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Monday February 6th, 2023

“Happy” Bhutan threatened by climate change and geopolitics

ECONOMYNEXT – For decades, the small Kingdom of Bhutan, has carefully controlled its exposure to the more materialistic lifestyles adopted elsewhere in the world.  It’s concept of Gross National Happiness (GNH) taking precedence over Gross Domestic Product (GDP), as envisioned by that nation’s 4th King, Jigme Singye Wangchuck has won Bhutan the status of being the only carbon neutral country in the world.  It also fares pretty well on the world happiness index.

Nestled in the foothills of the Himalayas, this Kingdom of less than 800,000 people, has styled its GHN along the four pillars of good governance, sustainable and equitable socioeconomic development, environment conservation and preservation and promotion of culture based on the country’s Buddhist heritage.  The Kingdom seeks to apply a holistic approach to development and progress as a nation, striking a balance between the economic and non-economic facets of well-being.

But, its carefully crafted policies to protect its people and the environment, maintain the status quo and withstand issues not of their making, requires a keen balancing act.

These subjects were discussed at a webinar on ‘Liberty and Happiness in Bhutan,’ organised by the Friedrich Nauman Foundation for Freedom (FNF) moderated by journalist Gopilal Acharya. In his introductory remarks Acharya said all development activities in Bhutan are centred around ensuring the happiness of the people, where liberty of the mind, and liberty from everyday situations is foremost, Bhutan must also struggle to safeguard its own identity. It may also have to consider diversifying its economy, he added.

The webinar which was held on June 2 had as its panelists Pramit Pal Chaudhuri, Senior Columnist, Hindustan Times & Fellow, The Ananta Aspen Society, Dasho Paljor J Dorji, Deputy Minister and Special Advisor, Environment Commission and Dr. Passang Dorji, MP, Chairman of Human Rights and Foreign Relations Committee, National Assembly of Bhutan.  Bettina Stark-Watzinger, an MP of the German Parliament, the Bundestag and a Board Member of FNF, was the Keynote Speaker.   Moderator Acharya is a Consultant and Freelance Journalist and Founder of The Journalist.

According to Pramit Pal Chaudhuri, Bhutan, a landlocked country, sandwiched between India on the south and China in the North, and Nepal and Bangladesh in proximity, is faced with several challenges.

The primary challenge he said is the sustainability of the country’s 2600 glacial lakes. Because of higher temperatures Bhutan is vulnerable to Glacial Lake Outburst Floods (GLOF) which would negatively impact the people living along the river valleys.  Nearly 70 percent of Bhutan’s population make the river valleys their home, and an equal number engage in subsistence agriculture.  The warming waters do not bode well for agriculture, he added, pointing out that climate change has already hit tea production in India’s Darjeeling region for instance, resulting in tea plantations moving to African countries such as Malawi and Kenya.

The second challenge will be the economy, Chaudury said that as hydropower, Bhutan’s main revenue generator, with most of the power produced sold to India, too could be impacted with fluctuating glacial water supply.

Bhutan, says Chaudhuri, is also placed in a vulnerable position, with the intensification of rivalry between India and China.  Of late, he states, China has become bolder, openly flouting its political and economic clout. Though both India and Bhutan have refused to be part of China’s Belt and Road initiative, both countries appear on the China’s websites on this plan. Bhutan’s borders are therefore threatened.

With India being a close ally of the USA, ‘Bhutan needs to be more nimble in geopolitics’, he advises, adding that the same is true for any country caught up between these powers.  In Bhutan’s case, he suggests reaching out to third party states for support, perhaps European countries, to help maintain the balance.

Bhutan adds Dr. Passang Dorji is the only country which has national happiness as a goal as it is mandated in the Constitution.

Transitioning from an absolute monarchy in 2008 to a constitutional monarchy, Dr. Dorji explains that the country has elected three different administrations, each time it went to the poll.  That is a sign of a robust democracy.  Though there may be criticism regarding freedom of expression, he claims that the more than eight mainstream newspapers are vibrant and critical of all the elected governments.  Social media platforms, he adds, have ‘destroyed social hierarchical structures’ and have provided the space for diverse views.  ‘It is not 100 percent free expression, but it is allowed, without fear and favour.’

Despite efforts to uphold its national goal of happiness for all, Bhutan is not without internal problems.   A country where half the population is under 28 years of age, unemployment is growing. Says Dasho Paljor J Dorji, as an infant nation, when its population was less than 500,000 it was possible to give everyone an education and employment.  But that is not the case anymore. ‘We are at saturation point we cannot provide employment to everyone.’  Therefore, the government is encouraging self-employment, the young are seeking opportunities outside the country, and that is a good thing too, he says.  “Not only are they remitting money to Bhutan, there is no brain drain, as many come back.’

More importantly, he urges a change of mindset and acceptance that there is no shame in taking on blue collar jobs.

Says Dr. Dorji, the country must address vocational and technical education. Bhutan’s reigning King, Jigme Khesar Namgyel Wangchuck, has instructed says Dr. Dorji that the country’s civil service and education system be reformed to reflect current world trends.

Dasho Paljor J Dorji popularly known as Dasho Benji, who is the brains behind the Bhutan Trust Fund for Environmental Conservation says Bhutanese ‘walk the talk’ when it comes to preserving the environment.  There is much activity in terms of research and social media engagement on this sphere.

Again, Bhutan’s constitution mandates the country maintains at all times, 60 percent of its land under forest cover, and reports indicate that the current percentage is over seventy.

Development takes place, says Dr. Dorji, but not at the cost of the environment.

Multilateral diplomacy, says Chaudhuri is no easy task for Bhutan, but with climate change becoming a major issue, possibly for the next fifty years, Bhutan could, along with other governments develop strategies for climate resilience, providing an impetus to other mountainous nations with similar ecologies, he adds.

Dr. Dorji agrees. Bhutan, he says could promote soft power, playing the role of ‘small state, smart state,’ in climate resilience as well as peace and happiness in the world.

In terms of the Bangladesh, Bhutan, India, Nepal (BBIN) initiative and the South Asian context, the country to watch closely says Chaudhuri is Bangladesh.  Sitting on $60 billion in foreign exchange, enabling it to provide a $200 million currency swap to Sri Lanka recently, Bangladesh is ‘neck to neck with India in terms of per capita income, and may well get ahead within the year.’

Dasho Benji attributes Bhutan’s control of the coronavirus pandemic, where to date there have been 1,669 confirmed patients, but only one death, to the leadership given by their King.  If the stringent rules regarding movement etc. are not obeyed, the long-term effects would be messy, he says. It is all about taking advice from one person   and adhering to the restrictions in force. The King has pulled out funds from the country’s reserves to fight the pandemic, he says.

Acharya explained that while the King has been guiding the initiative and providing creative solutions to fight the pandemic, the country’s Prime Minister, himself a medical doctor and the Minister of Health (an epidemiologist) have been out front ensuring the spread is controlled.  (According to WHO reports Bhutan had, by April this year, vaccinated 93 percent of its adult population.)

Keynote Speaker, Bettina Stark-Watzinger, welcomed the recent opening of diplomatic relations between the two countries.

The Western world, she said, has much to learn from Bhutan’s emphasis on valuing time and relying on the experience to shape the country’s policies, learn to slow down and concentrate on mental well-being.  Both countries share an ‘interest in climate policy and the preservation of a rule based multi-lateral and international order,’ and promotion of culture. Germany is also providing support to Bhutan’s initiative in preserving its ancient manuscripts, she added. (Colombo/June09/2021)

Reported by Kshama Ranawana

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Sri Lanka to address SME tax problems at first opportunity: State Minister

ECONOMYNEXT – Problems faced by Sri Lanka’s small and medium enterprises from recent tax changes will be addressed at the first opportunity, State Minister for Finance Ranjith Siyambalapitiya said.

Business chambers had raised questions about hikes in Value Added Tax, Corporate Income Tax and the Social Security Contribution Levy (SSCL) that’s been imposed.

It should be explored on how to amend the Inland Revenue Act, Siyamabalapitiya said, adding that the future months should be considered as a period where the country is being stabilized.

Both the VAT and SSCL are effectively paid by customers, but the SSCL is a cascading tax that makes running businesses difficult.

In Sri Lanka SMEs make up a large part of the economy, accounting for 80 per cent of all businesses according to according to the island’s National Human Resources and Employment Policy.

(Colombo/ Feb 05/2023)

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Sri Lanka revenues Rs158.7bn in Jan 2023 up 51-pct

ECONOMYNEXT – Sri Lanka’s government revenues were 158.7 billion rupees in January 2023 but expenditure and debt service remained high, Cabinet spokesman Minister Bandula Gunawardana said.

In January 2022 total revenues were Rs104.5 billion according to central bank data.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint.

President Ranil Wickremesinghe has presented a note to cabinet requesting state expenditure to be controlled, Gunawardana told reporters.

State Salaries cost 87.4 billion rupees.

Pensions and income supplements (Samurdhi program) were29.5 billion rupees.

Other expenses were 10.8 billion rupees.

Capital spending was   21 billion rupees.

Debt service was 377.6 billion rupees for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of 100 billion rupees, Gunawardana said.

Interest costs were not separately given. (Colombo/Feb05/2023)

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Sri Lanka’s Ceylon Tea prices down for second week

ECONOMYNEXT – Sri Lanka’s Ceylon Tea prices fell for the second week at an auction on January 31, with teas from all elevations seeing a decline, data showed.

“In retrospect, the decline in prices would be a price correction owing to the overall product quality and less interest from some key importers due to the arrival of cargo at destinations ahead of schedule,” Forbes and Walker tea brokers said.

The weekly sale average fell from 1475.79 rupees to 1465.40 rupees from a week ago, according to data from Ceylon Tea Brokers.

The tea prices are down for two weeks in a row.

High Growns

The High Grown sale average was down by 20.90 rupees to 1380.23 rupees, Ceylon Tea Brokers said.

High grown BOP and BOPF was down about 100 rupees.

“Ex-Estate offerings which totalled 0.75 M/Kg saw a slight decline in quality over the previous week” Forbes and Walker said.

OP/OPA’s in general were steady to marginally down.

Low Growns

In Low Grown Teas, FBOP 1 was down by 100 rupees and FBOP was down by 50 rupees while PEK was up by 150 rupees.

The Low Growns sale average was down by 8.55 rupees to 1547.93 rupees.

A few select Best BOP1s along with Below Best varieties maintained.

OP1                     Select Best OP1’s were steady, whilst improved/clean Below Best varieties maintained.   Others and poorer sorts were easier.

PEKOE                 Well- made PEK/PEK1s in general were steady, whilst others and poorer sorts were down.

Leafy and Semi Leafy catalogues met with fair demand,” Forbes and Walker brokers said.

“However, the Small Leaf and Premium catalogues continued to decline.

“Shippers to Iran were very selective, whilst shippers to Türkiye and Russia were fairly active.”

This week  2.2 million Kilograms of Low Growns were sold.

Medium Growns

Medium Grown BOP and BOPF fell by around 100 rupees

The Medium Growns sale average was down by 33.40 rupees to 1199.4 rupees.

“Medium CTC teas in the higher price bracket witnessed a similar trend, whilst teas at the lower end were somewhat maintained subject to quality,” Forbes and Walker brokers said.

“Improved activity from the local trade and perhaps South Africa helped to stabilize prices to some extent.”

OP/OPA grades were steady while PEKOE/PEKOE1 were firm, while some gained 50-100 rupees at times.

Well-made FBOP/FBOPF1’s were down by 50-100 rupees per kg and more at times.

(Colombo/Feb 5/2023)

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