In a major move to bring small businesses on the priority list which could probably change business dynamics in the country, the economic affairs ministry will soon have a new department for small and cottage industries.
The cabinet approved the new department on Tuesday which would look after a sector that comprises 98% of the business sector. The micro, small, and medium-sized enterprises (MSME) include various rural and urban enterprises, cottage industries and emerging cooperatives.
In the 10th five year plan, the government has allocated Nu 126.79m for developing an institutional framework for MSMEs. It has also looked into developing an enabling legal and regulatory framework for the enhancement of business development and the revision of investment opportunity study. The budget allocated will support the handmade paper industry and the essential oil development plants, amongst others.
According to the Bhutan Chamber of Commerce and Industry (BCCI), the MSMEs face numeral problems mainly due to the lack of entrepreneurial talent, basic marketing skills, modern technology and capital.
The major constraints for the MSMEs include limited access to financing, absence of clear-cut government policies for the sector, poor physical infrastructure, high transportation costs, and inadequate knowledge/information on market opportunities.
According to the ministry of economic affairs (MoEA), several activities to promote the MSME sector were initiated by drafting the industrial investment Act and the enterprise registration Act.
Further, business licensing procedures have been simplified and basic trainings on entrepreneurship development have been provided through the entrepreneurship development program (EDP) loan, credit guarantee scheme, and the rural enterprise grants through the Bhutan Development Finance Corporation.
During the Ninth Plan period, the economic affairs ministry also initiated the rural enterprise development and e-business projects. These projects supported small industries such as bee-keeping, bamboo crafts, textiles and vegetable dying.
According to the ministry, the Department of Industry has been promoting the MSMEs in the regional and global markets. So far, the industry department has been strengthening the institutional framework and regulatory environment, enhancing capacity building, and providing essential business development services. The responsibility will be taken over by the new MSME department once it is established.
During the August 5 meeting with the cabinet last year, the BCCI requested to improve the access to finance for the MSMEs by simplifying lending procedures and through alternate financing mechanism. The request also included channelizing the taxation system for the sector.
The government has now extended its priority to the MSMEs with the specific intent of promoting value addition for exports and by creating a separate department for the specific promotion and development of the sector.
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