By M Saraswathi
THIMPHU (Bhutan): Bhutan, a landlocked country at the eastern Himalayas, is fast emerging as an attractive investment destination in South Asia. This is especially so with its strategic location between two big economies in the region, China and India.
Although Bhutan was among the last few countries to open up after deliberately closing itself to foreigners until 1974, its leadership is now very focused and knows precisely what it wants to do and use this relatively late opening up to its advantage.
As such, it has lined up several plans to sustain its growth momentum, said Prime Minister, Jigme Y Thinley.
In an interview with Bernama, Thinley, who was clad in its national dress, called “gho”, said:
“We would like to become high quality medical service provider. We are looking at having specialised hospitals, for instance, a hospital focused on diabetes amid the high rate of diabetic patients in India.
“With the ageing population in both India and China, promoting a healthy lifestyle and offering medical treatment would make very good business sense.”
In 2007, Bhutan, with a population of just over 700,000, was the second fastest growing economy in the world, with a growth rate of 22.4%, mainly due to the commissioning of the gigantic Tala hydro-electricity project.
The Himalayan kingdom’s economy is based on agriculture, forestry, tourism and the sale of hydro-electric power to India. It is now keen to promote organic agriculture products, high-end education and tourism.
Tourism appears to have the potential to emerge as the largest income earner for the government’s coffers.
The government realises the importance of good air links for a growing economy and its flag carrier, Druk Air, the only airline that is allowed to fly into the country, is expanding to Singapore, Hong Kong, and probably Japan in the near future.
‘We want rich old people’
This expansion augurs well for Bhutan as some Japanese and Singapore firms have already shown interest in some niche projects.
Interestingly, Bhutan’s search for prosperity also has to be in consonance with its stringent requirement of a Gross National Happiness Index (GNH), protection of the environment and more importantly, its culture, Thinley stressed.
“As far as tourism is concerned, we want only high value, low impact tourism on our ecological system and culture. We can’t accept our environment suffering from various kinds of social issues,” he said.
Hence, Bhutan has started rating its hotels. Unless hotels have a certain score, they cannot accommodate tourists, otherwise, it would be difficult to sustain high-end tourism, said Thinley.
“We want rich old people, who really want to appreciate and admire our country and don’t have any capacity to do any real damage to our culture and environment,” he said.
Bhutan received 65,756 visitors in 2011, with a major portion above 60 years old. It was the highest recorded number of visitor arrivals in the country and this is 56.65% more over 2010.
Similarly, Bhutan’s Foreign Direct Investment (FDI) policy prohibits foreign investments in gambling, tobacco products, media and broadcasting, wholesale, retail and micro trade, mining for sale in raw form, hotel below three-stars and general health services.
The country is already facing some of the common problems that any developing economies face like changes in lifestyle, rural-urban migration and a potential property bubble which may distort the very base of a balanced and inclusive growth that Bhutan seeks to attain.
Adding to the woes is the recent drop in the Indian rupee, which is also pegged to Bhutan’s currency, ngultrum, and this has also triggered balance of payment issues.
Five years ago, it was rare to see Bhutanese wearing western clothes in their country but now the majority of teenagers here are shedding their traditional clothes for jeans and T-shirts, and they also have a preference for pizza as compared to Bhutanese food, said an observer.
The biggest challenge
The government recently shot down a proposal for an international fried chicken outlet to be opened here, claiming that it is junk food, said a local, who also asked how long would such a situation last.
Thinley said although there were concerns about the impact from exposure to the media, television, Internet and western culture, globalisation had also brought about considerable advantages to Bhutan, said Thinley.
“Westernisation is something that we worry about. At the same time, we are comforted that these kinds of western influences are very brief, [happening] during adolescence, and sooner or later, we find Bhutanese going back to their [traditional] values,” he said.
Universiti Malaya’s senior research fellow, Dr Marie Aimie Tourres, said the nature of modernisation strategy chosen by Bhutan would determine the extent the local population would get exposed to Western culture.
“There is no doubt opening up will have consequences on local culture but static culture does not exist. Also, you cannot force people to resist changes resulting from the globalisation process, especially in a democratic country like Bhutan,” she said.
In less than a decade, the price of land in the capital, Thimphu, had increased 10-fold, fuelled by unabated rural-urban migration, especially after the city boundaries were extended to Changtagang and Ngabirongchu.
Thinley agreed that the government is worried of the rising migration problem, but was fast to point out that it is not as serious as some other nations.
“Rural-urban migration is the bane of most developing countries. It is the biggest challenge. In Bhutan, it has not been as serious as some other countries, but we see it growing,” he said when asked if the migration would have an impact on its agriculture sector.
Thimphu has been growing at a rate of 7% annually, “so we are worried.”
“That is why the government aims to provide all services that are available in the cities such as road connectivity, access to electricity, safe drinking, water supply and easy access to education, to the rural as well and we have been quite successful,” he said.
The government also plans to effect income supplementation by enhancing farm productivity, providing new kinds of seeds and helping farmers to mechanise more of their farming processes so that they would not become “back-breaking jobs”.
For this, Marie said programmes like having extra incomes and better facilities in rural areas would probably reduce the need to move to cities.
“Migration will happen no matter what. More so when the median age of the population is 24.8 years. Attractive agriculture policies cannot help much to retain this part of the population,” she said.
The transition that the country is going through right now is a normal process of opening up and from the impact of globalisation. But the difference with Bhutan is that it has to tackle two massive challenges all at once, unlike other countries, which took on a more progressive pace.
By moving into a higher gear of development, Bhutan has to set an equilibrium between national interests, especially its core development philosophy through the Gross National Happiness Index, and integrating with the international community by using the best strategies possible.
One has to wait and see how Bhutan will take on the challenges in the Bhutanese way.