ITAB pushes for inclusion of IT sector in ESP
Last Updated on January 5, 2025 6:19 am
The IT Association of Bhutan (ITAB) has petitioned the Ministry of Industry, Commerce, and Employment (MoICE) for financial support and incentives, pointing out that the Economic Stimulus Plan (ESP) does not include specific provisions or initiatives to support the growth of the IT sector.
The letter points out that achieving the country’s digital economy goals will require substantial investment and policy backing.
ITAB is pushing for financial support equivalent to other sectors included in the ESP to ensure that the IT industry can contribute meaningfully to economic growth and job creation.
The ITAB’s proposal to MOICE highlights the need for key initiatives such as the establishment of innovation hubs, data centres, AI factories, and business process outsourcing facilities to foster growth in the sector.
It has also called for strong support for the startup ecosystem and the development of homegrown software products capable of competing in global markets.
However, during the recent meet-the-press session, Finance Minister Lekey Dorji explained that the ESP focuses on sectors like agriculture, cottage industries, and medium-scale manufacturing. “The trading and service sector has not been included in the ESP, and since the IT sector falls under services, it is excluded.”
The finance minister said that Nu 10 billion from the 13th Plan capital outlay has been allocated to GovTech Agency to promote digital governance and the digital economy. Another Nu 100 million is set aside for creative industries, such as film and music, and Nu 67.5 million for startup activities in the 2024-25 fiscal year.
ITAB President Phub Gyeltshen argued that while the GovTech funding is a positive step, the IT industry requires more comprehensive backing, such as equity and working capital.
“We are talking to the ministry about including the IT sector in the ESP. With the right resources and infrastructure from the government, we could contribute more to the country’s GDP,” he said.
The government has set ambitious goals for Bhutan’s digital economy in the 13th Plan, targeting USD 300 million in GDP contribution by 2029 and USD 600 million by 2034. The plan also aims to generate 1,000 jobs annually, starting 2024.
A private IT company owner said that in the past, each ministry had its own plans for the IT sector, which created opportunities for private firms. However, now the process has been centralised under GovTech.
“The budget allocated to GovTech over the next five years does not directly benefit the private sector. We can only access projects through open bidding, but sometimes these are awarded to DHI as a continuation of previous projects,” he said.
He also said that while tender projects can offer valuable opportunities, the payment terms are not immediate, which creates financial challenges for businesses. “This is when the support from the ESP can be crucial for private sector companies.”
A GovTech official said that the GovTech has always been open and welcoming to the IT industry, fostering collaboration to globalise the sector. “The possibility for support is always there provided commitment and effort is matched by the industry too.”
With the growing focus on digital transformation, the GovTech official expressed confidence in strong private sector investment. “Businesses must not only produce high-quality products but also ensure global standards and aim for international expansion.”
The Bhutan Digital Transformation Programme, a key component of the 13th Plan, aims to transform the country into a high-income Gross National Happiness economy by enhancing digital governance, economy, and society.
Out of the Nu 10 billion allocated for the initiative, Nu 5.15 billion will go to digital governance, Nu 1.69 billion to the digital economy, Nu 610.6 million to digital society, and Nu 2.45 billion for supporting enablers.
The programme also plans to train over 400,000 citizens in digital literacy, covering safe use of online platforms like AI, social media, and online banking.