As You Sow, So Shall You Reap

According to the most recent data released by the Department of Tourism (DoT) through TheBhutanese newspaper of July 1, 2023, for the 9 months period between September 2022 to June 26, 2023, Bhutan recorded a total tourist arrival of 71,951. Out of this total, at 49,714, Indian tourists made up more than 50% of the total arrivals. This works out to an average total arrival of 7,995 per month. This is a terribly dismal performance compared to a total of 315,599 for the 12 months period during the pre-pandemic period of 2019, when the average total arrivals stood at 26,300 per month – almost four times higher than this year’s average.

What natural law says

The shamefully dismal performance was expected - so racking up the issue is akin to flogging a dead horse. What is a matter of interest is the solid numbers that represent Indian arrivals. As much as it is encouraging to see such staggering numbers from a tourism market that, I believe, has the highest potential for Bhutan, the question to ask is this:

Of the 49,714 Indians who visited Bhutan, how many of them entered the country by air, and how many of them by road?

The answer I am told is: NO MORE THAN TWO THOUSAND Indians entered Bhutan by air!

On the face of it, this innocuous issue would seem irrelevant and inconsequential. Really? Think again - the issue is not so simple and straightforward - its implications are complex and its consequences far-reaching and CALAMITOUS for the country’s dwindling tourism business!

Imagination at work

Caused by the Druk Air’s unreasonably exorbitant airfare, more than 95% of Bhutan bound Indian tourist traffic is diverted to enter overland through neighboring Jaigaon. Couple that with the recent rule that tourists are not required to be regulated by requiring them to be hosted by a local tour operator, the situation is wide open and rife for entrapment by the operators across the border. Given the enabling conditions that have been created by this twin situation of the exorbitant Druk Air fare and the tourist traffic being forced to enter through Jaigaon, the following situations developed:

1. Takeover of business by Jaigaon operators which otherwise would have been handled by the Bhutanese operators. This proves my point made more than a year ago that the new tourism policy would enable outside players to step in and usurp local business opportunities.
2. A situation is created where Bhutanese tour operators become secondary players - even act as mere commission agents to foreign operators - something that I said would happen.
3. Under this situation, all tour payments are collected/routed through the principal operators at Jaigaon. This means that Bhutan bound Indian Rupees terminate their journey inside the bank accounts of Jaigaon operators. Payments to service providers within Bhutan - such as transport operators, hotels, guides, restaurants etc. are transected in local Ngultrums. This explains why Bhutan has seen dramatic drop in the inflow of precious Indian Rupees.
4. Since the business is unregulated and mostly handled by the Jaigaon operators, taxable tourism business turnover goes undeclared - resulting in a drop in tax collection by the DRC.
5. Over time, the Indian Rupees earned by the Jaigaon operators from business usurped from Bhutanese tour operators, is sold back to the Bhutanese - at a premium ranging between 3-5%, thereby devaluing our Ngultrum that is usually traded at par with the Indian Rupee. Also, the unofficially traded Indian Rupees is used to under invoice imports from India - further impeding tax collection.

I cannot believe that powers that be can remain clueless forever - it is hoped that they have the humility to accept that they have boo-booed big time …. and make amends soon enough before the situation spirals out of control. I believe that there is still a chance that we can retrieve the situation. Any further delay and the situation will be out of our hands.