True Friends Stand By Us

The razzmatazz of the birth of a new child - that of Bhutan’s tourism - is now, hopefully, behind us. Although seemingly unconcerned, many of us private citizens have been more engaged than most of the drummers and honkers that make up the transformation brigade. All across the country - Paro, Phuentsholing, Samdrup Jongkhar, Gelephu, Samtse etc. colorful flags have been unfurled, dancing girls and hooded monks did their thing - the change makers stooped low to welcome the pleasantly surprised visitors who came with the old “Faith” in mind but hopefully will go back home with a new “Belief”.

It is now time to move on; we will need to put to rest our individual differences - the child is now out of the womb and in the open. It is now everyone’s duty to care for and nurture the infant. Whether Apsara-like or grotesque and deformed, it is our child - we will have to take charge of it until it is firmly on its feet. From here on forward, it should not be about not being our fault - but about how we might collectively contribute to correcting the course.

But for me the silver lining at the end of all the razzle-dazzle and show of brilliance and incomparability, has been the demure event that took place in Jaigaon across the border in India, on 24th September, 2022. The Indian business community across the border celebrated Bhutan’s opening of tourism - with their own brand of celebrations. This was a touching moment - a re-enforcement, if any were needed, of their trust and faith in Bhutan, their joy in our small successes, and their commitment to walk the distance with us - through thick and thin. Proof that they will forgive us our minor quirks, as we are wont to do theirs.

Expression of happiness and joy.

India has supported Bhutan in every sphere of our nation building - from our first Five Year Plan to the present. To this day they remain firmly behind us, pandering to our every whim and fancy. The friendship and generosity the Indian people offer us is unparalleled.

At the end - we matter to them because they matter to us. There is mutual benefit to harmonious coexistence. In their progress is our progress - we succeed because they do. This has been the guiding principal on which is founded our close to three-fourth century of nurturing each other - we will continue to do so for many eons to come. After all, we are common in our shared culture and religion.

One thing is a matter of great regret - Bhutan could never draw in the Indian tourists of standing. The Indian middle class is hundred times richer than any chilips. The Indians have billions in black money that they do not know where to spend. The policy hawks will do well to divert their attention from chilips to attract the rich Indians who number in the hundreds of millions. Economically, it makes sense to target the closest markets - India and China - to give us the numbers that we seek, despite our smarting.

In this direction, the TCB has failed miserably. The tour operators too failed to grasp the potential that exists in the vast Indian market - our most favored nation and supporter.

BHUTAN is OPEN

Today is 23rd September - a day traditionally celebrated by the Bhutanese as the Blessed Rainy Day, or THRUE BAP as it is called in Bhutanese - a day that marks the end of the monsoon season. On this day, people take bath outside so that the blessed rain that is believed to fall from the heavens will wash away all their past and ongoing sins and diseases.

I looked in all directions - East, West, South and North - there was no hint of any rain - whether blessed or otherwise - atleast not in Thimphu where I am domiciled. Thus the dwellers of Thimphu will likely have to live with their sins and diseases - for the next one year.

Bhutan's brand new tagline "Believe". The old "Happiness is a Place" has been booted out.

But for many Bhutanese, this day holds greater meaning than the washing of sins - it is TODAY that the country throws OPEN its borders for tourism - since 5th March, 2020 when the first case of COVID-19 was detected and our first 21 days lockdown that was announced on 11th August, 2020.

This is a most happy day indeed! I offer my greetings and good wishes to all the tourism stakeholders within the country, as well as those outside. The wait has been long and painful - but it is now over and we are all poised for better times and brighter future, splendored with opportunities.

I hope that many of the tour operators who have been forced to close down their offices due to the pandemic, would now be encouraged to reopen their establishments, for business as usual.

It is also hoped that many of the hotels that have had to relieve their many staff will now be encouraged to reemploy their workers, emboldened by the promise the new tourism policy holds for the industry.

I hope that many of the tour guides who have had to go back to their roots and take up farming and other vocations, will now find encouragement in the new way of doing things, and retake-up their jobs in which they have been skilled.

I hope that the mule owners will be encouraged to buy back their mules that they were forced to sell off during the pandemic - with the hope that the opening of tourism will translate into business as usual, their traditional business that they had to give up for the past close to three years.

I hope that the rural farmers and weavers will see greater opportunities in their chosen craft; I wish and hope that the reopening of tourism will usher in an era of vigorous production and commerce for the group of people who are at the lowest rung of the Bhutanese social ladder.

I hope too, that the phallus carver would once again be able to station himself in the lanes and by-lanes of Thimphu’s vegetable market - to sheepishly peddle his handiwork to the passersby giggling past him.

Most importantly, I hope that the country will see millions upon hundred of millions of $$ in remittances that we so desperately need.

Lest history is wrongly recorded: Although tourism is supposed to have been disallowed, the truth is that tourists have been entering Bhutan - in dribs and drabs.

The People's Pandemic

A battle like no other, and Bhutan came out smelling like the roses.

A book will soon be available to the Bhutanese people that will describe in detail how the battle was won, who were the strategists behind the scene and who were the foot soldiers.

The look and feel of the Book

An excerpt from the book: The People's Pandemic

The book provides undeniable proof that we live in a land that hasn't survived by accident.

Tourism Industry: Are We Prepared For The Transformation?

I have been bewildered for the past many months - what am I missing? What am I unable to see? Have I gone well and truly senile? Have I lost my most rudimentary mathematics skill? What is so complicated about Bhutan's new Tourism Act of 2022?

I decided to devote two evenings to sit down and do my numbers - because in these perilous times, numbers matter. And, for the purpose of simplicity, I wanted to keep it simple.

UNDER THE MDPR REGIME

Under the tried and tested way of doing things that came to be known as the Minimum Daily Package Rate (MDPR) - a business philosophy that guided Bhutan’s tourism policy and a business model that ruled the roost for close to half a century, the numbers tell the story:

The implementation of the Minimum Daily Package Rate (MDPR) helped propel tourism to the top as the largest employer and highest foreign exchange earner in the country - with benefits accrued to the broad spectrum of Bhutanese society. Any and all Bhutanese who dared to hope and dream had a ready launch pad to act as a springboard to catapult them to heights unimagined in the wildest of their dreams.

As opposed to the above, a new business concept has been introduced - retrospectively effective from 20th June, 2022 - in which the SDF has been increased to US$200.00 - from the earlier US$65.00. With this new kid in town, the concept of the venerable MDPR was unceremoniously put to pasture and relegated to history. The new way of doing business will begin with the opening of tourism as of September 23, 2022, the numbers are likely to pan out as follows:

In place of the MDPR, the new tourism Act of 2022 calls for the collection of SDF at US$200.00 - but everything else remains mute. As the rough projections above show, the SDF may have seen triple fold increase - but the inflow of $$ and tax collection is seen to fall dramatically.

I have said these many times before - but I will say them again:

Under the MDPR regime, 100% of the “designated” tour payments were mandatory to be paid in advance. Tourism business was wholly owned and run by the Bhutanese, although few stray cases of fronting - both minor and major, were reported. Notwithstanding the incessant charge that there is undercutting in the industry, I know of no one who got away without paying the “designated” amount of MDPR, well almost.

Under the MDPR regime, it was impossible for tour operators to conceal business turnover given that TCB had all the records of business conducted by each of the country's tour operators, resulting in 100% collection of tax, as owed. By extension, hoteliers' true size of business were open to scrutiny by the tax department. With MDPR in place the TCB had the moral and administrative authority to administer ethical business practices among the tour operators. The tourism players were happy since what was on the table was more than adequate to keep every one happy and bouncy. No doubt there were some bad apples - that is because the authorities did not have the wherewithal to discipline the rogues.

Under the MDPR regime, it was all about protecting the brand Bhutan. Ofcourse some did not adhere - that is because those people in authority did not have the guts to do what they were expected to do.

Sadly, it is made to appear that the new policy’s focus is only on the collection of SDF, and everything else is subservient to the realization of this goal. To be fair, that is not really true - we know that the government has the industry’s long-term sustainability in mind. It is for this reason that the industry IS NOT in opposition of the new policy - but the manner in which it is implemented. Unfortunately, despite every body’s untiring efforts, the TCB and the industry players are dangerously inching towards a space in which, at best, they can co-exist as uneasy bedfellows, and not committed partners to a common cause.

The new rules and regulations practically shunt out the Bhutanese tour operators and go all out to encourage outside tour companies, tour agents and tourists, to conduct business directly with the government and the wannabes in the country. It is simply insane to think that a tourist who is willing to pay US$200.00 as SDF would be willing to position himself/herself at the EXIT gate and flag down taxis and go hunting for hotels and guides upon arrival in the country. But the larger worry is that this amateurish attempt is bound to cause massive fall in tax collection and inflow of foreign exchange - because they are required to bring in only the SDF of US$200.00 - which is, coincidentally, shy of US$50.00 compared to the MDPR of US$250.00. Here is a strange situation: the SDF has been jacked up threefold to US$200.00 - from US$65.00. I would have thought that a comparable increase in the inflow of foreign exchange would have been expected. It does not look like it - mathematics show that there is actually a dip of inflow of foreign currency, by as much as 12%. Even worst, tax collection is seen to drop by as much as 60%. To be fair it will not be so much - but since the income from other sectors - other than airlines and handicraft sectors - is rendered impossible to be recorded accurately, it is not possible to determine the size of their business, and thus, tax leviable on them.

Under the SDF only regime, even tour operators and hoteliers will fall under the grey area - unregulated business.

It will encourage under-declaration both by tour operators as well as the hoteliers. There are possibilities that tour operators might use the foreign agents and even individual tourists to conceal turnover, thereby escape paying the government's just dues. Even hoteliers are bound to take this route. The “SDF only” dictate opens up avenues for the immoral and the wayward to play hanky-panky.

Talking of hoteliers, their plight is even more precarious. I had submitted to the Hon’ble Prime Minister during his informal press briefing that a much bigger problem would confront the hotel industry. That they built the hotels based on a conducive policy that was in place and that when that policy is altered, the onus must rest with the government to bail them out of the sticky situation that they have been put into. The RGoB, whether past or present, needs to work at rescuing them from out of the quagmire.

I get the feeling that pegging the SDF to a suitably enhanced MDPR, and going ahead with business as usual seems to be the most workable method of doing business – particularly when conditions are in a confused state and are not very easeful. We are just a little over ten days away from Zero Hour and the Department of Immigration who is supposed take over the issue of Visa and collection of the SDF - remains unengaged and very, very quite.

It is my hope that the government would reassess the situation that is currently prevailing, and consider deferring the implementation of the new Act – until we are ready to take on the transformation initiative in the spirit and with the sure-footedness that such an upheaval warrants.

It is sufficiently clear that WE ARE SIMPLY NOT READY!

Tourism Rules and Regulation of Bhutan 2022 – V: Happy Convergence

There is a kahawat (saying) in India: Bhagwan ke ghar mey dhair hai, aandhair nahi. Roughly it means: In the house of God there may be delay but not darkness.

It appears that the TCBS’ Council Meeting yesterday to which were invited the tourism industry’s key players, went pretty well. That is nice - as I said in my earlier posts, tourism is a common cause, at the core of which is the need for convergence of views. Everyone has to understand that the tourism industry is bound to suffer - as in everything else - should we go with the belief that each element that go to make the sum total, can act in isolation of the other. Such an approach is bound to fail.

Happy Convergence

Since the early 1980s I have been propagating the idea that a good and progressive law, or rule or regulation is one that aspires to FACILITATE and not CONTROL. Unfortunately it seems like it is still about control, and not of liberalization and facilitation. History has proven time and again that control breeds renegades, and throttles entrepreneurial spirit.

Coming back to the Tourism Rules and Regulation 2022, I am given to understand that following changes have been accepted during the consultative meeting with the TCBS and the industry representatives which consisted of every sector head of the tourism.

Not Carved In Stone: It was clearly pronounced by the TCBS Chair as well as the Director General of the TCBS that the Tourism Rules and Regulation 2022 is subject to change and amendment, should the need arise.

Tour Operators Now Designated as a point through which to received SDF: In the earlier proposal prepared by the TCBS, nowhere was there a mention of tour operator being a point through which SDF may be received. The need for the role of the tour operators was ignored. The revised rules and regulations now designate tour operators as well – as a point through which tour payments may be received.

Reinstating Various Discounts: It has been agreed that the TCBS will pursue the matter with the Ministry of Finance on the issue relating to a number of discounts that were in place as per Tourism Rules and Regulations 2017 – atleast for tours confirmed before 20th June, 2022.

Tour Operators Can Represent Tourists/Tour Groups for Visa Application: It has further been agreed, which was earlier missing, that tour operators could also apply for Visa and Permits – on behalf of the tourist or a tour group.

Negative List: It appears that a NEGATIVE LIST – places that are out of bounds for visitation by tourists, has been finalized. TCBS will circulate the list soon.

Age Limit On Tourist Vehicles: The earlier requirement of an age limit on vehicles conveying tourists has now been done away with.

Cancellation Policy: Cancellation policy is also agreed to be governed by that which is agreed between the service provider and the tourists/tour groups.

Force Majeure Clause: It is agreed to be governed by the principals on the grounds of which this clause is accepted internationally.

Trekking Permit: Accepted to be routed through a tour operator - status quo.

Business Bond: There appears to be difference of opinion - on the need for this. What the TCBS does not consider is that few, if at all, has the liquidity to fulfill this requirement - given that business has been at a stand still for nearly three years. It is hoped that the Cabinet would reconsider this issue favourably - atleast for few years, until the industry gets back on its feet.

Further Discussion: It has been pointed out that the agreed changes in the proposed Tourism Rules and Regulations 2022 will be further discussed with the Steering and Advisory Committee, before it is submitted to the Cabinet for approval. From where I stand, this is fair - I do not believe that there would be opposition from any quarters - on a paper endorsed by the whole of the industry stalwarts, including the Council Members of the regulatory authority.

Tourism Rules and Regulations of Bhutan 2022 IV

Bhutan’s star-crossed romance with hydropower is now as good as over. Its appeal as a technology of choice has lost its sheen across the world - a number of other less costly and less harmful technologies have taken center stage. Hydropower is now viewed as costlier and more environmentally destructive way of producing energy. It is now old hat. It is for this reason the Bhutan has rightly halted further hydropower development – until all the hydropower projects currently under construction is completed and brought on stream. Our lone egg basket - India - has seen quantum jump is energy production. They are now energy surplus. For the past many years, India’s investment in hydropower has been next to nothing - they are focusing on more efficient and less destructive technologies.

The Land of Happiness is now a place of confounding confusion

With hydropower having made to eat humble pie, what are Bhutan’s options? There are a few that we can bank on:

     ~  Forestry

     ~  Mining

     ~  Agriculture

     ~  Tourism

Harvesting of forest produce: According to figures released by the government, harvesting of our rotting forests is said to present phenomenal potential - far in excess of hydropower. Forestry analyst Dr. Phuntsho Namgyel has been going hoarse making the point that we are destroying our forest stand due to rotting and mismanagement, and that we should harvest what is going to waste and ruining our ecology. But either the figures put out by the government are whole lot of hogwash or, Dr. Phuntsho Namgyel has the wrong color of skin.

Mining: To be sure we are doing pretty OK with mining and export of minerals, including boulders. But this is a high volume low value commodity and it can only do so much.

Agriculture: Less said the better about this sector’s utter failure, recorded over many decades. The agriculture production has seen unfailing decline over the years. Even while boasting of phenomenal altitudinal range and soil types, we are unable to produce enough to feed ourselves – let alone for the export market.

Tourism: This should now qualify as the shining star of the day. In terms of real net gain and employment generation, tourism has always been at the top. It holds top slot for foreign exchange earning as well. Few understand the real cost behind hydropower projects – not even when faced with the reality that imported energy – such as LPG gas and kerosene as a source of energy - are cheaper than our own electricity which we are told we produce in abundance. Few know that what we earn from export of electricity is more or less spent on import of fossil fuel.

Tourism has thus far been the only business in Bhutan where there is 100% collection of tax - without the possibility of concealment. There is perhaps no other business that generates tax at multiple levels: SDF from tourists at the first instance, followed by tax from tour operators, from hotel owners, handicraft business establishments, transport companies, guides etc. etc. - from one and the same tourist group.

Bhutan’s tourism industry stakeholders have been unrelenting in their pursuit for a workable and conducive atmosphere in which to do business. Recently, the sector heads of tourism had a meeting with the Tourism Council of Bhutan - to try and humanize the rules and regulations that are being proposed for adoption. We are not certain if the industry managed to make a dent into the rigid thinking of the TCB. Today - 8th September, 2022, the sector heads are once again participating in the meeting of the Council Members of the TCBS. We expect that the sector heads will not fail to impress upon the TCB Council why it is important to operate in an atmosphere of cooperation and congeniality. If they fail to do so, we will all fail.

The proposed rules and regulations, once discussed at the Board Meeting today, is due to be submitted to the Cabinet Members - on September 10, 2022. The industry remains hopeful that the rules and regulations will be rationalized at that stage.

My exit line: There seems to be a notion afloat that increasing the SDF from US$65.00 to US$200.00 will mean a triple jump in the inflow of $$. The reality will be that even if the number of arrivals exceed that of the pre-COVID era, the inflow of $$ will be far less than that which could have been generated under a MDPR regime.

Tourism Rules and Regulations of Bhutan 2022 III

The Tourism Levy Bill of Bhutan 2022 was tabled as a Money Bill - it should have been introduced as a Financial Bill. That having said, there is nothing wrong with the Tourism Levy Act of Bhutan 2022 - the tourism industry welcomed it as something that has been long in coming.

Where the industry was caught flat-footed is in the nature of the beast - the Money Bill has to come into effect from the date it is introduced - retrospectively. For the tourism industry that is what caused the milk to curdle - the introduction of the Bill as a Money Bill. Had it been introduced as a Financial Bill, it would have been smooth sailing for the government and the Tourism Council of Bhutan and, most importantly, the tourism industry players. The ongoing agitated mood of the industry is not because of the introduction of SDF of US$200.00 - it has to do with the immediate implantation of the Act - which is seen as tyrannical and delusional, given its impracticability.

But all that is now water under the bridge - but I refuse to believe that it is a case of flogging the dead horse - I believe that we can still nurse back the dying horse - the deathblow is far from mortal.

I am encouraged to learn that the TCB is scheduled to meet all the different tourism sectors today, and discuss the yet to be introduced Tourism Rules and Regulations of Bhutan 2022. Some industry members are not impressed – they believe that this is just an eyewash – that the TCB and the government will do exactly what they want to do, that they are hoodwinking the people. I have been trying to encourage them to participate in the consultative process, regardless. That history must bear witness to the fact that the industry tired to correct the course that is headed down the perilous path. We cannot give up so easily - at the end of the day, it is us the common man on the street who will be the bigger losers - not the government or the TCB. They have their state funded salary, perks, entitlements, vehicles and fuel, to tide them over through the worst of times.

In closing I would like to wish the VERY BEST OF LUCK to those members of ABTO, GAB, HRAB and HAB who are due to participate in todays meeting with the TCB. I hope they go in into the meeting with a wide-open mind - so that they are successful in opening the closed minds of the TCB and its transformation team.

Tourism Rules and Regulations of Bhutan 2022 II

The most effective crowd control strategy is when you plan an exit point when the mayhem breaks out - it is not through shepherding the crowd. Similarly, popular rules and regulations are those that are framed in consultation with those who will be most affected by them - not by springing them as a surprise, as if to say - GOTCHA!!!.

The diminishing allure of the land of GNH

The premise on which the TCB appears to be departing is that the tourism stakeholders are the enemy of the nation; that the tour operators are out to ruin this country. If this were not so, why are the flag-bearers of the tourism industry kept in the dark? Why are the tourism rules and regulations done in great secrecy, in the most clandestine fashion?

When Bhutan’s Constitution was drafted and due to be adopted upon introduction of constitutional monarchy as the form of governance, it was discussed across the nation - their Majesty’s traveled to every one of the country’s twenty Districts - sought the views and opinions of the Bhutanese people, so that an acceptable Constitution that has the concurrence and endorsement of the people of Bhutan is adopted. On the contrary, the TCB chose to draft the Tourism Rules and Regulations of Bhutan 2022 in the most clandestine fashion and in the greatest of secrecy - shielded and fortified from the industry players.

The country’s most able and competent industry leaders feel that there is now an atmosphere of antagonism prevailing in the industry. One pioneering tour operator who has been in the business for close to four decades told me the following yesterday evening:

“People who where not even born when I started tourism business are now elected to assess my competence as a tour operator”.

The message here is clear - a feeling is developing that TCB treats the industry leaders as small kids who need education in how to run their business. Such exasperation is bound to create an atmosphere where the TCB and the tourism industry players are pushed towards two opposite ends of the pole - a most undesirable development.

And yet, the industry leaders have not given up hope - the leaders of the tourism sector associations are still hopeful of saving the day - a few days back they submitted a joint appeal to the Chair of the TCB - for an eyeball-to-eyeball discussion on the proposed Tourism Rules and Regulations of Bhutan 2022 before it is adopted. It is hoped that this will come through and an acceptable version of the rules and regulations will come to be tabled before the Tourism Council Board, for submission to the Cabinet, which is the rule of procedure.

There are many, many issues with the rules proposed by the TCB. But the following are some of the most unimaginative and most glaring that needs reconsideration.

TCB’s guidelines on adopting names of tour companies

This is clearly an indication of how ignorant the TCB is. This is not in their domain. This comes under the purview of the Department of Intellectual Property of the Ministry of Economic Affairs. They have trained intellectual property lawyers with the knowledge and experience in these matters - they have a set of rules governing the issue. TCB is attempting to override the authority of the designated authorities.

Refund Policy on cancelled tours

The TCB has taken on itself the responsibility to determine the rates of refund on cancelled tours. While the TCB can point out that there ought to be a well-defined refund policy to avoid ambiguity, the rates should be left to the service providers and the tourists to decide. The TCB has to remember that most often the rates are agreed between the tourists and the tour operators’ agents abroad – they may have their own refund policy - distinct from the TCB’s.

Transport for use as conveyance for the visiting tourists

Here too the TCB has the bull by the tail. But the issue has been sufficiently covered in my earlier post on the issue.

Deposit sought by the TCB from tour operators and the hoteliers

The TCB should have asked for Nu.5,000,000.00 instead of Nu.500,000.00 - pun intended. This requirement is indicative of how insensitive and uncaring the TCB is towards the industry. They are aware that the tourism business has been at a stand still for the past nearly three years. There has been no income. The hoteliers are pleading with their creditors for deferment of loan repayments. Where are the people expected to come up with the deposits?

The government, which includes the TCB, needs to remember that the common people do not have the luxury that they have - to dip into public funds, as and when they want and desire. The Ministers, Secretaries, Director Generals and even the office peons have the assurance of their salaries, pool vehicles, free fuel and their perks that help keep them afloat - even in situations of worst pandemics, and even while they are designing the most idiotic rules and regulations.

The general public, by contrast, is dependent on the competence and wisdom of the people at the helm of things. When they fail, we are bound to fail. Thus it is for this reason that the public seeks engagement, not as an act of affront - but as a means to arriving at amicable solutions to a common cause.