About BEFIT Summit
The Bhutan Economic Forum for Innovative Transformation (BEFIT) was inspired by His Majesty’s vision that our recent example in ensuring a successful democratic transition must be accompanied by successful economic transformation based on the foundations of a just, equal and harmonious society. BEFIT is a national platform to bring together a wide range of expertise to share best practices and discuss innovative solutions to emerging national and regional economic challenges, with the overarching objective of transforming and bettering lives.
BEFIT aims to establish itself as a credible and impact-oriented national forum. Therefore, partnerships with domestic institutions and reputed multilateral institutions are important in ensuring meaningful dialogues and sustainable results. The theme for each BEFIT event is carefully selected to address a pressing current need in close consultation with relevant stakeholders. The expected outcomes are clearly identified from the beginning while partnerships ensure collective ownership and sustained commitments to implement the expected outcomes.
The BEFIT Story
To commemorate the birth of His Royal Highness the Gyalsey Jigme Namgyel Wangchuck on 5th February 2016, the Financial Institutions Association of Bhutan made a pledge to Their Majesties to renovate a historic monument or make a substantial cash offering. In response, His Majesty commanded that His Majesty would match the Association’s offering to institute a fund that will finance the creation of a platform where the financial institutions, the central bank, the government and the private sector can come together to discuss and share ideas, and learn from global expertise, to strengthen our economy for the benefit of all citizens.
The Royal Monetary Authority of Bhutan and the Financial Institutions have come together to institute the fund, matched by His Majesty, for the creation of the Bhutan Economic Forum for Innovative Transformation. BEFIT aspires to realize His Majesty’s vision for a vibrant democracy built on the foundations of a strong and dynamic economy. Events organized under the BEFIT banner will be guided by the principles of ensuring people-centered, participatory and inclusive growth.
BEFIT 2019: Catalysing the Cottage and Small Industries Sector to
Drive Bhutan’s Economic Diversification
Recognising the potential of Bhutan’s small and medium enterprises sector, locally termed as the cottage and small industries (CSI) sector, to diversify the economy, boost employment and domestic production and promote inclusive growth, a directed lending strategy called the Priority Sector Lending (PSL) initiative was implemented from January 2018 to improve credit to CSIs. While entrepreneurs and small business face a myriad of challenges, PSL was introduced as the first crucial step to ease access to credit from the financial institutions. Designed as an integrated platform to coordinate the support and interventions of the government with better access to bank finance, the PSL platform has been instrumental in enhancing collaboration and coordination among the various government agencies.
The experience of nine months of implementation of PSL has re-iterated pressing challenges faced by the CSI sector such as manually-driven production processes and limited use of technology, and lack of market access and entrepreneurial skills. These challenges formed the basis for the formulation of the government’s Cottage, Small and Medium Industry (CSMI) Policy 2012. The CSMI Policy was backed by a Development Strategy (2012-2020) and a series of Action Plans that revolved around the following six strategic areas:
- Strengthening the policy environment and institutional framework
- Strengthening the legislative framework and enterprise environment
- Facilitate access to finance and incentives
- Enhance competitiveness and innovation
- Improve market access
- Enhance employment and develop a culture of entrepreneurship
The CSMI Policy was based on providing a holistic interventions package to develop Bhutan’s CSMI sector. However, most of the challenges identified in 2012 remain largely unaddressed today, while economic and moral arguments to revive Bhutan’s CSI sector have only become more pressing today.
The theme for BEFIT 2019, “Catalysing Cottage and Small Industries to Drive Bhutan’s Economic Diversification”, is timely and relevant. Bhutan’s GNH-led approach to development has always emphasized inclusive and sustainable development while His Majesty the King’s aspirations for the creation of “just and harmonious societies” has further crystallized the expected outcomes of this GNH-led development process.
From an economic lens, societies are just and harmonious when there is equitable and inclusive distribution of the gains from development, when there is shared prosperity, and when citizens who are willing to engage themselves productively have the means to do so.
Bhutan has reached a critical demographic juncture. Our young working age population has been steadily increasing, with the highest concentration in the 25-29 and 20-25 age groups, closely followed by the 15-19 and 10-14 age groups. The 2017 Population and Housing Census of Bhutan refers to the increasing size of the young working population and suggests the presence of an accelerated demographic transition with opportunities for a demographic dividend through reduced dependency ratios.
However, taking advantage of this opportunity for a demographic dividend means that the young population must first have the opportunities to productively engage themselves. And it is the CSI sector that holds the most potential to productively engage our youth. The theme for BEFIT 2019 is also in line with the 12th Five Year Plan focus on diversification under the broader vision of creating just and harmonious societies.
BEFIT 2019 is expected to assist authorities in reviewing the CSMI Policy through a renewed lens to identify the interventions needed to catalyse the CSI sector as an important driver of Bhutan’s economic diversification and economic transformation. Outstanding recommendations articulated in the Policy and new insights from BEFIT 2019 will assist authorities to draft a CSI Masterplan that will articulate the medium-term interventions required to set-up a vibrant and resilient eco-system to transform Bhutan’s CSIs into an important agent of economic change.
Collective ownership, coordination and collaboration among stakeholders will be key in identifying challenges, finding solutions and in implementing the solutions. Therefore, in preparation for BEFIT 2019, key domestic partners have already been identified and consulted. There are strong commitments and ownership at the highest level while working groups have been formed and have been meeting regularly since August 2018 to discuss challenges and strategies to address the challenges.
BEFIT 2019 will be used as a national platform to discuss and finalize the strategies and solutions, learn from international and regional best practices, and identify remaining gaps and interventions needed. BEFIT 2019 will focus on the following thematic areas under the broad theme of “Catalysing Bhutan’s CSI Sector to Drive Bhutan’s Economic Diversification”:
- Capacity development and entrepreneurial culture
- Innovation and technology
- Market access
- Access to finance and risk management
This thematic area will focus on further boosting current efforts aimed at the creation of an entrepreneurial culture and enhancement of capacity development programs of CSI entrepreneurs (such as training, mentoring, internships, business incubation facilities, business pitching platforms etc).
An important area of focus under this thematic area is the promotion of innovative business practices and use of technology in the business process and shifting the focus of business from low-value products to value-addition and more high-end, niche products especially in agri-business, along with skills/knowledge transfers through FDI and other technology link-ups.
This thematic area will focus on standardization and quality, leveraging “Brand Bhutan”, e-commerce and logistics and market access through FDI and e-commerce.
This area will look at both traditional bank financing as well as alternate financing platforms leveraging fintech such as angel investors, venture capital, crowdfunding, P2P and risk management through credit guarantees, alternate credit scoring, debt resolution etc.
Cutting across all the above themes is a focus on improving the underlying regulatory environment through smart policies and leveraging fintech in crafting efficient solutions.
BEFIT 2017: Equitable Growth through Financial Inclusion
The inaugural BEFIT conference, the International Financial Inclusion Summit was hosted in Thimphu on May 24–26, 2017 on the theme of “equitable growth through financial inclusion”. The Summit was organized by the Royal Monetary Authority of Bhutan and the Royal Institute for Governance and Strategic Studies (RIGSS), in partnership with the International Finance Corporation. Within the overall theme of “equitable growth through financial inclusion”, the Summit focused on micro finance, SME and agri-finance and digital financial services. In addition, RIGSS hosted its flagship Friday Forum Lecture during the Summit.
BEFIT 2017: Equitable Growth through Financial Inclusion
The Summit brought together over 30 reputed international participants to share their experiences. Domestic participants at the summit included the 20 Dzongdags (District Governors), 20 DYT Thrizins (elected chairs of the District local government bodies) and 20 business representatives nominated by the Bhutan Chamber of Commerce and Industry, in addition to parliamentarians, government officials and financial sector representatives. The proceedings of the Summit were recorded and broadcasted by the Bhutan Broadcasting Service and documented through an official publication supported by the IFC and the Alliance for Financial Inclusion.
Following BEFIT 2017, numerous supply side interventions were initiated to improve access to finance and enhance financial inclusion. Insights from the Summit have also been instrumental in guiding the RMA’s initiatives for deeper digitalization of financial services. One key outcome of BEFIT 2017 was the formulation of Bhutan’s National Financial Inclusion Strategy (NFIS) which will serve as the roadmap for Bhutan’s financial inclusion activities and guide the broader financial inclusion agenda in the coming years. Along with the NFIS, the National Financial Literacy Strategy (NFLS) was also drafted. The NFIS and NFLS are “live plans” that will be implemented over the next five years.
The BEFIT Logo
The circle with the concentric arcs is representative of the common symbol in Bhutan for a “norbu” or “jewel”. For BEFIT, this norbu is the people. The concentric arcs also signify the aspirations of BEFIT to create positive socio-economic ripple effects from its activities.The bars contained within the Norbu represent the objective of people-centered, inclusive economic growth built on the foundations of the four pillars of Bhutan’s development framework of Gross National Happiness.