Address by ITC Executive Director at the Bhutan export diversification project launch
24 May. 2018
Thimphu - Bhutan
Ambassador of the EU to India and Bhutan
Ladies and gentleman
I am extremely pleased to be with you this morning in this beautiful country. The International Trade Centre (ITC), the joint development agency of the United Nations and the World Trade Organisation is based in Geneva, Switzerland. Bhutan is often compared to Switzerland for its size, its landlocked location, and its beautiful mountainous landscape. I arrived here for the first time only yesterday - but I already feel at home.
While I might be new to Bhutan, ITC is not. We have worked in Bhutan for over fifteen years in helping to strengthen institutions, and improving competitiveness of exporters. This is in keeping with ITC’s mandate to support the internationalisation of micro, small, and medium-sized enterprises in order to contribute to sustainable growth with the objective of raising incomes and creating job opportunities, especially for women, youth and poor communities.
Bhutan is a unique country. Unique in the way it has preserved its values and culture. And unique in the way it has conceptualized socioeconomic development. Not only did Bhutan invent the idea of ‘gross national happiness’, it has been a pioneer in measuring the country’s wealth in terms that encompass economic benefits as well as cultural preservation, environmental protection, and the quality of governance.
It was once said that gross domestic product “measures everything except that which makes life worthwhile.” Bhutan measures what really matters.
Part of what matters, of course, is economic prosperity and the life opportunities available to people. Trade can play, and has played, a useful role in increasing living standards across the world. International markets are a critical source of demand, ideas and technology – not to mention goods and services that are costly to produce at home. Bhutan recognizes this, which is why it has gradually embraced international trade and investment.
The Royal Government has initiated reforms to remove constraints to economic and trade development. While doing so, it has remained firmly within the framework of Gross National Happiness, with its four pillars of:
i. sustainable economic development;
ii. preservation and promotion of culture and tradition;
iii. conservation of environment; and
iiii. good governance.
The EU – Bhutan Trade Support initiative which we are launching today is guided by the same principles:
First, sustainable economic development. The initiative will support increased exports and export diversification to contribute to sustainable growth and poverty reduction. The objective is to scale up services to support farmers and cottage industries in the horticulture and textile handicraft sectors to improve product quality and increase sales to export markets.
The project will seek to improve coordination along the entire value chain in the selected sectors, linking artisans and producers to market opportunities. Reinforcing local expertise will be a top priority – the initiative will work with national institutions and train experts who will be able to train public and private sector officials in the future.
The capacities of government officials will be broadened to better equip them to shape and implement policies and regulations that will foster business development and trade while attracting investment. In addition, because empowering women and young people as economic actors makes growth more sustainable, the project places gender and youth at its centre.
Second, the preservation and promotion of culture and tradition. The two value chains of horticulture and textile handicrafts have been selected according to their potential for export diversification and value addition while representing Bhutan’s traditions and culture. Hence new handicraft designs will take inspiration from the country’s weaving traditions.
Third, environmental conservation. The project integrates environment-related issues throughout its plans, placing a premium on organic horticulture production.
Both culture and traditions as well as sustainability are two strong ingredients of “Brand Bhutan” for which the value chains selected in this initiative can be valuable ambassadors.
And this is why women and youth have an important role to play in this endeavor.
More than 65% of Bhutan’s total workforce and more than 72% of women workers are engaged in crop and livestock production. Many women, including younger women, are employed in the crafts and tourism sectors. The horticulture and textile handicraft sectors have the potential to expand significantly, lifting incomes and creating job opportunities for women and young people, including in rural areas.
And finally, good governance. Not only is this project marked by strong national ownership, but mechanisms have been set up to ensure alignment with Bhutan’s national priorities as well as synergies with other development initiatives. A national project coordinator will be embedded within the Gross National Happiness Commission. A Project Steering Committee will provide project oversight and direction. ITC will ensure synergies with projects we are implementing in Asia and around the world, as well as with other EU-funded projects. As part of the One Programme of the UN in Bhutan, ITC will also ensure coordination with other UN agencies’ projects here.
The project is aligned with Bhutan’s priorities for developing trade and investment to drive sustainable growth and poverty reduction, as articulated in the Bhutan Vision 2020, the 11th Five Year Plan, and the Economic Development Policy
I believe that it is critically important, if we are to meet the Sustainable Development Goals, for the development community to pay special attention to landlocked developing countries such as Bhutan.
Bhutan's exports are highly concentrated, in terms of both content and destination. Ten commodities and natural resources account for 80% of Bhutan’s export basket. 80% of its exports go to the Indian market. This high degree of trade concentration leaves the country heavily exposed to fluctuations in export commodity prices and changes in the Indian market. Diversifying both the goods and services Bhutan exports, and the markets with which it trades, would enhance Bhutan’s economic resilience and independence.
ITC fully supports Bhutan’s goal to graduate from its status as a least developed country by 2023. More effective engagement with international trade and investment will help Bhutan succeed. This initiative is a tangible contribution to the ongoing transformation of Bhutan’s economy.
Nearly a fifth of the way into this 21stcentury, we have learned two lessons about the economy. One, that a country’s size matters less than the agility and knowledge of its people and businesses. And two, that economic growth that is not environmentally and economically sustainable ultimately cannot be sustained. Bhutan is well position to be an example on both accounts.
ITC is proud to be the implementing agency for the EU-Bhutan Trade Project. Thanks to the Royal Government of Bhutan and to the EU for their support and trust.