Profits dip by Nu 44 million: Bhutan National Bank

Foreign exchange movement, not performance, led to a slump in Bhutan National bank’s profits, the first time in eight years, say bank officials.

“If you exclude the foreign exchange (forex) component for 2008 and 2009, we’ve actually grown by more than 23 percent,” said BNB’s chief executive officer, Kipchu Tshering.

In 2008, the bank had a windfall of Nu 84 mn through forex and last year it suffered a loss of Nu 19 mn. BNB, like most banks, is required to maintain at least USD 10 mn in foreign exchange to facilitate third country transactions.

According to the bank’s profit and loss account, which was not obtained from bank officials, BNB’s profits fell by about Nu 44 mn in 2009, with profit after tax slipping to Nu 266.2 mn from Nu 310.3 mn in 2008.

While income from interest on loans grew to Nu 1.14 bn from Nu 917 mn, interest paid on fixed deposits shot up to Nu 588.9 mn from Nu 329 mn in 2008.

The bank’s management said that the raise in corporate fixed deposit rates last year to attract more funds had increased the cost of funds. “Our lending was growing but not our deposits, so we raised the fixed deposit rates to avoid a cash crunch,” said Kipchu Tshering.

While this increased deposits to Nu 21.65 bn from Nu 14.60 bn and loans also grew to Nu 11 bn, shareholders pointed out, during the bank’s annual general meeting in Thimphu on March 23, that the huge interest payments on fixed deposits had significantly eaten into the profits.

“The bank has made money, but it could have made much more had it not taken so much deposits,” said a shareholder. “It’s a lapse on the management for not being able to track investment as well as fund flow.”

The bank did the same in 2002 and its profits fell for the first time after it was formed in 1997, said another shareholder. “It’s a repeat of 2002, they took in just too much money.” He also said that the bank could be stuck with paying high interest rates for some time, particularly for long term fixed deposits.

For the Bank of Bhutan, the cost of funds were much cheaper, because most government agencies, for whatever reasons, had their current accounts with them, on which the bank incurred no cost but charged for services rendered.

BNB today has an excess liquidity of about Nu 4 bn, but its officials expect large borrowers only after some hydropower projects are completed. “Domestic power consumption has reached its peak and no new industries can come up without power,” said Kipchu Tshering. There was no land either to set up new industries, although the government has made announcements to develop several industrial estates.

Kipchu Tshering said that there were no investment avenues within the country to utilise the surplus money. “Elsewhere, you have mutual funds, the stock market and government bonds. Here even the issue of government bonds isn’t consistent.”

The bank is waiting to invest several hundred million ngultrums as consortium financing to the Dungsam cement project, which announced earlier this year that it would borrow about Nu 2 bn domestically.

Despite the drip in profits, the bank declared a dividend of Nu 28.50 a share, the same as the previous year. It will paying Nu 101 mn as dividend, Nu 79 mn will go into reserves. As in 2008, Nu 50 mn has been set aside as reserve to build an office complex.

Source: Kuenselonline

GNH philosophy into the country’s economic policies

Much has been done to beef up the country’s economy, just as much has been said about the need to protect its environment that is underpinned by the gross national happiness (GNH) philosophy.

Lyonchhoen Jigmi Y Thinley said the government would incorporate the GNH philosophy into the country’s economic policies to promote a ‘green and sustainable economy’.

“We’ll give incentives, tax relief and bonuses to economic activities, promoting a green and sustainable economy with value addition and minimum impact on environment and culture,” the prime minister said.

He said this was already incorporated in the government’s final economic development policy (EDP) document, which will be made public next week.

Source: Kuenselonline

Anything leading to the depletion of resources with minimum benefit to the country, he said, would be discouraged. He explained that exploiting and exporting raw minerals, for instance, would not receive priority. He assured that, rather than terminating the existing industries, they would be encouraged to add value to their products.

“We’ll go for economic activities that ensure highest return, while also ensuring the intergeneration equity in the sharing of natural resources,” the Lyonchhoen said.

Sources said the FDI policy was delayed on the advice of the cabinet to incorporate the philosophy of GNH into the document.

Lyonchhoen said the government would encourage FDI in activities that made Bhutan a regional services hub in health and wellness, education centre, tourism, financial services, data centres and ICT.

He said Bhutan was promoting hydropower, both inside and outside the bilateral framework, and the pursuit of renewable energy sources.

An important component of GNH in economic development, he pointed out, was also the promotion of Bhutan as an organic farming country, which would immensely benefit farmers exporting their products abroad.

The prime minister admitted that, although some of his colleagues in the cabinet, like Lyonpo Khandu Wangchuk and Lyonpo Yeshey Zimba favoured accession to WTO, he delayed the process.

He said they were still unclear to questions like how WTO could reconcile with Bhutan’s pursuit of GNH, its impact on Bhutan’s economy and, unlike EDP based on GNH, accession to WTO would mean indiscriminately opening up all barriers to external services and goods.

Bhutan could join WTO any time it wanted, but to withdraw would be difficult and a traumatic process, he said.

On bridging the divide between the big economic policies, GNH and the everyday needs of the people, Lyonchhoen said GNH was also about equitable development and empowerment through not just the ballot but also economic and social empowerment.

He said to achieve that equity and empowerment, the government was focusing on providing essential services like roads, water, electricity, and telecommunications among others.

Lyonchhoen explained that to promote equitable development, the government would provide incentives to businesses that opened in remote areas or those other than established places like Thimphu and Phuentsholing.

He also said the country saw an influx of imported junk food, which most developed nations refused to accept because of their contents.

Products such as carbonated drinks and other juices, which were harmful to people’s health and lead to environmental pollution, he said, would be taxed heavily.

“Some of the main elements of the economic policy will be creating an environment where the population grows as healthy, intelligent and educated people, who will have the capacity to turn into meaningful instruments the power of the ballot,” the prime minister said.

Giving the international context, the prime minister said the present macro economic policies was leading to crises similar to the global financial crisis, pollution and great disparities in wealth. Therefore, he said, Bhutan would have to pursue a different path of GNH that could also be the world’s saviour.

With all the economic activities and growth the country was experiencing, Bhutan, the prime minister said, would be an economically self-reliant country by 2020, no longer dependent on foreign grants.

Gups, elected gewog heads, from 199 gewogs are in Thimphu

Gups, elected gewog heads, from 199 gewogs are in Thimphu to discuss and resolve various local government issues, but mainly to understand where they stand in the new political structure.

An upshot of democracy, the gewog leaders said, is that their workload has increased, respect from the people has diminished and they are struggling to understand and draw a line between politics and local governance.

This year’s annual conference of the gups, which began yesterday, is the second such meeting, since the introduction of parliamentary democracy, and the first after the recent reinstitution of the local governance department under the home ministry.

“We’re all trying to understand our place in the new system, not just the gups, but also the mangmis, party coordinators, tshogpas and parliamentarians,” said Sarpang’s Chuzargang gup, Sangay Tshering, adding that a gup’s responsibility has doubled post 2008. “We’re looking after the enormous Plan works, holding meetings and dealing with people, who now seem more vocal and powerful,” he said.

About six of the 205 gups are not attending the five-day annual conference, because of various reasons, officials of the local governance department said.

Some gups told Kuensel that their roles in the gewogs have remained the same, while many said it was changing.

For instance, some gups said that most of the party coordinators and tshogpas were former local leaders themselves and therefore they shared a close relationship.

“Our mandates are clear that we aren’t supposed to get into politics. But some of us are going to contest in the local government elections, and we expect the same people, who voted for the government, to vote for us,” one of the gups said.

Many gups, however, felt that they were no longer the only figure of authority and trust in the gewogs with the advent of parliamentary democracy. “The respect we used to receive isn’t the same anymore,” said Samtse gup Dorji Wangdi.

Similarly, other gups said that some people preferred discussing their problems with party tshogpas, coordinators or directly with members of parliament, in the belief that the government would respond faster to them than the gups.

Describing the role of a gup as “crucial”, home minister Lyonpo Minjur Dorji said that the gups have a lot of work to do to ensure that the desired actions take place in the gewogs.

“There’s no drastic change in their roles and responsibilities, but they have so much work to execute,” Lyonpo Minjur Dorji said. “Their main role is to implement activities on the directives of the government and support democracy, instead of sidelining it. Any political inclination shouldn’t affect their work. We hope to discuss these issues and educate them in the next five days.”

Another gup from Drujeygang gewog in Dagana, Sherub Dorji, said that the government’s success would also be judged from the work completed at the local level and many gups faced greater work pressure. “I’m very worried because, in my gewog, I’ve been able to complete only 5 percent of the Plan work and we’re running out of time,” he said.

Chuzargang gup Sangay Tshering said that, besides executing the Plan work, they had another important responsibility – ensuring that gewog tshogdus are functional and active for democracy to flourish. “We need more guidance to ensure that people understood democracy, because we’re in direct contact with the people,” he said.

Source: Kuenselonline

Bhutanese look forward to weekends: Druk Star

Weekends are always looked forward to as a time to relax. But these days, Bhutanese look forward to weekends for a special reason. And the reason is Druk Star. Ever since the show began, almost all Bhutanese in Phuentsholing have been spending their weekend home watching the show.

Seventy three-year-old Angay Mindu is among the many ardent Druk Star fans in Phuentsholing. Angay Mindu makes it a point to be home every weekend to watch the show.

“I always watch the show leaving behind everything. I eat my lunch quickly before the show begins so that I can watch it uninterrupted. The show is very interesting and I like it very much,” said Angay Mindu.

Her heart broke when her favourite contestant Gyem Dorji got voted out. But now that he is back into the show through the wildcard entry, angay Mindu is determined to keep him in. She even learned how to vote.

“I voted for Gyem Dorji all the time. When he was voted out last time, I felt very sad. I want to vote for him again. I like the boy very much. He is young and has a very good voice,” Angay Mindu said.

Her husband is also a great fan of the show. He never misses the show.

“Wherever I am, I rush home to catch the show. If I can’t make it, I watch from where ever possible,” said Dendup Rinchen.

Every time he watches the show, the talent of the contestants leaves him mesmerized and amazed.

“It is not easy to sing Zhungdra. But the Druk Star contestants sing very well. To be able to sing Zhungdra at such young age is really commendable,” Dendup Rinchen said.

Their daughter Kinley is even a greater fan of Druk Star. Kinley lives in Samtse but the place she stays in has no cable connection. So every weekend she makes a trip to Phuentsholing to watch the show.

“Friday after office I drive to Phuentsholing and go back on Sunday after the show ends. For the result, I call my family to find out, “Kinley said.

Like them, most Bhutanese families stay glued to BBS TV watching the show on weekends. When Druk Star came to Phuentsholing early this week, fans rushed to watch their favourite contestants perform LIVE.

The Norgay cinema hall, where the show was performed, was packed with people. The contestants performed amidst cheers and applause.

Bhutan’s national team is gearing up for ACC elite cup in Kuwait

Bhutan’s national team is gearing up for the Asian cricket council (ACC) elite cup in Kuwait, which will begin in April. The squad of 14 players, despite leaving behind five key players, is confident and optimistic about performing at their best.

Lobzang Yonten, a teacher from Merak Sakteng and Manoj from Tashi Bank are two of the five. “Although they’re really interested in joining the team to Kuwait, they’re bound by their official duties,” said the coach

Bhutan will be playing against United Arab Emirates, Hong Kong, Singapore, Nepal, Afghanistan, Kuwait, Bahrain, Oman and Malaysia.

“I’ve never played an ACC elite cup and I’m very excited and nervous at the same time,” said bowler Tandin Wangchuk.

Many team members expressed their concern over the lack of a good bowler, including the youth national coach of Bhutan cricket council board Damber S Gurung. “In spite of their absence, we feel competent and up for the tournament,” said Damber.

Although winning the tournament seems like a distant dream, the national squad is eying at least two wins to retain their position in the elite cup group. Failure to do so will result in the team being relegated to challenge cup level.

“It’s a golden opportunity for me to play in the elite cup,” the team’s youngest player Susil S Luite said. “It’s a matter of pride and satisfaction for me to be representing my country.”