Friday, October 28, 2011

My take on DHIs establishment

Like most things, the magic is in the details. The issue centering DHI is no different. Let me explain. Ever heard of the Blue Ribbon Panel? This should clarify many questions relating to the existence of DHI. The Blue Ribbon Panel is composed of the prominent nationals such as the Governor, the Secretary, MoEA, Election Commissioner etc who come together to elect the Chairman of DHI. The Royal Charter Mandates that one of the Board Member be a representative of Ministry of Finance. The rest of the Board Members are nominated by the chairman and approved by the Shareholder ( MoF) in the Annual General Meeting, as per the Companies Act of Bhutan. The Board Appoints the CEO and the top Management and so on and so forth like any normal Limited Company in Bhutan operating under the Companies Act. The Chief Difference you will notice about DHI and the other Companies in Bhutan is in Having a Blue Ribbon Panel and an Executive Chairman. The Idea of Blue Ribbon Panel is in insulating any the State Owned Enterprises and National Resources from negative political influence. The intention is not of suspecting the present or any government of ill-intent to the nation but, a precautionary measure, incase such governments do come into power. Political parties have to function under many limitations such as the 5 year tenure, the need to comeback to power and please the voters.

Assume that the State owned enterprises were still under the direct control of MoF. What would be expected of them? Provided Dividends to help the Government pursue its developmental activities and purse social objectives such as rural electrification or rural telephony. A important aspect of the Royal Charter for DHI is to provide Revenues to the Government. Further, annually, the government gives objectives/targets to be achieved by the SoE's as per the governments plans. The Government therefore neither looses out on revenues or the activities to be carried out. The Government instead has the advantage of now needing to interface only with one organization to achieve its interests. This would probably mean fewer staff in MoF to get it all done which is inline with the Governments Policy of lean Civil Service.

Remember the days, when all the SoE's were directly under the MoF. There was a Division of sorts looking into the affairs of the SOE's. There were no mechanisms of target setting, performance measurement, expenditure controls etc. As a SOE's employee, i felt MoF's presence only when Board Directors were to be nominated or when a Salary raise was in question. After DHIs formation, because of the establishment of a institution focused on managing existing SOE's, Control and improvement measures were put in place, more thought was put into having efficient and driven board Directors.

Important Mandate of DHI is investment. The Prime Minister calls DHI the investment Arm of the Government. All of us have heard about the oil rich countries. The oil provides these countries with access to lots of finance for the near future. Recognizing that the access to money is not going to be forever, Soverign wealth and fund management companies are established to make investments which would ensure that the Country in question would have other resources. It is my belief that DHI has been established with similar intent of 'protecting and growing the nations wealth for future generations' . Such organizations will require adequate empowerment. The context of sovereign wealth management becomes more important for Bhutan, because the largest enterprises in Bhutan are all SoE's and private sector is at its infancy.

One look at the Royal Charter, and you will realize that immense wisdom and thinking has gone into the formation of DHI. The interests of ruling governments in SoE are well taken care of. The SoE's in question are subjects to higher requirements of efficiency and accountability. The Nations wealth is being safe guarded for future generations.

For a balanced democracy, the check and balance mechanisms must be in place. DHI in my view, is an institutions set up for such reasons and certainly not as parallel government or centers of power. The avenues to discuss and amicably move forward have been clearly laid out.

If I were the Finance Minister, I would definitely not see any reasons why DHI would 'disrupt the economy'. DHI might take wrong steps sometimes and so might the Government in its intent of using national wealth, but importantly the such of such things have been lowered by many times because of the check and balance mechanisms in place.

I conclude with the quotation from His Majestys Kasho for the LG Elections "In the interest of unity and harmony, I have always encouraged close consultation and cooperation between different branches and agencies of government; between institutions and the public; and among our people themselves. Bhutan is a small country so we must always seek ways to sit together, face to face in the spirit of brotherhood and with unity of purpose, to resolve all issues. We must take advantage of our strength as a small close-knit society."

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