Even as the focus in South Asia has been on collapse of the Sri Lankan economy, smaller economies as Maldives and Bhutan are also facing a challenge.
The overall trend however remains cautious and not alarming but much will depend on the plan for recovery which appears to be largely based on revival of tourism. Here is a brief review of major economic activity in Bhutan and Maldives for July.
Bhutan Facing the Vagaries of COVID 19 Restrictions
Economy remains a major concern for Bhutan even as it has traversed the past two years plus of the COVID 19 pandemic creditably recording one of the lowest infections based on population at 0.07 percent.
Prime Minister Dr Lotay Tshering warned that the country’s dollar reserve would last only about 15 months now if the economic situation doesn’t improve even as the government has instituted a number of measures to uplift the economy including opting for high end tourism.
Tourism – Focus on High End
Increase in the Sustainable Development Fees to USD200 per person per night has attracted debates among the stakeholders with some fearing that this will be a premature end to the tourism industry. Stakeholders like tour guides fear losing their source of income due to this policy. The National Monument Committee has now revised entry fees for Lhakhang and monuments for all foreign visitors. All foreign visitors now must pay Nu 2,000 to visit Taktsang. Earlier they had to pay Nu 1,000.
The government agreed on a motion in the National Assembly to open entry and exit points at Samdrupjongkhar, Gelephu, Samtse, Nganglam and Panbang. This was also one of the major election promises of the government. Presently, Phuentsholing is the only entry point for tourists. The newly restored ‘Trans Bhutan Trail’ has been named in TIME’s 50 greatest places around the world for 2022. The 403-kilometre pilgrimage trail from Haa to Trashigang will be officially re-opened for the first time in six decades in September as per the Bhutan Broadcasting Service. This will add to tourism demand in Bhutan.
Capitalising Mining Potential
With eleven ferrosilicon industries in operation, three under construction, six new constructions approved and ten new applicants, Bhutan will have more ferrosilicon industries in the coming years. Ferrosilicon is Bhutan’s top export commodity. In 2021, Bhutan exported ferrosilicon worth Nu 15B, the highest so far. In 2020, Bhutan exported Nu 7B worth ferrosilicon, Nu 9B in 2019, Nu 13B in 2018, and Nu 9B in 2017.
These facts were presented by Kuenselonline. In 2020, records show India imported the highest share of ferrosilicon from Bhutan- a 16.6 percent worth USD 101M. India’s current 120 million (M) MT production of crude steel, the consumption of ferrosilicon is projected at 600,000MT as per Kuenselonline. India imports around 125,000MT of ferrosilicon from Bhutan and the rest from Malaysia, China, and other countries as per Kuenselonline report
Economic Briefs
Bhutan’s Finance ministry has estimated recurrent expenditure of Nu 36.34 billion (B) from the total expenditure of Nu 74.8B. Since the recurrent expenditure must be met through the domestic revenue as mandated by the Constitution, the ministry has estimated a domestic revenue of Nu 37.05B in the fiscal year as per the Kuensellonline.
Tax revenue was estimated to contribute to Nu 25.432B, Nu 10.935B from non-tax, and Nu 685.36 million from internal grants. In the fiscal year, the fiscal deficit was projected at Nu 22.882B, which is 11.25 percent of the gross domestic product. Government is planning to construct numerous small hydropower projects across the country. Yungichhu Hydropower Project in Maedtsho Gewog in Lhuentse is one such project.
The Druk Green Power Corporation is currently conducting feasibility studies for four more potential projects in the second phase. Remittances from Bhutanese living abroad have seen a declining trend as per Kuenselonline. Statistics from the Royal Monetary Authority (RMA) show that Bhutan’s remittance inflow decreased by 2.5 percent to Nu 8.062 billion (B) in 2021 from Nu 8.27B in 2020.
Maldives Banking on Tourism for Economic Revival
Maldives is banking on tourism for economic revival and the strategy is working. While the atoll nation has idyllic beaches and resorts with focus on high end tourism, despite the COVID 19 surge tourism continued at a permissible scale.
This has paid off.
The decision to reopen Maldives’ borders after the lockdown prompted by the COVID-19 pandemic was a good decision which led to economic revival, elevating the country to where it currently stands, states President Ibrahim Mohamed Solih. Maldives, in July, saw 4,400 daily tourist arrivals on an average till the third week. Statistics released by Tourism Ministry showed that the average daily tourist arrival rate stood at 4,179 before the pandemic, in July 2019.
The average daily tourist arrival has been higher than in July 2019. So far in July, Maldives has recorded 79,749 total tourist arrivals. The number of tourists arrivals during the same period in 2019 stood at 75,213. This marks a 4.8 percent decrease this year compared to 2019. The total number of tourist arrivals so far this year is at 892,960.
This number was much higher in July 2019 – being 937,802 as per Sun Online.
The Finance Ministry signed a USD 10 million grant project with the World Bank. The Finance Ministry detailed that the project – Sustainable and Int egrated Labor Services (SAILS) was aimed at supporting Maldives in promoting competition in the broadband market with the grant as per Sun Online.
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