Presentation on SMEs In Bhutan Ms. DEKI CHHODEN Acting Regional Secretary Bhutan Chamber of Commerce & Industry Bhutan Chennai, India (11th- 12th Dec 2009)

SMEs in Bhutan DEFINITION In Bhutan the trade and industrial ventures are classified based on initial capital investment which, by definition , consists of paid- in capital and long term credit. Following the industrial classification method, manufacturing and services micro enterprises businesses with investment of: Less than Nu. 1 million (Micro) Between Nu. 1 million and 10 million (Small) Between Nu. 10 million and Nu. 100 million (Medium) More than Nu. 100 million ( Large)

Data Distribution More than 13,606 (31st December 2008) industrial and Trade licenses are issued by Ministry of Economic Affairs so far. Large Scale Enterprises – 128 (1%) Medium Enterprises – 143 (1%) Small Enterprises – 1667 (12%) Micro/cottage – 11668 (86%) About 99% of licenses are registered as CSMEs.

Current Practices of SMEs development & management Industrial policies of the government: a) Privatization b) Use of indigenous raw materials c) Industry with a potential to export d) Capital intensive industries

Contd… Promotion of CSMI (Cottage, small and Medium scale Industries) 2. Broadening of the Entrepreneurial base Promotion of CSMI (Cottage, small and Medium scale Industries) Promotion of Traditional Handicrafts Industries. EDP Loan Scheme Group Lending Scheme

Problem faced by SMEs in Bhutan 1. General Problems: Lack of Comprehensives policy Data Problems Definition and classification Issues

Problem Contd… Lack of enterprise culture Low productivity 2. Business Environment: Lack of enterprise culture Low productivity Small Domestic Market No knowledge of Export Market Poor Financial Intermediation

Problem Contd… Weaknesses within SMEs Lack of skilled labor Lack of Technical Managerial knowledge Lack of access to Business Development Services Low Product Quality and Diversity

Status of SMEs in Bhutan Priority in numerous RGOB policy statements and documents. Five year plans. Major CSME activities Enterprise Growth Employment Generation

Activities initiated by the supporting institution to promote SMEs 1. Ministry of Agriculture( MOA) Extension services and marketing programs Provision of subsidized farm machinery and other inputs Agri-business courses in relevant training institutes Rural Enterprise Development project

Activities to promote SMEs Cont… 2. Ministry of Economic Affairs (MOEA) Rural Enterprise Development Project Licensing and legislation framework Business Promotion Section (BPS) Established of MSMEs Division

Activities to promote SMEs Contd… 3. Ministry of Labor and Human Resources (MOLHR) Entrepreneurship Development Program In-country training program on SMEs promotion Establishment of vocational training institutes 4. Financial institutions Lending through various schemes of financial institutions the rural credit.

Cont…Non- Governmental organization (NGOs) Tarayana Foundation Training in pottery, paper making, nettle weaving 2. Youth Development Fund Training in carpentry skills. 3. Respect, Educate, Nurture and Empower Women (RENEW) Training in basic computer skills Other skills for enterprise development

Contd… Conducting resource inventory studies for the promotion of SMEs 4. Bhutan Chamber of Commerce & Industry (BCCI) Conducting resource inventory studies for the promotion of SMEs Identification of project ideas for SMEs development Delivery of Enterprise Development Support/Advisory Services Conducting basic entrepreneurship promotion Hosting of Regional, National & International Trade fair. Business Development services through outreach programs

Contd…. Planning & Coordination of Capacity Building Trainings/Workshops and Consultative Meetings (Pvt. Sector HRD) Identifying common SMEs business problems and addressing them Building networking among various SMEs players/stakeholders Conducting Feasibility Studies for Enterprise (SMEs) Promotion Tshongrig – SMEs Tool kit

Trade Opportunities in various sectors The following are the trade opportunities in various sectors for SMEs Between Bhutan & India: Skills and Technology transfer Co-operation among SMEs through IT enabled services. Assist each other in marketing products Trade Fair or Exhibition Food processing (Agro-based) Contact organization as BCCI

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