Understanding the IT Park in the Correct Perspective
In view of the various misunderstandings that seem to be floating around regarding the IT Park project, I felt that it is necessary to make a few clarifications because correct information is vital for healthy public discourse and understanding.
First of all, the IT Park is one of the three components of Bhutan Private Sector Development Project which was conceptualized and initiated by the Royal Government of Bhutan in consultation with the World Bank way back in 2006, about two years before Bhutan’s first democratic elections in 2008. Given the difficulty we face in coming up with practical and sustainable solutions to the current state of our economy and the rising youth unemployment problem, the IT Park project is a visionary initiative which was started with the main objective of supporting “private sector-led economic growth that is capable of combating rising youth unemployment, and help to further diversify the economic base of the country”.
This is also timely and in line with the changes taking place globally following the ICT Revolution. To step back and simply watch what is happening in other countries is to be deprived of the opportunities this revolution offers our small land-locked country and to be forever left behind – economically and technologically.
Secondly, it is important to understand that the IT Park Project is executed on a Public Private Partnership (PPP) model and therefore the pressure on the Govt.’s resources has not been as heavy as it would have been otherwise. Under the PPP model, the Govt. has provided the land on lease and ancillary facilities like the road access, water supply, fibre-optic connection, power line connection etc. with the World Bank’s project-tied assistance, to the private developer – Thimphu TechPark Pvt. Ltd. (TTPL), which is a joint venture between Assetz Property Group (APG) of Singapore currently owning 70% of the shares and Druk Holding and Investments (DHI) owning the remaining 30%.
In keeping with the PPP best practices, the pressure on the Govt.’s own funds is minimal. TTPL financed the construction of the IT Park infrastructure at a cost of around Nu. 300 Million, and was completed on 30 April 2012, in a record time of less than two years after the ground-breaking ceremony held on 18 May 2010. TTPL owns and will operate the IT Park for 30 years which can be renewed twice on mutual agreement according to the PPP contract. Hence, the operational expenses of the IT Park are also borne by TTPL and there is no direct running cost for the IT Park on the Government as some people think.
Thirdly, the operation of the IT Park began only from the beginning of May 2012 and so it has been in operation for only about two years till now. Within these two years, TTPL, with the support of the Ministry of Information and Communications (MoIC), has been able to rope in two international tenants and support a number of Bhutanese entrepreneurs within the Government owned incubation centre inside Bhutan Innovation and Technology Centre on the ground floor. A third potential international tenant is piloting from the IT Park at the moment. Currently, around 250 people work from the IT Park every day.
When has another project created 250 white-collar jobs (which our youths prefer) within a span of two years with an investment of around Nu. 300 million only by the private sector? On top of that, the salary of most of these people come from abroad helping Bhutan prop up its meagre foreign currency earnings and ease the ‘rupee crunch’ at least a little bit. In addition, the IT Park has created spill-over effects like the increase in the overall internet backbone speed, reduction of internet leased line costs and improved reliability of Internet connectivity in the country owing to the demand for better service from the international tenants at the IT Park. Above all, it has helped project Bhutan to the world as not just a Shangrila for tourists, but also an investment destination for investors looking for opportunities in new locations.
TTPL is currently in close touch with a number of potential tenants and we believe that we would be able to rope in some more tenants soon. The IT Park is also open to domestic IT/ITES companies and the rent is very competitive with the local market rates (it is not Nu. 45 per sq ft as was reported in the media) despite having a host of facilities like the state of the art fire protection system, HVAC and DG power backup and common security and facilities.
However, it is by no means easy to attract foreign investors as moving to Bhutan has to make a real business case for them. Many countries in the world give enormous incentives to woo investors. Our Government too has offered some incentives to the tenants of IT Park such as support for training employees and tax holiday for 10 years which some people believe is doing too much. What we offer is actually quite modest compared to what other countries offer. Hence, I think we need not be alarmed by this at all.
Fourthly, some recent media coverage on the discussions between the JV partners APG and DHI for the possibility of transferring shares from APG to DHI has given rise to some speculations. The discussion is based purely on business decision on the part of the partners involved in line with their strategic business interests and has nothing to do with any other factors. As far as the operation of the IT Park is concerned, it will continue seamlessly regardless of any change in the shareholding pattern. Last but not the least, the IT Park is a boon, not a burden for the country as we are already reaping its benefits. The IT Park is not any one organisation’s or any one company’s investment, but Bhutan’s long-term investment for Bhutan’s future. Hence, besides the MoIC and DHI, all stakeholder agencies would need to work together to help it achieve its vision and full potential of creating more employment opportunities for our youth and strengthening our economy at the same time.
By: Tshering Cigay Dorji, CEO, Thimphu TechPark Ltd.
This article appeared in Kuensel on Saturday, 3 May 2014 under the title ‘IT Park – the Real Picture’.
Disclaimer: The views expressed here are those of the author himself and not necessarily that of the organisation he represents.