The Land of the Dragon: Bhutan

The ‘land of the dragon’, officially the Kingdom of Bhutan, is a tiny and remote kingdom nestling in the Himalayas between its powerful neighbours, India and China.
It is also bordered by Nepal and Bangladesh. Almost completely cut off for centuries, it has tried to let in some aspects of the outside world while fiercely guarding its ancient traditions. The Bhutanese name for Bhutan, Druk Yul, means “Land of the Thunder Dragon” and it only began to open up to outsiders in the 1970s. The country is famous for its unique philosophy – Gross National Happiness (GNH) – which guides its development.

Bhutan maintains solid growth and macroeconomic stability. Hydropower construction and supportive fiscal and monetary policy have contributed to solid growth. Single-digit inflation, a stable exchange rate, and accumulating international reserves attest to the stability. Bhutan has a stable political and economic environment. It has made tremendous progress in reducing extreme poverty and promoting gender equality, while attention is needed to address inequality issues.

Bhutan’s economy continues to be dominated by hydropower and its economic relationship with India. On the demand side, growth was underpinned by exports and consumption, reflecting the progress in hydropower maintenance and procyclical public demand response to the associated income inflows. Services remain the main driver of growth on the supply side, where wholesale and retail trade has emerged as the key contributing sub-sector. The governmental structure also changed radically. Reforms initiated by King Jigme Dorji Wangchuk (reigned 1952–72) in the 1950s and ’60s led to a shift away from absolute monarchy in the 1990s and toward the institution of multiparty parliamentary democracy in 2008.

The country has a multiethnic population of 760,000 inhabitants (in 2015). There are three main ethnic groups in Bhutan, the Tshanglas (or Sharchop) are considered the aboriginal inhabitants of eastern Bhutan, the Ngalops, people of Tibetan origin who migrated to Bhutan, and the Lhotshampas, a group of Nepali language-speaking Bhutanese people. The official language is Dzongkha, a language closely related to Tibetan and Nepali. Capital and largest city are Thimphu. The Kingdom of Bhutan is considered a development success story, with decreasing poverty and improvements in human development indicators. The Bank’s engagement in Bhutan is aimed at supporting the government’s goal of Gross National Happiness.

Coronavirus effects on Bhutan and its Success story Battling COVID-19

Even as the COVID-19 pandemic has hit the world like none other before it, the Himalayan kingdom of Bhutan has done well in keeping the number of infections as limited as possible. The government has set its eyes on recovering from the possible economic onslaught of the virus. Tourism is the worst-hit sector in Bhutan. The livelihood of 50,000 citizens depends on this or allied sectors.

The under-resourced nation’s response, led by science and quick preventative action, has been fortified by its traditional communal values. In Bhutan, prayers and ceremonies are being offered daily to ward off the threat of the COVID-19 pandemic. With a few cases and very less number of deaths, many in the Himalayan Kingdom believe they are being spared by their guardian deities. Yet while fortune may have played its part, the often overlooked Buddhist nation is emerging as an unlikely success case for how to handle the outbreak with a decisive and collective leadership. Indeed, had it not been for the strong initiative taken by its king, government, and citizens, the country may have faced a terrible fate.

When the virus first emerged, Bhutan seemed particularly vulnerable. It initially banned food imports. The ban was soon lifted as officials realised it was unfeasible. But with the closure of Bhutan’s borders with India, the country’s food imports have plummeted. A combination of a shortage of labour to handle the goods, as well as the difficulty of sterilising food products, has meant that imports have slowed to a trickle. Healthcare in Bhutan is largely public-funded, and the government has borne the costs of testing, medical facilities, and quarantines. The Ministry of Health produced a preparedness and response document that details the healthcare sector’s capacities in terms of surveillance, early detection, control and prevention, response, and recovery.

Bhutan has devised a four-stage COVID-19 alert system and is currently in stage three, which denotes confirmed cases without evidence of secondary transmission. Compared to other countries in South Asia, Bhutan appears to be keeping the crisis under control. The government has also developed a contact-tracing app called Druk Trace. All offices, businesses, and transportation hubs are mandated to display the QR code generated by the contact-tracing app, and all individuals using these services are required to scan the code. A manual log is kept by service providers and offices for those who do not have smartphones. Moreover, it has created a national COVID-19 response fund to ease the financial stress on citizens, as well as a high-level task force to focus on infection control, the economy, and security.

The Royal Monetary Authority announced a series of measures aimed at helping businesses and citizens, including by providing working capital, waiving interest on loans, and issuing microloans for agriculture. The crisis is likely to disrupt many sectors vital to Bhutan’s economy, such as hydropower plants, agricultural exports, and tourism. The World Bank estimates that Bhutan’s real GDP growth rate will drop to 2.2–2.9 per cent, down from its pre-crisis estimate of 6.5 per cent.

Bhutan has gone from the extremes of self-isolation until the 1950s to increasing its connections with the outside world over recent decades. What Bhutan is quickly learning is that while globalization and science are to be embraced, it should also look to its heritage to survive in troubling times.

By Karishma Gwalani

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