COUNTRY BACKGROUND - Gross National Happiness Commission

unacceptably high inequalities of income distribution.
Privatisation
6.5 The Ministries chiefly involved in managing the privatisation programme are the Ministry of Finance and the
Ministry of Trade and Industry, which oversees many of the commercial enterprises which are priorities for
privatisation. However, as Table 6.I indicates, a number of other Ministries and departments also have
responsibilities for public enterprises within their sectors.
Developments during FYP6Developments during FYP6
6.6 In order to promote a suitable institutional and legal environment for privatisation, Government passed "The
Companies Act of Kingdom of Bhutan, 1989". Many enterprises, including public enterprises have been already
incorporated under the Companies Act. For instance, Druk-Air Corporation and Bhutan Polythene and Pipe
Company have been registered under the Companies Act so that the management decisions such as recruitment and
salary fixation need not follow the Royal Civil Service Rules, thus giving the management freedom to act in the
interest of enterprise's efficiency. All companies which have more than one owner have to be registered under the
Companies Act.
6.7 The privatisation of Gedu Wood Manufacturing Corporation was the most significant activity during the 6FYP.
Privatisation of this corporation took place in February 1990 and its management handed over to a private
entrepreneur who owns 41% of the shares in the Corporation. The Government, other private companies and
employees of the Corporation own the remaining shares. The Bhutan Tourism Corporation and Bhutan Polythene
Pipe Company had also been privatised by the end of the 6FYP. In addition, the Government was in the process of
selling most of its shares held in many industries including Bhutan Calcium Carbide Limited, Penden Cement
Authority.
Policy ObjectivesPolicy Objectives
6.8 The objectives of the Royal Government's strategy of privatisation include:
(a) ensuring the efficient management and operation of enterprises, and thereby promoting economic
growth;
(b) limiting the role of Government, so that it can concentrate on activities where there is not an adequate
private sector alternative;
(c) fostering indigenous entrepreneurial and management expertise; and
(d) providing increased opportunities for saving and investing within the Bhutanese economy.
6.9 The Government is fully committed to the privatisation strategy. As indicated in the previous section, a
substantial number of privatisations have already taken place. In future, RGOB will look for private sector
involvement from the start of new ventures and encourage foreign investment though these will be welcomed on
the basis of case by case consideration. Measures to encourage investments and to support indigenous
entrepreneurs are described in Chapter 18 on Manufacturing and Trade.
6.10 During FYP7 the privatisation programme will be continued mostly by divesting shares held by the
government in joint corporations. However, there are limits to the speed with which full privatisation can be
achieved. Factors that have to be taken into account include:
(a) The need for each privatisation to be properly prepared and launched. This involves ensuring that the
concern has an appropriate legal structure, that its assets are properly valued and so forth. In several
cases, there may need to be considerable restructuring of a company before it can be floated.
(b) The capacity of the local capital market to absorb the new shares on offer. The primary purpose of
privatisation is not to raise money for the Government, but there is a danger of realising much less than
the true value of public assets if too many offers are made simultaneously. (This is one of the reasons
why RGOB has, for the time being, retained some of the shares in a number of the companies already
3