Celebrating REMIT Bhutan with RMA and Bhutanese residing Abroad.
Just came across an fb post of the Prime Minister shared by fb friend regarding REMIT Bhutan. It is about Foregn Exchange Account a Bhutanese can open with or through Royal Monetary Authority of Bhutan (RMA).
This is a good starting move to promote hard currency banking in Bhutan by Bhutanese working in third Countries.
RMA needs to go much further than simply permitting opening Foreign Exchange Accounts by such Bhutanese. It has to change its authoritarian mode of simply " granting " something like permission to maintain " foreign exchange account" under REMIT Bhutan.
The Governor and the Board of RMA has to come up with commercial strategies to encourage those Bhutanese to park all their hard currency savings with or through RMA in Bhutan.
When DPT Government of Bhutan borrowed Indian Rupees to meet shortages, the Government paid interests of 9% to 11%. On top of that the Government had to more or less beg the Government of India to arrange such short Rupee term loans.
Later the PDP Government of Bhutan used hard currency reserve with RMA to buy Indian Rupees to solve the same problem of Rupee shortage. That way Bhutan did not have to beg India for Rupee loans.
I cite these two cases to highlight how important it is for RMA and the Government to value the hard currency source that is represented by Bhutanese working in third countries. You cannot express value by words only or simply permitting opening of hard currency account.
This REMIT Bhutan Scheme must be promoted and attracted through incentives that commercial banks (normal banks like BoB, BNB,T Bank and Druk PNB) offer: Such as Savings interest and Fixed Deposit interests.
a) Offer 5% interest on Hard Currency Savings Account and higher interests on long term Hard Currency Fixed Deposits. The interest component could be paid in Ngultrums. A twin Ngultrum Account could be opened along side the REMIT Bhutan account for interest deposit as well as for such account holder to spend money in Bhutan from their Foreign Exchange Account through equivalent counter value transfer into this Ngultrum Account.
b) Interests income from Fixed Deposits should not be taxed. Such income must be free of PIT to encourage saving culture for all Bhutanese living inside or outside Bhutan. Banks can use Fixed Deposits to mobilise as capital source for their loans to clients. More money would be available to plough into the economy. And Government can earn more income through CIT from Banks and from BIT on incomes generated through business investnents enabled by loans disbursed by Banks . This way all three: the Depositors, the Banks and the Government ( Revenue Department) become end winners together. The Bhutanese nation benefits in the overall scheme of things.
c) Main reason why hard currency remittances are taking place through other channels than Banks is because RMA has in place a very discouraging short sighted regulation in place. RMA pays less when buying hard currencies and charges more when selling. The difference is around than Nu: 2. 25 for every dollar transacted. There are valid reasons in general transactions like Donor contributions wherein Banks and RMA are able to accrue benefits from the service facilities offered.
d) In cases of Bhutanese citizen remittances, RMA need to pay the same selling rate in counter value. This will encourage Bhutanese residing away to remit through Banks and also induce such Bhutanese to park their hard currency earnings with RMA or Banks authorised by RMA. Bhutanese residing or working outside must be encouraged to bank their hard currency savings with Bhutanese Banks. Over the years they will grow to be reliable continuous substantial foreign exchange source for Bhutan.
e) Whilst on this subject of exchange value, RMA could also realise more hard currency if it permits re- exchange of left- over foreign currency at the selling rate. For example: The Banks sell certain amount of dollars to a Bhutanese travelling to third Countries. The exchange rate applied is the higher selling rate. The same Bhutanese should be permitted to re-exchange upto a third of the amount initially exchanged at the prevailing selling rate upon return from the third Country. This would enable RMA to capture almost all available hard currency within the country and such Bhutanese do not have to seek buyers in the black market or hold on to the hard currency saved for next outside visit which may not even happen.
I appreciate the progressive step taken by RMA and this Government. Thank you for national interest. Please take further concrete steps so that both the Bhutanese nation and the Bhutanese citizens residing or working outside mutually benefit.