Rising Dollar: To The Rescue of Bhutan’s Tourism Industry

The Kuensel sounded a tad disappointed by the rising dollar. I, on the other hand, am jumping with unbridled JOY - at its rise, and rise, and rise and rise. May it soar even higher. The $$’s spirited rise against the Ngultrum has many advantages in an era when the tourism industry is headed for a serious tumble downhill. Not only the tourism industry, but I believe that it bodes well for our foreign exchange reserve as well.

Dearer the $, better for Bhutan's tourism industry

The recent three-fold increase in SDF introduced by the government has caused serious concerns to the tourism stakeholders in the country. All are in agreement that inflow of tourists will dwindle to a trickle. The increase of the SDF from US$65.00 to US$200.00 means that the tour packages need to be sold at rates bordering around US$350.00 - US$400.00 per tourist per night halt, to be able to offer a level of service that is expected of the operators at that price range.

The superior purchasing power of the $$ against the Ngultrum means that the tour operators can breath easier, because whatever little dollar payments they receive will attract higher $$ to Ngultrum conversion value. This will help them offer tour packages at lower rates.

Elsewhere, it is likely that $$ inflow into the country will now see a marked increase – RMA had reported that the inflow during the month of January had recorded a dip by more than 50% compared to the same period in the previous year. A number of causes for the dip has been reported: poor currency conversion rate; poor investment opportunities, unrealistic land prices which are rumored to be more than those available outside the country and, massive transections between the none-resident Bhutanese and the importing community of Bhutan – using the “Hawala” route to pay for the importers’ merchandize transected in places like China, Thailand, Malaysia, Vietnam etc. I am told by a reader of my blog that this route accounts for transections totaling more than hundred fold what comes in as official remittances that are recorded by the RMA.

If this is true, there must be huge under invoicing happening in the import trade – resulting in lower import duty and tax collection by the taxman.

Another benefit of a dearer $$ is that it will help curtail useless imports such as chocolates, cosmetics and noodles, and purchase of VEHICLE QUOTA financed cars against against hard currency - from third countries.

I hope and pray that the RMA throws the rule book out the window, and jacks up the $$ to Ngultrum currency conversion rate to Nu.100.00 per $1.00 – and hold it there for the next 2-3 years! If they do that, it will more than offset the painful SDF increase, and the tourism industry will continue to remain buoyant.