Bhutan’s philosophy of Gross National Happiness (GNH) guides our long-term vision of sustainable development. The nation’s GDP increased 70% over five years to ~ 40 Billion Ngultrum in 2007, driven primarily by the electricity and construction sectors.
Bhutan’s Tenth five-year plan began in 2008. With a planned outlay of ~142 Billion Ngultrum, the plan has set aggressive targets to grow GDP annually by 8-9% and reduce the proportion of people living in poverty from 23% to 15% by 2013.
As the country marches forward, there are significant challenges to overcome:
- Only ~1% of the population is college-educated and the number of unemployed people is increasing (especially among youth and rural populations)
- Economic growth has been dependent on a few industries, largely driven by the public sector
- Public services (especially healthcare, education and administration) are likely to place an increasingly unsustainable burden on the nation
- The regulatory and business environment needs to be improved. Bhutan ranks low in the “Ease of doing business index” by the World Bank
It is against this backdrop that the Royal Government chose to focus on an accelerated pace of socio-economic development through improvement in efficiency and effectiveness of public service delivery and exploring potential for job creation, rather than depending on conventional ways of doing business to address the challenges. Thus, the “Accelerating Bhutan’s Socio-Economic Development” initiative was conceptualized.
Given the cross-sectoral nature of issues at hand, the Cabinet Secretariat directed the GNHC Secretariat to initiate and implement the project by hiring an internationally reputed strategic and management consulting firm on the 11th March, 2009. An open tendering process commensurate with the Procurement Rules and Regulations, 2009 was followed for selecting the management consultant partner. The chosen selection method was Quality & Cost Based Selection (QCBS), with 90% weight on quality and the rest on cost. McKinsey & Co. won the competitive bid with a financial bid of US$ 9.1 million. The other four competing firms for the project were Parthenon, A.T. Kearney, Booz & Company and Monitor.
The approach to consultancy and the project is unique in the sense that the consultancy work does not end with carrying out surveys and submitting reports to the government. The consultant is also supporting the selected sectors in terms of implementing the recommendations with the extent of implementation support determined by capacity that exists with the sectors.
On each of the selected sectors, the consultant and concerned officials spend the first three months in analyzing and understanding real situation of the sector/industry called the Diagnostic Phase. At the end of this exercise, a set of new initiatives and key decisions are jointly proposed to the government. Based on the cabinet decisions, a blue print is prepared on each initiative and the project moves into Implementation Phase.
The objectives of the ABSD initiative are aligned with the GNH pillars, especially equitable growth and good governance. The three specific objectives of the project are described below:
(1) Improving the efficiency and effectiveness of public services
~50% of Tenth plan outlay is budgeted for public administration/services, education and health. Given the challenges of a difficult terrain, innovative solutions are required to deliver public services in Bhutan. The focus shall be to provide critical public services cheaper, faster and at higher quality levels. The public services selected include Healthcare, School education, Tertiary education, Vocational training and Government to Citizen (G-C) services.
(2) Generating a substantial portion of the employment target of the Tenth Five Year Plan
The public sector has been the driving force behind Bhutan’s economic growth. The Tenth plan has set an ambitious goal of achieving full employment, particularly of educated youth. To achieve this, significant contribution from the private sector is critical, in addition to continued growth in the public sector. ABSD will target to generate a substantial portion of the ~75,000 jobs required in the Tenth plan period in key sectors. The sectors selected are Construction, Tourism, Culture Industry, ICT and Agriculture.
(3) Enabling and Managing Change to ensure real and sustained impact
Significant, far-reaching changes are anticipated in Bhutan as part of this project. It is critical that knowledge and capabilities are developed within the government to ensure recommendations are executed effectively and the impact is sustained.
Diagnostics have been completed and implementation underway in all the priority areas.The detailed status is shown below:
Nine performance compacts have been signed to date. Over the last 20 months, the cabinet has taken over 100 decisions on ABSD. In order to ensure that the new initiatives are commensurate with national policies and local ethos, a counterpart staff each from the GNHC and the corresponding sectors work with the team of consultants Every concerned government agency, including the Ministers and civil servants, is an integral partner to all the plans and strategies devised. Together, they commit a great deal of time and energy towards the success of each initiative. . The consultants along with the GNHC representatives form the Performance Facilitation Unit (PFU), which monitors the progress and helps the concerned sectors in addressing issues and bottlenecks in implementation.
The institution of PFU was endorsed by the Cabinet on 26th October, 2009. Its overall mandate is to ensure that the most important initiatives in the 10th FYP are successfully achieved. It puts especial focus on the most important projects in the country. It ensures that each of the ministries and departments are accountable to the national agenda via a system of performance compacts that each entity has with the prime minister. PFU, by reviewing and stocktaking at the right frequency, creates a system for reporting performance gaps timely and thus facilitates appropriate intervention to resolve issues mid course rather than at the end of plan period
Efficiency and effectiveness of public services:
- Potential procurement savings for the government to the tune of 500 million Nu, over the remaining plan period in construction and healthcare
- Further savings potential to be explored
- First set of leaned public services to be rolled out in a few months
- Government has launched a concerted effort to create additional 35-40 thousand jobs from the priority sectors. 40-45% of this job creation is expected in rural areas. Construction sector has employed close to 35,000 people in the past.
- Driven by improvements in VTI training, MOU with hydro power companies to train and incentives towards local employment provided as part of new point based system, 10 thousand additional local jobs expected in the construction sector over the next three years.
- By attracting 100,000 ecologically conscious high-end tourists additional 10 thousand jobs expected in tourism sector.
- Agriculture expected to create 10-12 K new jobs and also address under-employment in the sector by focus on contract farming.
- Additionally, ICT and Culture industry are expected to create 8-10 K jobs.
- The Ministry of Labour is working with the various ministries to understand the need for training in these areas and supporting them through VTIs and other channels.
Details on the progress made in each sector/service can be found in the respective section in the website.