Compared to other tourist destinations in the world, Bhutan is likely to be safer and more flexible.
The economy of the small landlocked Himalayan kingdom of Bhutan has been severely affected by the Covid-19 pandemic, with subsequent closure of borders — one of the primary sources of trade and transit. Even though the country has presented a real success story of containing the virus early on, with the lowest number of reported cases in the sub-continent, there has been a deceleration in economic growth from 3.8 percent (FY 2018-19) to 1.5 per cent (2019-20).
There has also been a drastic and crucial decline in the import and export pattern, causing severe disruptions to trade in general. It is not a very good circumstance for Bhutan, which has been trying its best to elevate itself from being lower middle-income country.
When the first nationwide lockdown was put in place, on 11 August, two important sectors were the worst-hit. The first was the tourism industry with related transport services, as the arrival of tourists had dried up by this time. The second was associated to all sectors requiring close interaction with the Indian neighbour, in turn, one of the primary trade partners and export markets.
India was already under a domestic lock-down for months, thus resulting in an economic slowdown. There was reduced foreign demand for Bhutanese products, especially from India. Additionally, financial cooperation and aid from sectors like manufacturing, non-hydro-electricity projects, construction and labour supply from India were deeply affected, causing long-lasting economic vulnerability for Bhutan. In this circumstance, uncertainty has been looming large on Bhutan’s growth forecast with mainstay areas like hydropower with lower-than-expected generation.
Bhutan was one of the fastest-growing economies in the region before the Covid-19 pandemic hit. The fiscal deficit faced by the country with 6.18 percent has been one of the worst in recent years, primarily due to the socio-economic challenges and the tax incentives that are being provided for businesses.
According to the United Nations Development Programme (UNDP) June forecast, the deficit number has chances of going up to 7.36 percent. Consequently, in this situation, a way out has been often denoted as a well revived tourism sector, a major national revenue earner. Although this sector is likely to recover in a slow-paced manner as the travel restrictions will still be prevalent until 2021 and global tourism flows in general are ‘expected to remain muted,’ the country is still pinning its hopes on it.
However, compared to other tourist destinations in the world, Bhutan is likely to be safer and more flexible. This is due to the long-standing tourism policy of “high value, low volume,” as explained by King Jigme Khesar Namgyel Wangchuck. Brand Bhutan has always relied on the connotation of being an ‘exclusive destination.’ Now, this principle is likely to help revive the economy, with safety and security of the tourists.
The Tourism Ministry has been planning several campaigns to portray Bhutan as a destination for well-being and peace, amidst the present situation with the tagline “happiness is a place.” With this new-normal format, the country is offering its natural beauty, unique culture and perfect weather to unwind after the year of turmoil. Bhutan is also often referred to as ‘Menjong, the Land of Medicinal Herbs’ with the concept of Gross National Happiness (GNH).
In order to make this possible, the ministry is also paying attention to the upgradation of its online travel portals that provide right information to the tourists with guidance revolving around health precautions. Quarantine practices and online health applications, rapid-test kits and contact-tracing applications are also being put in place accordingly. Measures are also being taken to make the hoteliers and the tour guides aware of the standard precautions.
Another important step has been the introduction of ‘bubble tourism,’ through partnership with India. These are also called ‘Travel Corridors’ or ‘Green Lanes.’ This is a bilateral arrangement between two countries where no quarantining is required. The system benefits both countries, financially. Therefore, this arrangement will also be a good opportunity for the eastern part of India which is right on the other side of Bhutan — the most crucial border being Jaigaon and Phuentsholing.
This structure is indeed a part of the national response mechanism of the government and the Economic Contingency Plan (ECP) with the reprioritisation of the 12th Five Year Plan (FYP) activities of the country. There also must be the implementation of unconventional policy responses such as these, thereby helping Bhutan to come back on track in the economic front. In doing so, it can capitalize on the good relationship that it shares with India, churning out maximum prospects for both the neighbours.
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Sohini Nayak was a Junior Fellow at Observer Research Foundation. Presently she is working on Nepal-India and Bhutan-India bilateral relations along with sub regionalism and ...Read More +