Unemployment Bhutan's rising problem

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Breathtaking Bhutan

Bhutan, nestled in the Himalayas, has been in news in the last few days. The country, which embarked on a vaccination drive on March 27 has, already managed to inoculate 93 per cent of the eligible adults with their first shots within just two weeks. However, the country is facing another challenge. Rising unemployment. Many experts said that this is due to the lack of a vibrant private sector.

The Labour Force Survey conducted November and December, 2020 showed that unemployment rate increased drastically to 5 per cent.

Bhutan’s unemployment problem has been on the rise even prior to the Covid 19 pandemic.

“The decline in the unemployment rate is, partly due to our youth staying out of the labour market. This means that the youth are giving up prospecting and applying for jobs at the threshold of building their lives and careers when they should be most optimistic and full of hope about their futures. They are dis-disillusioned and uninspired,” a report by the Bhutan based newspaper Keunsel said.

The country’s private sector has not flourished the way it should have. The private sector in the country has been facing several challenges including lack of finances and market access.

According to the World Bank, Bhutan’s economy continues to be dominated by hydropower and its economic relationship with India. 

However, analysts said that as India, Bangladesh, Nepal and Bhutan are looking at boosting connectivity and regional cooperation, the issue of unemployment could be somewhat addressed.

As India is set to press the pedal on the Bangladesh-Bhutan-India Nepal (BBIN) initiative, envisaging closer connectivity among themselves through rail and road, through development of infrastructure, there could be job generation.

“The initiative can be a game changer in the region but active participation of the private sector is equally important to crate jobs,” an analyst said. 

FDI into Bhutan

Share of foreign direct investment (FDI) into in Bhutan has been relatively low compared to other developing countries. The UNCTAD 2020 World Investment Report, the total stock was estimated at $141 million in 2019. After turning negative in 2017 when it dropped to $-10 million, FDI inflows recovered in 2018. Despite the recent rise in FDI inflows, Bhutan still is the Asian country attracting the least FDI, partially due to its small size. However, with development and connectivity projects, the share of FDI is set to rise.

Meanwhile, India’s cumulative investment in Bhutan over the period July 2007 to March 2019 stood at $50.12 million. Most of the FDI share has gone into sectors such as hydropower, gas and water.

Covid 19 pandemic has further aggravated the problem

An Observer Research Foundation (ORF) study noted that Bhutan’s economy has been further 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.”

 

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