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Bhutan gets its first IT park

Sep 18, 2009

The Bhutanese government has announced a plan to build the country’s first Techpark to facilitate technological innovation and attract foreign investments. The park is expected to be operational in June 2011 and will provide 700 jobs.

Thimphu: Bhutan has taken the first concrete step towards achieving its aspirations of becoming a major regional IT centre, with the government finalising a deal last Friday to build the country’s first IT Park.

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The park, named Thimphu TechPark, will be built on a five-acre plot in Wangchutaba by Thimphu Techpark Pvt Ltd, a joint venture of Druk holdings and investments (DHI) and Assetz, a property development firm headquartered in India and Singapore.

Thimphu TechPark Pvt Ltd, the only firm to bid for the project, will design, build, finance, own and operate the park.

“This is a nationally significant event, in that it’s the dawning of the ICT era we all have been awaiting in terms of building a world-class IT park,” said communications minister, Lyonpo Nandalal Rai, at the signing event.

But what exactly is an IT park and how will it benefit Bhutan?

Creating its unique space

“It’s the same concept as Singapore, where the government provides liberal economic laws and ancillary features (water, sewerage, electricity and fibre connectivity) to attract foreign companies to operate within its borders,” said DIT consultant, Kezang.

“In this case, Bhutan is simply providing a developed country environment on five acres of land, and advertising the office space.” Similar such zones also exist in India.

“The first thing about an IT park is infrastructure,” explained the chief executive officer (CEO) of Assetz, Michael Holland. “It will provide a high level of mechanical, electrical, data management and storage, and cooling facilities.”

An IT park will also enable IT and ITES (information technology enabled services), said Holland.

The IT component will generate employment opportunities, while the ITES sector produces BPOs (business process outsourcing) and KPOs (knowledge process outsourcing). Bhutan is primarily targeting the ITES component.

Holland said ITES was about bringing “international and local experts together for the exchange of knowledge.”

Another factor, which explains the inclusion of the word ‘park’, is the inclusion of a natural environment for occupants. Since the IT industry is fueled by innovation, favourable environs are a must. For this aspect, Bhutan was perfect, he said.

Global ambitions

The park is also a special economic zone (SEZ), where economic laws are more liberal than the rest of the country. For instance, global IT companies that use the park will get a 15 year tax exemption, 100 percent foreign equity ownership and other fiscal incentives.

"The main structure is designed to be environmentally friendly and incorporating traditional architectural characteristics"

“We have certain advantages like our natural environment and political stability to attract foreign investors,” said DIT director, Tenzin Chhoeda. The director also said that major Indian IT companies are already supporting Bhutan in its endeavour. “We’re quite confident,” he said.

There are currently no commitments from any IT companies to set up at Thimphu TechPark. DIT director said BPO Genpact had expressed its willingness to move in immediately, but the lack of a back up international internet connectivity line had prevented it.

Efforts to establish a second line through Gelephu by 2011 are underway. Marketing of office space at the park will start shortly, according to DIT consultant, Kezang.

As another incentive for Thimphu TechPark, the government has assured 20% occupancy by leasing 10,000 sft at USD 2m for 90 years, the maximum potential duration of the lease.

Thimphu TechPark will pay the government Nu 217,800 annually for the land. Non-fiscal incentives, like ancillary services, are also being provided until the park perimeter at government expense.

Alternate routes

Even then, DIT officials say, Bhutan’s IT goals are not dependent on the success of Thimphu TechPark. “We’ve other aspirations like e-governance, and a knowledge-based society, where everyone is networked,” said director Tenzin Chhoeda.

“If the park fails to attract foreign investment, employment and establishing an ITES industry, will be adversely affected, and we can’t afford that,” the director added. The government has set up a multi sector task force, which will provide enabling policies for the IT Park to prevent and quickly deal with any possible setbacks.

“The biggest challenge is making sure the demand, the industry, exists,” said Assetz CEO, Holland. “Local IT companies will have to develop over the next few years,” he said.

A related challenge is creating an IT labour force. DIT predicts 700 Bhutanese employees of managerial capacity will be employed at the IT Park upon completion, but with the recent refusals of a majority of Infosys trained graduates to return and work in India, possessing such a force by then remains contentious.

“It was disappointing,” said Assetz CEO, Holland on the refusals. “Parents in India would have sold everything they owned to get such an opportunity.” Tenzin Chhoeda, added, “There’ll be a realisation that the IT industry is the future.”

Construction of the Nu 250m IT park begins in February, next year. The main structure, designed to be environmentally friendly and incorporating traditional architectural characteristics, will be completed by November 2010. Thimphu TechPark is planned to be operational by June 2, 2011.

The article was first published in Kuensel.

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