy in Punakha with a student strength of 800; but the curriculum is localised. We now wish to start an academy with international curriculum and also a medical college. We are in talks with certain Indian companies to set up an Educational Centre in Bhutan. This is an ideal place for education there is good governance, clean environment and very little distraction, said Dorji.

Being one who received his entire education in India, Dorji feels that though there is a wonderful relationship between the governments of Bhutan and India, there is scope for increasing people-to-people relationships. Education is a great unifying factor. I think it is very important for the people of India to know how much the Bhutanese people appreciate their contributions to our development, and the goodwill Indians enjoy among the people of Bhutan, he said.