To save the country’s plunging foreign currency reserves, the finance ministry has suspended the import of vehicles from today. The suspension will be reviewed and amended six months from now depending on the situation of the foreign currency reserves. The announcement comes amid news of countries in the region facing severe economic crises and some even imposing similar measures to retain declining foreign currency reserves.
The suspension of the import of vehicles is one of the government’s solutions to reduce spending amid falling foreign currency reserves.
The Prime Minister, during his recent tour in the east, said that the country’s foreign currency reserves depleted to around USD 850 M from about USD 1.3bn about two years ago. He said that will last only about 15 months if the country’s economic situation doesn’t improve.
Article 14, section 7 of the Constitution states that “A minimum foreign currency reserve that is adequate to meet the cost of not less than one year’s essential import must be maintained.”
As per the ministry’s notification, the suspension, however, is exempted on three conditions. Heavy earthmoving machines, agriculture machinery and utility vehicles costing less than Nu 1.5 M or equivalent to USD 20,000, whichever is less will be allowed. In addition, vehicles for the use and promotion of tourism shall be exempted from the moratorium. And fossil and electric taxis which are due for replacement will also be exempted.
Vehicle bookings received after yesterday will also not be permitted.
Vehicle dealers in the country said this move will affect them heavily. The STCBL’s CEO, Tshering Wangchuk said the company rely heavily on the import and sale of vehicles. He said the moratorium will have a huge impact on the company’s revenue.
“Unfortunately, all the vehicles that we import and sell are above that USD 20,000 cap. Because of that, we may not be able to book or bring in any vehicle from today. But STCBL over the last few years has diversified it and gone into petroleum. We are also exporting boulders to Bangladesh although it is very negligible and we are also into other businesses. So, we may be able to sustain through this moratorium,” he said.
“If the government could allow us to import all those vehicles that have been ordered by us which are already confirmed to our supplier, our stock will may go another two months,” said Kumar Subba, the GM of Shingkhar Pvt LTD, Kia Motors.
Bhutan imported over 8,600 vehicles last year. And this year from January to June alone, the country imported more than 3,700 vehicles including two-wheelers and heavy machinery.
Export of hydropower, metals and other mines and minerals, tourism and inflow of remittance are key sources of Bhutan’s foreign currency exchanges. But the country could not receive the expected foreign currencies from these sources amid the COVID-19 pandemic.
SamtenDolkar
Edited by Phub Gyem
