Public sectors are those economy concerned with providing basic government service includes such service includes such services as the police, military ,public roads, public transit, primary education and health care for the poor, the economy which is not privately owned by people. Public services are those that are considered to be so essential to modern life and may be associated with fundamental human right. Therefore public sector by nature is often unprofitable.
The identification of the public and private sector can essentially be done in terms of differences in ownership pattern of resources in each sector have grown rapidly in many fields of economic activity involving massive investments. Public sector in Bhutan broadly refers to the business sector and does not necessarily include all activities outside the direct influence of the public sector. It would include various small, medium enterprises as well as micro and informal business that may or may not be registered. Private sector not only creates jobs but also integrates new technologies, improves productivity, and raises incomes, and through the payments of these private taxes it enables government to invest in public goods and services. That's why we say private and public sector are two hands of the economy.
It was in 1960s that Bhutan opened its door to outside world, today private and public sector serves as an engine to Bhutan's economy. These sectors continue to fuel Bhutan's socio economic growth. In past several years the Royal government has taken timely steps to provide more and more opportunities to our private sector and at the same time, safeguard our national security and vital interests. Public sectors in Bhutan as in most of other countries has been the principal instrument for fulfilling the role of state as an entrepreneur.
This assignment contains analysis of role played by private and public sectors in modern Bhutan, its contributions in employment, gross capital formations, and the difficulties in developing these sectors.
History of public and private sector in Bhutan
Followed by the privatization of Bhutan calcium and carbide limited, Gedu wood manufacturing corporation, Bhutan board and particles limited, nation wide Bhutan government transport services, road construction and the Bhutan tourism corporation and sale of shares, the small industries like the essential oil extraction unit in the east have also been hand over to the private sector. One of the largest private companies in Bhutan is Tashi group of companies having a wide range of business portfolios including manufacturing, trade and a range of service, the company was established by dasho Ugyen Dorji in 1959. Privatization and participation,(1990-1991,p.52).
Over the last few years developments in private and public sectors have brought dramatic changes to our society. Both public and private sector companies play a pivotal role in development of the country. Bhutan started planned developed in 1961, and since then it has followed a unique development path. A series of five year plan provided the frame work for continuous development. The first five year plan focused on the development of basic infrastructure like roads, power and telephone networks. Subsequent five year plan focused on the development remit, with the most recent plan, the ninth five year plan, highlighting a diverse array of issues to be tackled including decentralization and devolution of power to the grassroots, management of public services, poverty alleviation and private sector growth.(Mehta,2009, p.1)
Private sectors participation in the information, communications and transport markets has become prominent in last five years and will continue to grow in the tenth five year plan as the government gradually withdraws from service provisioning. Public private partnership has also been successfully implemented and more such collaboration will continue in the near future. The first public service in telephone established in the year 1963. It provided fixed line and mobile telephony, internet and other value added ICT services in all 20 dzongkhag headquarters. The department of information and media was established in 2003 to coordinate the development of the media sector in Bhutan. There is both public and private mass media in Bhutan, Kuensel, BBS, radio, television, cinema and internet as the public service and Bhutan times and Bhutan observer a private media which was licensed in the beginning of 2006. (a special report, 2007,p.4)
Indicators of economic development
Development is a multidimensional concept which broadly includes economic development, social development, technological development as well as institutional change. It is the process whereby the real per capita income of our country increases over a long period of time.
Both public sector and private sectors have grown rapidly in many fields of economic activity involving massive investments. They have contributed a lot in the progress of Bhutanese economy. The structure of Bhutanese economy has undergone significant changes over the past years. The first indicator is the increase in GDP.
Base year =1980
Table1. Sector-Wise Share in Real GDP (in %)
Year Primary sector Secondary Sector Tertiary Sector
1980 55.9 12.2 31.9
1990 44.6 23.3 32.1
2000 33.5 33.3 33.2
2007 20.6 43.3 37.1
2008 21.2 39.1 39.7
Source; Annual Report 2007/08, RMA for 1980, 1990, 2000 figures.
National Accounts Statistics 2000-2008 for 2007 and 2008 figures.
So the increase in GDP in secondary and tertiary sector and decline in the GDP contribution from primary sector indicates economic development in the country. This increase in secondary and tertiary sector in 2007 is due to full commissioning of Tala Hydro Power.
Source: statistical year book
Table 2. Life Expectancy
Year
Life expectancy at birth
2005
54.39
2006
54.78
2007
55.17
2008
65.53
2009
66.13
2011
67.3
The average lifespan of Bhutanese has increased significantly indicating that there is increase in social well fare, people are getting good health services and living standard are being raised.
Per capita income is also used as one of the indicator because a rising per capita income indicates that per head there is an increase in the availability of goods and services. Bhutan's per capita increased drastically over years, it was just $150 in 1988, $1321 in 2006 and it creased to $1900 in 2008, which represents the fact that a country as a whole is getting better off.
Table 3. Unemployment rate.
Year
unemployment
Rate
2003
1.8
2004
2.5
2005
3.1
2006
3.2
2007
3.7
2009
4.0
2010
3.3
Source;( kuensel, march5, 2011, p.1-2)
Fig. 1. Unemployment rate
If a significant proportion of population in a country is unemployed it is said the country is never developing but if it decreases it shows the signal that economy is developing. But here we can analyze that Bhutan unemployment raises due to development only. When the country is growing towards development there is a need of large force of human recourse. But in our country though there is a significant of jobs available people lack skills and level of educations is low for certain job so government is left with no option to heir experts from other nation which creates unemployment within our country. Bhutan had 4% unemployment rate in 2009 and decline t 3.3% in 2010 indicating Bhutan is trying to develop skills so in order to reduce the unemployment rate. So we can say Bhutan is growing toward development. (gyelmo, 2011.page.1).
Table 4.Gross Domestic Capital Formation at Constant Prices (Nu. In million)
Year
Capital formation of private sector
capital formation of public sector
Growth rate of Private sector
growth rate of public sector
2000
6785.5
3080.1
0.0
0.0
2001
9802
3556.4
44.5
15.5
2002
11709.2
4095.7
19.5
15.2
2003
14258.2
2647.9
21.8
-35.3
2004
16842.3
3236
18.1
22.2
2005
14904.6
3669.7
-11.5
13.4
2006
13524.1
5193
-9.3
41.5
2007
13235.4
6302.4
-2.1
21.4
2008
14435.3
6729.2
9.1
6.8
2009
18263
7038.2
26.5
4.6
Source; statistical year book, 2007-2009 &statistical year book,2010.
Fig.2. Growth rate of private and public sector
Gross domestic fixed capital formation includes the purchase of machinery and equipments for production of goods and services by industries, general government, non profit institutions serving house holds, and the out put of construction.
In 2001 the growth rate of private sector was 44.5% and that of public is 25% this is because of government privatizing of some public sector. The growth rate of private increased in the year 2008, this significant change is because of increasing rate of investments by various public sectors in construction. The share of private sector in the purchase of equipment was more compared to public.
In conclusion we can say from the above table that the construction sector gets a huge share compare to machinery and equipment. Public sector invests its greater part of GDFC on construction then on machinery and equipment, But far less then private sectors. All these are because of the pragmatic measures and help undertaken by the royal government in terms of fiscal incentives, financing etc. The role of private sector is increasing every year, and its growing.
Contribution made by public and private sector in employment.
Table.5: Number of persons employed by age group and type of enterprise, 2010 - Bhutan
Government sector
Private sector
Age group
Male
Female
Male
Female
15-19
300
200
900
1600
20-24
2300
1500
3000
4100
25-29
6900
5900
5600
8600
30-34
6800
3700
5200
6000
35-39
5700
3000
4600
6000
40-44
4300
1600
3200
4200
45-49
3000
400
2300
1400
50-54
2100
300
2300
1000
55-59
1000
0
2000
700
60-64
400
9
1100
800
65+
400
100
900
500
Total
33200
16709
31100
34900
Source: Statistical Yearbook of 2010
Employment in today's world has emerged as the major development challenge globally.. Bhutanese citizens are to be benefited from the progress taking place in private and public sector. As government and private sector in Bhutan work together hand in hand it will be one day succeed in providing 100% employment.
Though the civil service remains the preferred employment choice for most educed youth in view of the security, dignity, training and career opportunities associated with it. However the prospect in expanding employment in civil service has reached saturation point. So government taking this into considerations in attracting for youth to take up work in the private sector. From the above table it is clear that most of the people are now employed in private than in public, which indicates that government is today privatizing most of the public services and creating employment opportunities. Contribution towards employment is greater from private than that of public.
Difficulties faced in developing private sectors
Though the private sector in Bhutan is regarded as the major engine of growth but also an important partnership in the development of the country, there are some difficulties faced in the development of private sector.
1) Access to finance
2) Access to government regulations
3) Labor productivity and skills are the main challenges faced by the private sector of Bhutan, according to World Bank's second investment climate assessment survey, 2009. Access to finance is the main challenge faced by private sectors in Bhutan, along with labor regulations for small and medium industries. There are transportation difficulties too. The time spent by firms to comply with regulation and associated cost is much higher compared to regional averages. On labor productivity and skills Bhutanese do not take up blue collar jobs, while not many have the capacity to perform high skilled jobs. So it becomes difficult for private sectors to develop. And strict regulations when hiring foreign labors were also an issue for the private sector without which the private sectors cannot increase the productivity of their industries. Though economic development policy is friendly private sector oriented there were issues with external borrowing, there also prevail the issues of collateral when the companies avail loans. ( Agrawal, 1996, p.381)
Difficulties faced by public sectors
Though public sectors plays a vital role in the development of the economy has challenges, the basic consideration which persuade the government in setting up huge manufacturing capacities especially in the so called core sector industries like power which involves large investment, long gestation periods in project implementation and consequent long periods f waiting for security returns on investment made. Man of services and products provided by public sectors are subjected to price controls to meet the social objective which contributes on the profit. A large of projects in public sector suffered from time and cost over runs of an unbelievable magnitude dam damaging their viability badly and making them prematurely sick.
Conclusion
Both public and private sectors plays a vital role in the development of Bhutan's economy, public sector being the monopoly in the hands of government is considered to be very important organization. Though that is the fact public alone cannot lift the economy towards development. Rather there should be equal part played by both sectors. Private sector in Bhutan usually neglects rural places, but public sectors set up their units in the economically backward areas, which tries to bring regional development equally. so there is dare need of private sectors to be developed in backward places too.
Public sector organizations are working with the only motive of providing public utility services to society at large irrespective of its profit but private opt for profit maximizing. A rapid industrialization growth in a country needs a sound infrastructure, huge capital, electricity and many such industries. Public sector in Bhutan takes proper care of society and its employee and provides job security, sound wages, proper working conditions, training and welfare facilities so that's why people prefer civil service but in order develop both sector people should not neglect the important role played by private sector . Both private and public sector has to be given equal importance because one give revenue and other provide social welfare. If private is given more importance means there will be a chance of widening the gap between rich and poor and there is a full chance of concentration of power within few people. So in order to prevent this equal importance must be given to two sectors, as we say private and public sectors are two hands of the economy.
