Press Summary from the 9th Friday Meet

Press Summary from the 9th Friday Meet held on 22nd March 2019

‘The Real Estate Boom’ & ‘Earn and Learn Program’

Developing countries have faced a common phenomenon of exponential growth of population and high divergence in housing needs. As a country develops and is urbanized, there has been a noted disproportion between housing needs and supply. Over the past two decades, the occupation of rented houses and the number of people desiring to stay in rented accommodation has increased exponentially in urban centers of Bhutan.

While urban centers have seen increasing constructions in real-estate, the crunch in the residential complexes continue to see escalations due to changes in economic structures.

The lack of adequate tourist standard hotels was once an issue for our tourism resonant country. However, one of the top real-estate constructions over the last few years have been the increasing construction of tourist standard hotels and the conversion of residential complexes into hotels. In 2018, Thimphu saw the construction of 33 tourist-standard hotels adding to the already existent 98 such hotels. Phuentsholing Thromde records show that 15 new hotels were constructed in the last five years while about 11 residential buildings were converted into hotels.

The increasing construction of the tourist standard hotels and conversion of the residential complexes into hotels may be accredited to the fiscal incentives granted for ‘hotel upgraded to a higher standard and duly verified by TCB’, sales tax and custom duty exemption on ‘import of furniture & fixtures, kitchen & laundry equipment, mattresses & linens, cutlery & crockery, sanitary wares, electrical fittings (excluding wires) and other items by hotel industry’ and tax holiday granted in 2010. And ‘income tax holiday of 10 years to newly established tourist standard hotel and 5 years to existing hotel upgraded to tourist standard hotel’ in 2017.

The government has realized that proper monitoring of the fiscal incentives and tax holiday and a long term economic plan for the nation have not been conducted, causing this surge in hotels and increasing housing crunch.

Realizing these, the government looks forward to the recommendations from the Private Sector Development Committee created to guide the government on policy decisions and plans in determinacy to market forces. The Private Sector Development Committee chaired by the Minister for Economic Affairs is a multi-sectoral committee to boost the private sector in the country.

The Ministry of Economic Affairs is also suggested to advisory cell [Think Tank] to assess the potential economic determinants in the country while also channeling risks for the country economy.

The government is determined to tailor a major facelift for the tourism industry. The establishment of the Tourism Development Board, changes in chairmanship of the Tourism Council of Bhutan, the first ever Tourism Conference are some of the few facets of remodeling the tourism industry in Bhutan. The government aspires to make the myth of seasonal tourists nonexistent and redistributing the benefits from tourism to all 20 dzongkhags.  The Tourism Development Board and the Tourism Council of Bhutan will recommend the government on boosting the tourism sector in line to the global competition while also looking into plausible approaches in counselling the government on way forward for issues of hotels, guides and others.

The government is in close touch with the Royal Monetary Authority and the banks to look into the loans for real-estate and align and make it relevant to the current market needs. This would not only help the real-estate assessment but also slacken economic threats that might bubble from the high investment in tourist-standard hotels.

Rural-urban migration and the presence of sectoral and regional organization in urban centers are also among the few reasons for the increasing housing crunch. Amenities, available of services and employment opportunities in urban centers force people to migrate to urban centers causing crunch in the residential availabilities.

Our country has seen major initiatives to bolster the agricultural sector. Initiatives such as the land user right system and the priority sector lending initiative are some ways towards agricultural enhancements. With the government now planning to shift from subsistence to commercial cooperative farming is perfectly in line to these strategies.

Aware of the fact that we are an agrarian society, the government would like to initiate cooperative farming, cold storage and government buy-back mechanisms which would also revamp the role of the Food Corporation of Bhutan, farm-shops and Bhutan Post services.

The government’s plans of shifting from quantitative to qualitative feeding for all school children and generating employment in the agricultural sector would boost the agricultural cooperatives in the country and garner urban to rural migration. These policies while not directly linked to real estate would cater to curbing the migration pattern and reducing the housing crunch in urban centers.

The government aspires for inclusive governance and will seriously consider the recommendations from the private sector, tourism board, CSOs, political parties and other stakeholders. The government is committed to rethinking development not just for the next 5 years but for generations to come.

 

‘Earn and Learn program’

 

The ‘earn and learn program’ in Japan under the overseas employment scheme has been a topic of discussion in recent times.

The government is aware that our youths in Japan are facing difficult times due to the occurrence of adversities in the package. The package was initiated simply with a good intent to employ our youths in Japan.

Cognizant of all the issues in Japan, the government would like to look into the way forward to solve the issues and not go back into history which ultimately would distract the path of way forward.

The government is aware that our youths are facing difficulties in meeting ends needs, payment of tuition fees to language schools in Japan and repaying the loans in Bhutan. Assessing these, the government decided to defer the loan for students from 2-4 years based on their study period in Japan. The government decided to defer the loan so that the students after completing their language course could pay their loans here.

However, the loan deferment is optional and those who prefer to continue with the current loan payment may continue.

The most popular thing for the government with such situation in hand would be to cancel the loans. But, the government believes in doing the right things and not what is popular. Such populist move would be to the advantage of the government in power but a concern for the nation as the issues of loan is not just applicable to our students in Japan, but also for others who have availed education, agricultural and business loans.

If the government cancels loans for the students in Japan, then should the government not also cancel loans for all other people who face similar problems of repayment?

The government is aware of the VISA and employment issues that our youths are facing. We have requested the Japanese Embassy in Delhi to provide necessary assistance on the matter. We have also asked our Honorary Consul in Japan to help the youths with employment opportunities.

On the parents’ committee and legal advisors visit to Japan, the government is open to hear and help them.

The government will not comment on the issues of legality as the Judiciary is there to judge. The government will present itself to the judiciary if it is asked to do so by the judiciary.

The government does not need to support or discredit officials from the Labor Ministry allegedly involved in the earn and learn issue. The government has handed the case to the Royal Civil Service Commission as mandated.

The government has continued to elucidate that it looks onto the way forward and means to help curb the issues face by our youths in Japan and continues to pledge to do so.

 

The Royal Government is thankful to the Japanese government for their support at all times and acknowledges the mutual respect and friendship between the two countries.

 

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