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June 30, 2017

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Bhutan aims to liberalize trade market, ease pressure on rupee

THIMPU, Bhutan -- The Bhutan government is looking at liberalizing the wholesale business as a means to streamline the process of how goods are brought into the country and retailed to consumers.

With casual traders preferring to buy stocks directly from their Indian counterparts, Bhutan's distribution channel for goods is highly fragmented. This has put undue pressure on the Indian rupee.

In the interior parts of the country, stocks of essentials are running out and shopkeepers that buy directly from Indian traders do not have rupee to replenish stocks.

A month ago, a shopkeeper in Lhuentse returned empty-handed from Jaigaon, where he went to buy his stock; the banks did not have any rupees for him.

As of today, there are only three wholesale distributors dealing in essential food items and toiletries. "New licenses will be issued for dealers of new products, like construction materials and electronics," Trade Director Sonam P Wangdi said. "The department has identified around 300 products that will have to be distributed by the wholesalers."

The director said the idea was to ensure that all goods available in the country and whatever more the country needs are sourced from licensed wholesalers. Bhutanese individuals shopping in India can buy as much as a dozen of the same quantity but not commercial quantities.

To ensure that Bhutanese retailers do not buy from Jaigaon traders, the government will strictly monitor the movements of goods through its customs offices in the bordering areas. This could be the tricky part, because Phuentsholing gate, which is the entry point of most goods entering the country, lacks the infrastructure and resources to properly monitor movement of goods. Given this situation, corruption is rampant and under-invoicing of goods a normal practice.

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