Bhutan

This is a study of how the Bhutan National Statistics Bureau began producing Import and Export Price Indices (XMPI) using existing administrative data. This was made possible through support from the Regional Programme on Economics Statistics in Asia and the Pacific run by United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and supported by Department for International Development (DFID). This study was developed by the National Statistics Bureau (NSB) of Bhutan and ESCAP. It documents the context and process followed to support other countries thinking of producing XMPIs. This is one of five studies of successful projects and aims to advance statistics in Asia and the Pacific through shared knowledge and experience.

Despite confronted with such unfavourable conditions as mountainous topography and being landlocked and susceptible to natural disasters, Bhutan has demonstrated a strong track record in sustaining economic growth and reducing poverty over the past two decades or so. Its progress in other socio-economic indicators as reflected in its success in achieving many of the 2000-15 Millennium Development Goal (MDG) targets is also worth noting. It is unique in approaching development by valuing collective happiness as the goal of governance. Bhutan successfully met the least development countries (LDCs) graduation criteria in two United Nations triennial reviews of 2015 and 2018 and is set to graduate from the group of LDCs in 2023. The transition involves loss of certain trade preferences and other international support measures. However, as the significance of these benefits has been quite limited for Bhutan, LDC graduation should not be a major cause for concern. While most LDC-specific privileges are related to international trade, Bhutan’s overwhelming dependence on trade with India is governed through a bilateral trade agreement insulted from LDC status. Overseas development assistance is important for Bhutan although its significance in the economy has fallen. Graduation should not have much implication for development financing as development partners do not use LDC status as an important factor in deciding about aid allocation. For Bhutan, dealing with general development challenges should remain important policy priorities. It has embraced a proactive policy stance for graduation by combining its eighth five-year development plan, Sustainable Development Goals (SDGs) and Gross National Happiness (GNH) indicators. Bhutan has huge potential for developing supply-side capacities and generate employment opportunities through further development of such sectors as tourism, agribusiness, ICT and hydropower. Major impediments for exerting dynamism in these sectors include lack of investment, infrastructure deficit, and poor connectivity. Diversification of economic activities is a challenge for which one priority attention should be on developing the private sector.

Micro, Small and Medium Enterprises (MSMEs) are key to the economies of various countries. Their numbers and contribution towards employment is well documented and there is acceptance amongst policy makers that these enterprises are critical for economic development. Increasingly, access to finance has been recognised as a major hurdle in their development or growth.

Amongst, the countries reviewed in this paper - Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, and Nepal – Bhutan is the only target country where the supply of finance to MSMEs is favourable with nearly 68% of the demand being met. Cambodia has the highest finance gap followed closely by Lao Peoples Democratic Republic and Nepal. While examining the finance gap of microenterprises and SMEs, the gap revealed in Bhutan, Cambodia, Lao People’s Democratic Republic and Nepal are not substantial. However, in Bangladesh the differences are much larger between microenterprises and SMEs with only 14% of microenterprise demand being met.

The review also explores the number of women owned MSMEs (WMSMEs) in the countries and the access to finance for such enterprises. It shows that the finance gap is amongst the lowest in Bangladesh (6%), Bhutan (19%) and Nepal (9%). In Cambodia and Lao People’s Democratic Republic, the share is higher at 32% and 42% respectively. But in both South East Asian countries women owned MSMEs also are a larger proportion of MSMEs.

There are a number of demand and supply reasons or constraining factors leading to issues in access to finance. The common factors pertain to awareness, risk, knowledge, and products and processes. Women owned enterprises too face these challenges, but these may be more severe as they are often entrenched in gender stereotypes, limited education opportunities and restricted mobility, perception that women cannot manage businesses or lack leadership skills, and women are also often required to perform the dual role of business women and homemakers. Most of the countries are still in the process of framing laws pertaining to contract enforcement and resolution of insolvency. Specifically, on the demand side, enterpreneurship is not viewed as a career option and risk acceptance is overall low.

While these constraints exist, there are several policy initiatives undertaken by regulators and governments in these countries to increase access to finance. These approaches involve a mix of regulatory and financial approaches, including efforts to develop the financial infrastructure, such as, secured transaction laws, creation of collateral registries, developing credit bureaus, and payment and settlement systems. Other actions include interest subsidies, dedicated funds and institutions. But these are in various stages of enactment and implementation. Cultural shifts in terms of acceptance of entrepreneurship have also been observed in many of these countries, with governments adopting policies to encourage entrepreneurship.

While Digital Finance Services (DFS) initiatives specifically linked to increasing MSME access to finance are few, and there are no specific policy initiatives (in the target countries) linking the two, development of DFS and its spread is likely to positively affect MSME access to finance. This is because DFS helps to create a digital footprint that when combined with other accumulated data can yield business intelligence to make decisions related to credit risks, for example.

In all the countries reviewed, there is a notable push in terms of policy and mobile connectivity that favour the growth of digital payments. Number of bank and non-bank agents in all the five countries has shown significant increase as has the adoption of payment services by populations. This has in part been supported by the high levels of 2G and 3G mobile service penetration.

A lot of the policy and regulatory effort by the target countries is in the right direction which requires further encouragement and a more nuanced approach towards MSMEs. Policy makers need to continue to build their own capacity on MSME access to finance. In terms of financial infrastructure, what matters is that it is effective and reliable. This should be the continued focus of policy makers and regulators in the target countries. Alternative source of finance should be encouraged, but with the understanding of the varied sources and their applicability to different stages of enterprises. It is vital that women owned MSMEs be treated as a distinct category and attempts made to use data and training to remedy the perception issues. Finally, DFS offers immense potential and efforts need to be made move beyond payments and into digital lending, savings and insurance simultaneously building up consumer protection policies related exclusively to DFS.

The UN Global Survey on Digital and Sustainable Trade Facilitation 2019 reveals that the average implementation of a common set of 31 Digital and Sustainable Trade Facilitation measures by SSWA countries stand at 55.4% slightly lower than the Asia-Pacific regional average of 59.7%. Moreover, SSWA members have one of the lowest average level of implementation in the region, much lesser than AUS-NZL (93%) and is only ahead of Pacific Island Developing Economies (35.5%) that is largely made up of small island economies. In general, more advanced or larger economies are at a higher level of trade facilitation than many other countries in the region, while small or less developed countries, such as LDCs or small Pacific countries, lag in the implementation of trade facilitation measures, particularly paperless and cross-border paperless trade measures.

Although trade facilitation implementation varies widely within each sub-regional grouping, differences in trade facilitation implementation levels in South and South-West Asia ranks second behind South-East Asia (see Figure 2). This can be explained by the wide development gap between the countries in the sub-region with more developed nations like Turkey (80.65%) and India (79.57%) scoring higher, while less developed nations like Bhutan (36.56%) and Afghanistan (22.58%) trailing behind. Countries with special needs in the Asia-Pacific region face challenges in implementation of ‘Paperless Trade’ and ‘Cross-Border Paperless Trade’ measures, likewise SSWA nations exhibit low levels of implementation for ‘Cross-Border Paperless Trade’ measures too.

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The SSWA SDGs Update is a bimonthly electronic newsletter, which summarizes recent news about South and South-West Asia, with a particular focus on regional cooperation and national developments related to the implementation of the Sustainable Development Goals. The newsletter typically features a timely and relevant key event as a lead story and provides a news digest, which is a compilation of news on topics such as SDG priorities and challenges, gender equality and empowerment of women, regional connectivity: trade, transport and energy, and means of Implementation of the SDGs.

The July-August issue features National Voluntary Reviews of five South Asian countries at the High-level Political Forum (HLPF) on Sustainable Development held in New York from 10-19 July 2017.

• July-August 2017 http://mailchi.mp/aed3e05a29f4/unescap-sswa-sdgs-update-may-june-374331…

The Transport and Communications Bulletin for Asia and the Pacific is a peer-reviewed journal published once a year by the Transport Division (TD) of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). The main objectives of the Bulletin are to provide a medium for the sharing of knowledge, experience, ideas, policy options and information on the development of transport infrastructure and services in the Asia-Pacific region; to stimulate policy-oriented research; and to increase awareness of transport policy issues and responses. It is hoped that the Bulletin will help to widen and deepen debate on issues of interest and concern in the transport sector.

This issue of the Bulletin is dedicated to the theme of “Combatting Congestion”. With growing motorization, most cities in Asia and the Pacific are facing tremendous challenges in coping with traffic congestion. Congestion accentuates the health and environmental impact of motor vehicles because vehicles operating in heavy traffic pollute considerably more than those operating in free-flow conditions. Congestion also exacts a heavy economic and social toll, particularly on people living in cities, in terms of wasted time and fuel costs.

As the articles in this issue describe, there are many different ways to reduce traffic congestion. Several major cities in the region have launched mass transit projects, such as the Delhi Metro in Delhi, India; TransJakarta, the first full Bus Rapid Transit system in Indonesia and Asia; and suburban metro lines in Beijing, China. Others have implemented traffic demand management policies, such as the congestion charge scheme in Singapore and car plate auctioning systems in Shanghai, China. Despite these measures, however, urban mobility continues to deteriorate in most Asian cities. This issue of the Bulletin looks at why this is so, and also suggests some possible solutions for policy-makers, particularly at the municipal level, to consider.

The Bulletin comprises of five articles:

Article 1: Smarter congestion relief in Asian cities: win-win solutions to urban transport problems – by Todd Litman

Article 2: The sustainable mobility - Congestion nexus: a co-benefits approach to finding win-win solutions – by Portugal-Pereira, J.O., Doll, C.N.H., Suwa, A., and Puppim de Oliveira, J.A.

Article 3: Urban transport systems and congestion: a case study of Indian cities – by M. Absar Alam and Faisal Ahmed

Article 4: Battling congestion in Manila: the Edsa problem – by Yves Boquet

Article 5: “Pedestrian day” experience in Thimphu, Bhutan – by Ishtiaque Ahmed and Gyambo Sithey

The Asia-Pacific Development Journal (APDJ) is published twice a year by the Macroeconomic Policy and Development Division of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

The primary objective of the APDJ is to provide a platform for the exchange of knowledge, experience, ideas, information and data on all aspects of economic and social development issues and concerns facing the region and to stimulate policy debate and assist in the formulation of policy.

The development experience in the Asian and Pacific region has stood out as an extraordinary example of what can be achieved when policymakers, experts, scholars and people at large harness their creativity, knowledge and foresight. The Asia-Pacific Development Journal has been a proud partner in this process, providing a scholarly means for bringing together research work by eminent social scientists and development practitioners from the region and beyond for use by a variety of stakeholders. Over the years, the Journal has emerged as a key United Nations publication in telling the Asian and Pacific development story in a concise, coherent and impartial manner to stimulate policy debate and assist in the formulation of policy in the region.

The SSWA SDGs Update is a bimonthly electronic newsletter, which summarizes recent news about South and South-West Asia, with a particular focus on regional cooperation and national developments related to the implementation of the Sustainable Development Goals. The newsletter typically features a timely and relevant key event as a lead story and provides a news digest, which is a compilation of news on topics such as SDG priorities and challenges, gender equality and empowerment of women, regional connectivity: trade, transport and energy, and means of Implementation of the SDGs.

The May-June issue features country statements delivered by South Asian countries during the Ministerial segment of the 73rd session of the United Nations Economic and Social Commission for Asia and the Pacific that was held in Bangkok from 15 to 19 May 2017.

• May-June 2017 http://mailchi.mp/6667e61f329a/unescap-sswa-sdgs-update-may-june-2017?e…

In the process of undertaking the baseline study of Trade and Transport Facilitation Monitoring Mechanism (TTFMM) in Bangladesh, five studies are carried out to provide multiple facets of trade and transport facilitation covering export and import of specific products, corridors and border crossings. A synthesis report is also produced based on five study reports. The current report examines trade process of exporting Plastic kitchenware and tableware from Bangladesh to Bhutan using Business Process Analysis (BPA) approach. It is a stand-alone document itself and in the meantime the 1st report of a series of 5 studies that feeds the synthesis report.

Regional economic cooperation and integration, with regional trade and investments as primary drivers, has been an influential transformative force in bringing about inclusive and sustainable development outcomes and welfare gains in many parts of the world. Nearer home, South East Asian subregion, is the developing world’s leading example of how rich development dividends can be reaped from regional cooperation. The ASEAN has progressively deepened economic cooperation for sharpening its collective competitive edge and thereby create policy space to address domestic socio-economic challenges. Future directions for the achievement of the Sustainable Development Goals especially in South Asia would critically depend on how state and non-state actors and stakeholders are brought together under regional economic cooperation and integration (RECI) frameworks.

As this Report argues, the South Asian subregion has a lot of ground to cover in terms of regional economic integration. The volatile and uncertain external environment ever since the onset of the global financial crisis sets a new context to revisit policy priorities in this regard. The subregion has been making progress on some indicators of trade and investment, notwithstanding certain intercountry differences in performance. But the progress has been slow at best, enabling it to exploit only less than a third of potential of intra-subregional trade. Through the UNESCAP resolution 68/10 on “Enhancing regional economic integration in Asia and the Pacific”, countries of the Asia-Pacific region have acknowledged the potential of regional economic cooperation and integration in eliminating poverty and, in achieving inclusive and sustainable development. The Bangkok Declaration of December 2013 on Regional Economic Cooperation and Integration in Asia and the Pacific, endorsed through UNESCAP resolution 70/1, subsequently helped in securing commitment of Asia-Pacific countries to work together for economic integration. South Asia also has a number of institutional frameworks for regional cooperation like SAARC and BIMSTEC.

This Report tracks the status of regional economic cooperation and integration in the South Asia subregion and identifies policy priorities for the future in this regard. In doing so, it covers four broad areas of international collaboration as identified by the Bangkok Declaration; (i) market integration through enhanced cross-border trade and investments, (ii) development of transport, energy, ICT and people-to-people connectivity, (iii) greater financial cooperation for closing infrastructure gaps and liquidity support; and (iv) increasing economic and technical cooperation to address shared vulnerabilities and risks. Taking into account the low baseline scenarios and massive socio-economic challenges faced by South Asia, the report underscores the need to accelerate reforms for deepening subregional economic integration with utmost urgency. This could be achieved through putting in motion a South Asia Comprehensive Economic partnership (SACEP), recommended in this report to consolidate and build upon initiatives such as trade facilitation measures for formation of production networks and regional value chains, measures for liberalization of trade in services and improvement of investment climate,and necessary reforms for overall procedural ease of trade and investment. South Asian countries also need to take bold steps to broaden the horizons of economic relations with neighboring subregions of Central Asia, South East Asia and beyond. In this regard, South Asia’s economic integration can benefit from institutional arrangements provided under overlapping regional organisations such as SAARC, ECO, and BIMSTEC. By building synergies between various related bilateral and plurilateral initiatives and agreements for economic integration which are currently in progress, the subregional countries will have greater opportunities to secure their position in the broader Eurasian economic space. With its convening authority, multi-sectoral agenda of work and strategic presence in the subregion, UNESCAP is uniquely placed to assist in strengthening regional economic cooperation in South Asia and beyond, with a larger goal of uniting Asia and the Pacific for sustainable development.

This Report is first released in May 2017 and is revised in September 2018.