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TRANSCRIPT
The Economic Contribution of Copyright-Based Industries
in Bhutan
October 2011
The Economic Contribution of Copyright-Based Industries in Bhutan
ROYAL GOVERNMENT OF BHUTANIntellectual Property Division, Ministry of Economic Affairs
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The Economic Contribution of Copyright-Based Industries in Bhutan
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Ta b l e o f C o n t e n t s
Executive Summary 5
Abbreviations 8
1. IntroductIon 9
1.1 Background 9
1.2 ObjectiveoftheStudy 9
1.3 Process,ScopeandMethodology 9
1.4 DataSourcesandLimitations 10
1.5 TheCopyrightFactor 11
1.6 StructureoftheStudy 11
2. ovErvIEw of thE copyrIght InduStrIES 12
2.1 Background 12
2.2 Definition 12
2.3 LegalandInstitutionalFramework 14
2.4 ProtectionofCopyright 14
2.5 ReviewofRecentDevelopmentsinKeyCBIsofBhutan 16
2.5.1 FilmandMusic 16
2.5.2 PrintandMedia 17
2.5.3 HandloomWeaving 19
2.5.4 Handicrafts,FurnitureandVisualArts 19
2.5.5 OtherRelatedAreas 20
2.6 ThePromotionofCulture-BasedCreativeIndustries 20
2.7 KeyIssuesandConstraints 21
2.7.1 WeakDatabase 21
2.7.2 PoorInter-AgencyCoordination 21
2.7.3 LackofAwarenessofCopyrightProtectionandEnforcement 22
2.7.4 LackofInnovationandR&D 22
2.7.5 LackofSkillsTraining 22
2.7.6 InadequateAccesstoFunding 22
3. contrIButIon of cBIs 24
3.1 Introduction 24
3.2 TheStructureoftheEconomyofBhutan 24
3.3 EconomicContributionofCBIs 26
3.4 ShareofCBIsinGDP 26
3.4.1 StructuralCompositionofCBIs 26
3.4.2 GVAGrowthofCBIs 28
3.5 ShareofCBIsinEmployment 30
3.5.1 ShareofCBIsinTotalEmployment 30
3.5.2 EmploymentDistributionwithintheCBIs 34
3.5.3 FemaleParticipationinCBIs 34
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4. pErforMAncE of cBIs 36
4.1 Introduction 36
4.2 PerformanceIndicators 36
5. EconoMIc LInKAgES of cBIs 38
5.1 Introduction 38
5.2 BackwardandForwardLinkages 38
6. contrIButIon of cBIs to IntErnAtIonAL trAdE 39
6.1 Introduction 39
6.2 ShareofCBIsinInternationalTrade 39
6.3 Inter-temporalChangesinTradeContributionofCBIs 40
7. A coMpArAtIvE country AnALySIS of cBI contrIButIon 42
8. poLIcy rEcoMMEndAtIonS 44
8.1 Introduction 44
8.2 ImproveDataCollectionandDissemination 44
8.3 StrengthentheIntellectualPropertyDivision 45
8.4 FosterPublic-PrivatePartnership 45
8.5 ProvideadequateCredit 46
8.6 Conductin-depthSector-SpecificStudies 46
9. futurE dIrEctIonS 47
references 48
AnnEx 1: ISIc codES for BhutAn 50
AnnEx 2: SourcES of dAtA And InforMAtIon 53
AnnEx 3: QuEStIonnAIrE 55
AnnEx 4: MEEtIngS And group dIScuSSIonS 57
AnnEx 5: corE cBIS uSEd for EStIMAtIng thEIr contrIButIon to gdp 58
AnnEx 6: forMuLA on copyrIght fActor 59
AnnEx 7: cALcuLAtIonS of nEt vALuE AddEd 60
AnnEx 8: EQuAtIonS rEfLEctIng thE Input-output coEffIcIEntS for cBIS 61
AnnEx 9: SupportIng poLIcy dEvELopMEnt for cuLturAL InduStrIES 62
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Ta b l e s
table 1: CopyrightFactorinNon-CoreCBIs 11
table 2: CopyrightFactorIndustryGroup-Wise 11
table 3: ClassificationofCopyright-based,CreativeandCulturalIndustries 13
table 4: ProtectionofCopyrightWorks 15
table 5: MilestonesonCopyrightinBhutan 15
table 6: EnforcementofRightsundertheCopyrightAct,2001 16
table 7: IssuanceofISBNfrom2000to2008onWorksbyDifferentGroups 18
table 8: BankofBhutan:LoanstoMajorCBI-relatedSectorsasofDecember2008 23
table 9: AnnualAverageGrowthRatesofRealGdpbyMajorEconomicSectorsatConstantPrices(in%). 24
table 10: NominalGVAoftheCoreCBIs(inNu.millions) 26
table 11: RealGVAatMarketPrice(baseyear2000,inNu.)ofNon-CoreCBIs 27
table 12: PercentageShareofEachCategoryofCBIsinGVAofallCBIsandGDP 27
table 13: AverageAnnualGrowthRateofGVA(in%) 29
table 14: EmploymentinCBIsin2008 31
table 15: ShareofCBIsinEmployment2008 31
table 16: RelativeProductivityofLabourinCBIsin2008 32
table 17: EmploymentDistributionacrossCoreCopyrightandPartialCopyrightIndustriesin2001 33
table 18: MajorEmploymentSharewithinCBIsin2008 34
table 19: PerformanceIndicatorsofCBIs 36
table 20: EducationLevelofEmployeesinCBIs 37
table 21: ShareofCBIsinInternationalTrade(inmillionNu.)in2008 39
table 22: Inter-temporalChangesinInternationalTradeofCBIs 40
table 23: TradeBalanceofCBIs(inNu.millions) 41
table 24: AverageAnnualGrowthRateofValue-AddedofCBIsinSelectedCountries 42
table 25: Cross-sectionalStudyontheRelativeSizeofCBIs 42
table 26: Cross-countryComparisonsontheShareofCoreCBIsinTotalTrade 43
table 27: Cross-sectionalStudyonShareofCBIsinTotalEmployment,2008 43
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C h a r t s
chart 1: PercentageShareofDifferentEconomicSectorstoGDP(2008) 25
chart 2: ShareofCBIsinGDP(%) 28
chart 3: ShareintheGVAofCoreCopyrightIndustriesin2008 28
chart 4: AverageAnnualGrowthRatesofDifferentCBIs 30
chart 5: Skill-wiseDistributionofLabourinCoreandPartialCBIs 33
chart 6: ShareofWomeninLabourForce 35
chart 7: InternationalTradeofCBIs(inmillionNu.) 41
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E x e c u t i v e S u m m a r y
IntroductionTherehasbeengrowinginterestamongcountriesinestimatingtheeconomiccontributionofthecreativeindustriesthatareprotectedbycopyright,commonlytermedcopyright-basedindustries(CBIs).Thisworldwidetrendispremiseduponincreasingempiricalevidenceoftheimportanceofcopyright-basedactivitiesinthegrowthanddevelopmentofnationaleconomies.ThispilotprojectwascommissionedbytheWorldIntellectualPropertyOrganization(WIPO)attherequestoftheRoyalGovernmentofBhutan(RGOB)toidentifyBhutan’sCBIsandtoestimatetheireconomiccontribution.
CopyrightisarelativelynewconceptinBhutan:itwasintroducedinthe1990s.Bhutanesesocietyisuniqueinthesensethat itbelieves insharingknowledgeandcreativityforthewellbeingofthecommunityasawhole.Creativityisperceivedasaformofmeditation,andhencethebeliefinearningmeritleadsonetocreateartsandcraftsforthebenefitofsocietyasawhole.Mostcraftsareproducedforhouseholduse.Withthisdistinctivesocio-economicstructureofBhutan inmind,thestudyusestheframeworkandguidelinesrecommended by WIPO to quantify the contribution of CBIs in terms of value added, employment andforeigntrade.
WIPOdistinguishesCBIs intofourcategories,basedonthenatureandsignificanceofcopyrightactivities.Theseincludecoreandnon-coreCBIs:
• Thecorecopyright industriesrefer to ‘industriesthatarewhollyengaged increation,productionandmanufacturing, performance, broadcast, communication and exhibition, or distribution and sales ofworksandotherprotectedsubjectmatter’1.
Thenon-coreCBIsinclude:
• Theinterdependentcopyrightindustries,definedasthoseindustriesthat‘whollyorprimarilyfacilitatethecreation,productionanduseofworksandotherprotectedsubjectmatter’2.
• Thepartialcopyrightindustries,definedasthoseindustriesinwhich‘aportionoftheactivitiesarerelatedtoworksandotherprotectedsubjectmatter’3.
• Thenon-dedicatedsupportindustries:thoseinwhich‘aportionoftheactivitiesarerelatedtofacilitatingbroadcast,communication,distributionorsalesofworksandotherprotectedsubjectmatter,andwhoseactivitieshavenotbeenincludedinthecorecopyrightindustries’4.
Economic contribution of cBIsBasedonthestudyestimates,thetotalcontributionofCBIstotheBhutaneseeconomyin2008was:
• 5.5%ofGDPorNu.3,009million;• 10.1%oftotalemploymentor25,215persons;• 4.0%oftotalexportsorNu.912.4million;• 6.9%oftotalimportsorNu.1,604.8million.
ThecontributionofCBIstoGDPwasonlyNu.648.8millionor2.8%in2001,butitincreasedalmostfive-foldby2008. Inotherwords,CBIsgrewatarapidpaceofabout21.3%perannum,outperformingthenationaleconomy,whichgrewat9.0%duringtheperiod.Interestingly,eachoffourCBIgroupssurpassedthenationalgrowthrateduringthisperiod.ThecoreandinterdependentCBIsgrewthefastestat123%perannum,followedbythenon-dedicatedsupportindustriesat14.5%.ThehighrateofgrowthofcoreCBIsduringthisperiodisduetothelowbaseofgrowth.Priortotheyear2000,themaincoreCBIssuchasprintingpress, literature,films,TVandcableTV, ITandIT-enabledserviceshardlyexisted.Theirsignificantgrowthtookplaceonlyaftertheyear2000.
GiventheuniquestructureoftheBhutaneseeconomyandthedifferinggrowthamongCBIgroups,thepartialCBIsarerelativelymoresignificantinBhutan.ThecoreandpartialCBIsaccountedforanoverwhelming75%
1WIPOGuidepg.29.2WIPOGuidepg.33.3Ibid.4WIPOGuidepg.35.
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ofthetotalCBIshareofGDPin2008.ThisisbecausemanyofthecoreandpartialCBIsflourishedduetoeconomicliberalisation,whichbecamemoresystemic,especiallyafter2005.Thisisalsoduetothepromotionofculturaltourism.ThecoreCBIsaccountedforabout34%,partialcontributed41%,non-dedicatedsupportindustries accounted for 14%, and the interdependentCBIs 11%of the total value addedofCBIs. TherelativelysmallshareoftheinterdependentCBIsisduetotheweakmanufacturingbaseinBhutan.
TheCBIsalsomakeanimportantcontributiontoemployment.Basedonthe2005PopulationandHousingCensus,theycontributeabout9%oftotalemploymentinBhutan.PartialCBIsaccountforthelargestshareofemployment(71%),followedbythenon-dedicatedCBIsatadistant15.9%.Ontheotherhand,thecoreandinterdependentCBIsarerelativelysmallandthustheycontributeonly10.2and2.8%respectivelytothetotalemployment inCBIs.Giventhecharacteristic labour-intensityofpartialCBIsandtheirsignificanceinBhutan’sCBIs,labourproductivityinCBIsislowerthanthenationalaverage.Themorecapital-intensivenon-dedicatedsupportCBIs,however,registerthehighestlabourproductivityamongallCBIgroups.
ThepartialCBIsnotonlymakethelargestcontributiontoGDPandemployment,theyalsohavethegreatestimpactontheeconomy.Theinter-industrylinkagesrevealthatthepartialCBIshavethehighestbackwardlinkageswiththedomesticmarket,whereastheotherCBIgroupshavenotablebackwardlinkageswiththerestoftheworld.ThepartialCBIshavethegreatestlinkageswiththeagriculturesectorandthereforetheycanplayamoredominantroleinruraldevelopmentandpovertyalleviation.Withrespecttoforwardlinkages,90-100%of thesalesofdifferentcategoriesofCBIsaremadeto theservicessector.Themostprobableexplanationliesinthehospitalitysector(tourism),whichisthemainbuyerofcopyright-basedproducts,giventhesmallpopulationbaseandlowpurchasingpowerofthepeople.
Ashighlightedabove,CBIsarenet importers.However, thepartialCBIsexportalmosttheirentireoutput(about99%)andaccountfor98%ofthetotalexportsofallCBIs.Withinthiscategory,theweavingandhandmadepaperindustriesarethelargestnetexportersandconsequentlythebiggestnetforeignexchangeearnersamongallCBIs.
Cross-countryanalysisofselectedcountriesshowsthatBhutan’sCBIscontributemoderatelytoGDPat5.5%,betterthanCBIsinPhilippines,JamaicaandLatviabutlessthanthoseinMalaysia,MexicoandUSA.However,CBIsinBhutanwerethemostdynamic,expandingatdouble-digitratesofbetween13-32%from1997to2008,incontrastwithbetween6-7%insomeofthedevelopedeconomiessuchasAustralia,NetherlandsortheUSA.
NotwithstandingthenotablecontributionandperformanceofCBIsinBhutan,thereareissuesandproblemsthatimpedetheirfullpotential.SomeofthekeyconstraintsincludepoorcoordinationofCBIdevelopmentstemmingfrominstitutionalweaknesses,difficultiesinobtainingcredit,andlackofinvestmentinR&Dandhuman resource development. As in many developing economies, there is also poor understanding andappreciationof the importanceof copyrightamongconsumersandproducersalike.A lackof consistentandreliabledataonCBIsisamajorimpedimenttomakingarealisticassessmentofthepotentialofCBIsinBhutan.
policy recommendationsThegrowingsignificanceandworldwiderecognitionoftherisingroleofcreativeindustriesastheengineofgrowth,aswellasthepotentialofCBIs inBhutangivenitsuniquegeographicalandeconomic landscape,necessitateaconsistentandcoordinatedapproachforpromotingCBIsinBhutan.TomeetcurrentandfuturechallengesfacedbyCBIs,thefollowingrecommendationsaremade:
(i) In line with the proposals for the development of cultural industries, it is recommended thatsupportingpoliciessuchasadvocacyandstrategydevelopment,aswellasculturalassetmanagement,be implemented forCBIs. Preparing a comprehensivepolicy and strategy is thefirst step in theirdevelopment,alongwithhumanresource,technologyandinfrastructuredevelopment.Thesemustbeaccompaniedbysettingupofclearobjectives,benchmarksandresponsibilitiesforcoordination,follow-upandimplementation.
(ii) ToimprovethequalityandavailabilityoftimelydataonCBIs,coordinationandcooperationamongstthefivekeyMinistries–Home&CulturalAffairs;EconomicAffairs;LabourandHumanResources;InformationandCommunications;Finance;aswellastheNationalStatisticsBureau(NSB)–isvital.AsNSBistheclearinghousefornationaldata,ithastobeactivelyengagedincheckingthequalityofdatabyassistinginstatisticalsurveysandstudies.Thenationalincomeaccountsshouldalsobe
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preparedinamore-detailedmannersothatdisaggregateddataforvariousactivitiesareavailabletoplannersandresearchers.TheNSBhastotakealeadingroleinthisregardaswell.
(iii) Tofacilitatetheabovetask,thenecessaryinstitutionalarrangementsmustbeputinplace.Oneoptionistoprovideaspecificmandatetoanagency,liketheproposedCulturalCommissionorDCSI/APIC,forsuchcooperationandcoordinationinthegenerationanddisseminationofdata.Themandateofthisbodyshouldinclude,inter alia:(a)clarificationanddelineationofresponsibilitiesformaintaininganddevelopingdataonCBIsaswellascreativeandculturalindustries;(b)cooperationincarryingoutanystatisticalsurveys,includingagreementontheirtermsofreferencesothatastudycanservetheneedofmorethanoneagencyaswellasmeetNSB’squalitativerequirements;(c)collecttradedataatadisaggregatedlevel;and(d)cooperateinpolicyandprogrammeimplementationinareassuchastechnology,R&Dandhumanresourcedevelopmenttoavoidduplicationofeffortsandresources.Whenitcomestocopyrightandcreativeindustries,theIPDshouldplayanactiveroleincoordinationanddirection,incooperationwiththeleadcentralagency.
(iv) TheroleoftheIPDinadvocacyandcreatingpublicawarenessmustbestrengthenedinordertobuildastrongercultureofIPprotectionwithintheBhutanesesociety.TheIPDmustplayamoreproactiveroleindisseminatinginformationoncopyrightprotection.Itswebsitehastobemoreuser-friendly,withinformation,factsandfiguresthatareeasilyunderstood.Inaddition,incooperationwiththeRoyalBhutanPoliceandjudiciary,theIPDmustprovidegreatersupporttotheprivatesectorindealingwithpiracyandotherkindsofIPabusesandeventuallydevelopajointpublic-privatesectorstrategytocombatthisgrowingproblem.
(v) ToenabletheIPDtocarryoutitsroleandfunctionsmoreeffectively,itisproposedthattheIPDbetransformedintoanautonomousgovernmentagency,asinthecaseinMalaysiaandothercountries.As its activities cut across theworkofmanypublic andprivate institutions, it can functionmoreeffectivelyasanautonomousagencyunderaboardofdirectorsdrawnfromdifferentprofessions.Itcanassumegreaterflexibilityinprogrammeoperationsandachievebettercoordinationwithotheragencies.Iffullautonomyisnotfeasible,thesecond-bestoptionistoelevatetheIPDtothestatusofadepartment.TheIPD’sexistingfacilitiesandstaffshouldbereviewedandstrengthenedwherenecessary,toenableittomeettheabovefunctionsandtoelevateitsprofilewithinthegovernment.AstrongergovernmentbodyonIPwillhaveafavourableimpactonthedevelopmentofthenationalcreativeindustriesandwillhelpimprovecoordinationatappropriatelevels.
(vi) Incentives in the formoffiscal, financial and infrastructural support shouldbegranted inorder tofosterprivatesectorinvestmentinCBIs.Bhutan’sprivatesectorisstill inits infancy.Assuch,public-privatepartnershipwillgoalongwaytoenableCBIstocompeteintheglobalmarket.Aclusterforcreativeindustriesshouldbedeveloped,liketheITPark,includingtheencouragementofforeigndirectinvestment(FDI)thatcanbringnewtechnology,differentskillsandmuch-neededcapitalforinvestmentincollaborationwiththeBhutaneseprivatesector.
(vii) Thereisaneedtoimprovetheavailabilityandaccessibilityofcredit,especiallyfortheSMEs.Thefocusshouldbeonimprovedcreditinformation;betterprojectappraisal;removaloratleastrelaxationoftherequirementsofcollateralsforloans;andimprovedlegalprotectionforbothbanksandborrowers.Some of these elements are being addressed by the RMA, but a separate window or facility forlendingtoSMEsisnecessarytoencouragetheirgrowth.
(viii) Thestudyshowssomeemergingareaswithmuchpotential.Theseincludefilmsandmusic,printandmedia,handloomweaving,handicraftsandfurniture.Amongthese,thefirstthreeindustrieshavebetterprospects.More in-depthsector-specificanalysis shouldbecarriedout for these industries,inordertoidentifytheissuesandchallengesfacedbythemandtotargetpoliciesandprogrammesaccordingly.Simultaneously,otherless-developedCBIsectorslikeadvertisingservices,photography,visualartssoftwareanddatabasesshouldbeencouragedtoattaintheirfullpotential.
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AbbreviationsAPIC : AgencyforthePromotionofIndigenousCraftsBICMA : BhutanInformation,CommunicationandMediaAuthorityBIMSTEC: BayofBengal Initiative forMulti-SectoralTechnicalandEconomicCooperation (Bangladesh,
Bhutan,India,Myanmar,Nepal,Thailand&SriLanka)BPO : BusinessProcessingOfficeCBS : CentreforBhutanStudiesCBIs : CopyrightandRelatedRight-BasedIndustriesDOC : DepartmentofCulture,MoHCADRC : DepartmentofRevenue&Customs,MinistryofFinanceDCSI : DepartmentofCottage&SmallIndustries,MoEAFDI : ForeignDirectInvestmentGDP : GrossDomesticProductatmarketpriceunlessstatedotherwiseGNH : GrossNationalHappinessGVA : GrossValueAddedHR : HumanResourcesHRD : HumanResourceDevelopmentIP : IntellectualPropertyIPD : IntellectualPropertyDivision,MoEAIPRs : IntellectualPropertyRightsITAB : InformationTechnologyAssociationofBhutanLFPR : LabourForceParticipationRateMoHCA : MinistryofHome&CulturalAffairsMoEA : MinistryofEconomicAffairsMoIC : MinistryofInformation&CommunicationMoLHR : MinistryofLabour&HumanResourcesMPAB : MotionPicturesAssociationofBhutanNDS : Non-DedicatedSupportNSB : NationalStatisticsBureauNVA : NetValueAddedNu. : BhutaneseNgultrumPC : PartialCopyrightR&D : ResearchandDevelopmentRGOB : RoyalGovernmentofBhutanRMA : RoyalMonetaryAuthorityofBhutanSMEs : SmallandMediumEnterprisesTRIPS : TradeRelatedIntellectualPropertyRights(WTOAgreement)TSC : Transport,StorageandCommunicationUNCTAD : UnitedNationsConferenceonTradeandDevelopmentUNDP : UnitedNationsDevelopmentProgrammeUNESCO: UnitedNationsEducational,ScientificandCulturalOrganizationUNIDO : UnitedNationsIndustrialDevelopmentOrganizationWIPO : WorldIntellectualPropertyOrganizationWTO : WorldTradeOrganizationWRT : WholesaleandRetailTrade
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1 . I n t r o d u c t i o n
1.1 BackgroundInterestamongcountrieshassurgedsincethe1970stoestimatethecontributionofcopyrightandrelatedright-based industries (hereafter referredtoasCBIs) tothenationaleconomy.TheeconomiccontributionofCBIs ismeasured intermsof itsshareofvalueadded,employmentandtrade intheeconomy.Severalcountries, both developed and developing, have done studies which show that the overall contributionofCBIstothenationaleconomieshasbeenrisingsteadilyduringthepasttwodecades,reachingashighas11.1%ofGDPintheUnitedStatesin2004and8.8%oftotalemploymentinthePhilippinesin1999.ApartfromthePhilippines,otherAsia-PacificcountriesthathaveundertakensimilarstudiesincludeAustralia(2001)5,Singapore(2003)andMalaysia(2009)(WIPO2003&Kanapathy2009).
ThisstudyistheoutcomeofarequestbytheRoyalGovernmentofBhutan(RGOB)totheWorldIntellectualPropertyOrganization(WIPO)forassistanceinassessingtheeconomiccontributionofCBIstothenationaleconomy,whichhasbeenwitnessinganaveragegrowthofrealGDPat8.4%inthepastdecade(2001-2010).ThestudywillalsoserveasareferenceforintroducingnewpolicymeasurestoenhancethegrowthofCBIsinthecountry.Accordingly,WIPOandtheIntellectualPropertyDivision(IPD)oftheMinistryofEconomicAffairs(MoEA)commissionedthestudyinApril2009.
1.2 objective of the StudyTheobjectivesofthestudyareto:
(a) QuantifytheeconomiccontributionofCBIsinBhutanbyestimatingtheirshareofvalueaddedandemploymentintheeconomy,andrevenuegeneratedfromforeigntrade;
(b) Carryoutan in-depthanalysisof selectedCBIsof importance toBhutan in termsof theirmarketstructure,valuechain,demandandsupplypatterns,labourmarket,policyframeworks,institutionalsupport (including the role of collecting management organisations and other copyright-relatedorganisations), termsof trade and cross-border issues, financingmechanisms, implications of thedigitalenvironment,amongothers;and
(c) Proposepolicy,strategyandinstitutionalinterventionsforencouragingthegrowthanddevelopmentofCBIsinthecountry.
1.3 process, Scope and MethodologyThestudycommenceswithareviewoftheliteratureanddataonCBIs,culminatinginconsultationsamongnationalandinternationalconsultants,thegovernmentandWIPOinJune2009atThimphu.Theconsultation, inter alia,reachedanunderstandingonthescope,coverageandmethodologyforthestudy.Theconsultationalsoidentifiedafewsimilarstudies,suchasthoseinMalaysiaandJamaica,asreferences.TheconsultationswithWIPOandtheinternationaladvisercontinuedthroughouttheperiodofthestudy.
ThestudywillcoverallCBIsthathavebeengroupedintofourcategories,i.e.core,interdependent,partialandnon-dedicatedCBIs. In linewithothernationalstudies,Bhutan’sCBIswillbe identifiedusingWIPO’smethodologyandguidelines.WIPOdefinesCBIsusing the International Standard IndustrialClassification(ISIC)codes.Likewise,Bhutan’sCBIsaredeterminedusingtheISICcodes.AstheNSBdoesnotstrictlyfollowtheISICcodes,thefour-digitISICclassificationbyMoEAisused.Bhutan’sCBIsaredescribedinAnnex1.
5Australiadidanupdateofitsstudyin2007http://www.wipo.int/export/sites/www/ip-development/en/creative_industry/pdf/eco_table.pdf
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1.4 data Sources and LimitationsThestudyisbasedonsecondarydatasourcedfromNSB.Inaddition,primarydatawasgatheredthroughastructuredquestionnairesurveycarriedoutbetweenOctoberandNovember2009,semi-structuredinterviewsandfocusgroupdiscussions.Thesourcesofsecondarydata,surveyquestionnaireanddetailsofindividualmeetingsandfocusgroupdiscussionsaregiveninAnnexes2to4respectively.
TheeconomiccontributionofCBIsiscapturedthroughthreekeysummaryindicators,whileitsperformanceisassessedusingavarietyofindices.ThekeysummaryindicatorsincludetheshareofCBIsinGDP,nationalemploymentandinternationaltrade.Apartfromintra-CBIcontribution,therelativecontributionofCBIs,vis-à-vis otherindustries,overtimeandbetweencountries,isalsoanalysed.
The relative performance of the CBIs is assessed by computing various growth rates as well as labourproductivity.Ahostofotherperformanceindicators6,suchascapitaloutputratio,input-outputratio,plantloadfactorandprofitabilityratios,areusedtomeasuretheirphysicalandtechnicalefficiency.
Thedataarecollectedforfouryears, i.e.1997,2001,2005and2008.However,secondarydataarenotreadilyavailableforallCBIsforallchosenyears.Thesedatagapsareaddressedthroughsamplesurveysandextrapolationusingrelevantindustrygrowthrates.InJune2011,consultationswereheldtoestimateamorerealisticcontributionofcoreCBIstoGDPandemployment.ThelistofthecoreCBIsconsultedisgiveninAnnex5.
TheshareofCBIs inGDP iscalculatedbyusingdataobtainedthroughtheaboveconsultationsanddatacompiled by NSB. The gross value added (GVA) of CBIs is obtained from the Census on ManufacturingIndustries,1997and2001.However,theGVAfortheyears2005and2008hadtobeestimated.
− For the core copyright industries, theprimarydata are collected through consultationswith suchmajorindustries.
− Forpartial copyright-based industries, theGVAatmarketprice for the years2005and2008areextrapolatedusingthegrowthrateofthemanufacturingsector.
− The contributionof the interdependent copyright-based industry is imputed indirectly becauseofnon-availabilityofdisaggregatedinformation.Theimputationisbasedontheratioofcontributionofinterdependentcopyrightindustries’GVAtotheGVAofcorecopyrightindustries.ThisratioisderivedfromthestudiesundertakeninLatviaandJamaica7.Theratioisabout37%.
− Theshareofnon-dedicatedsupport(NDS)industriesisalsoindirectlyimputedusingthemethodologyapplied in thestudyof theeconomiccontributionofcopyright-based industries forLatvia. In thisstudy,theshareofnon-dedicatedsupportindustriesiscalculatedusinganaverageweightof5%oftheGVAoftheWRTandTSCcategories.
Due tohighlyunreliabledataonemployment, thecontributionofCBIs to totalemployment isbasedondatafromthe2005PopulationandHousingCensus.Priorto2005,notonlythepopulationestimatesvariedsignificantlyovertimebutpopulationdistributionacrosssectorsalsofluctuated.Evenrecentdataremainsunreliable, as the year-to-year fluctuations remain high. For this reason, any time series analysis can bemisleadingandtheCBIcontributiontoemploymentisonlyestimatedfortheyear2005onwards.
Thetradedatausedinthestudyisfromthe2008BhutanTradeStatistics.ItwouldbepertinenttonotethatthetradestatisticscompiledbytheDepartmentofRevenueandCustoms(DRC)differsfromthatpublishedintheNationalAccountStatistics,2000-2008compiledbyNSB.Thetwosourcesdifferonthevalueofexportsandimportsandhencecreatedifferencesinallothervariablesderivedfromthetwo.
Furthermore,theprobleminestimatingtheshareofCBIsininternationaltradearisesfromthefactthatdataonexportsandimportsarenotclassifiedfromthesourceoforiginordestinationofindustryactivity.Thisleadstoover-estimationofthecontributionofCBIstotrade.Thisisespeciallytrueinthecaseofimports.For
6Capitaloutputratioistheratioofthestockofthecapitaltotheoutputproduced;input-outputratioisanamountofinputusedtoproduceaunitofoutput;plantloadfactorisratioofactualoutputtofullcapacityoutput;andprofitabilityratioistheratioofprofittonetvalueaddedorratioofprofittosales.
7Thecriteriafortheselectionofthesetwocountrieswere:(1)ThelevelofdevelopmentandthenatureoftheeconomyofthetwocountriesaresimilartotheBhutaneseeconomycomparedtostudiesofothercountriescitedintheWIPOStudy,and(2)Jamaicahasalsousedsimilarcriteriainpreparingitsstudy.
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example,thestatisticspublishedbytheDRConlytellsushowmuchofaparticularcommodityisimported,say,particleboards.ItisnotpossibletoidentifywhethertheyareimportedbyCBIsorbyconstructionfirms.
The coverage, accuracy and reliability of this study therefore need to be seen in this perspective. To acertainextent, theproblemwasdiluted,by twomeans. First, thedatawas re-classified from thecensusofmanufacturingon auniformbasis. Second, the labour tooutput ratio in1997wasused to estimateemploymentineachcategoryofCBIsindifferentyearstominimisethiserror.
1.5 the copyright factorThecopyrightfactorsignifiestheweightofcopyrightinthevalueaddedoremploymentofafirm.AdetailedexplanationofthecomputationofthecopyrightfactorforeachofthefourbroadcategoriesofCBIsisgiveninAnnex6.
Thecopyrightfactoriscalculatedusinginformationcollectedthroughthesamplesurvey.Astratifiedrandomsamplingwasusedwithasamplesizeof109.ThelistofCBIsprovidedbytheMoEAservedasthesampleframe.Thesamplesweredrawnusingthemethodofprobabilityproportionaltothepopulation.
ForthecoreCBIs,allofthefirm’sactivitiesareattributedtocopyrightsandhenceitscopyrightfactorwasassumedat1.Forthenon-coreCBIs,notallofthefirm’sactivitiescanbeattributedtocopyrightandhenceavalueoflessthan1wasassigned.AsshowninTable1,thedifferenceinthecopyrightfactoracrossthenon-coregroupismarginal.Non-dedicatedsupportindustrieshavethehighestcopyrightfactoramongthenon-coregroup.Theleastcopyrightfactorisfoundintheinterdependentcopyrightindustries.
Table 1: Copyright Factor in Non-Core CBIs
Category of CBI Average Copyright FactorInterdependent 0.021Partial 0.026Non-dedicated support 0.028
Source:Samplesurvey
ThecopyrightfactorforeachindustrygroupcalculatedfromthesamplesisshowninTable2.Someindustrieshaverelativelylowcopyrightfactorscomparedtoothers,duetothelowerlevelofcopyrightinvolvedintheproductionprocess.
Table 2: Copyright Factor Industry Group-Wise
Category of CBIs Industry Group Copyright FactorPartial Handicrafts 0.033Partial Furniture 0.014Interdependent Electronics 0Interdependent Computers 0.12Non-dedicated Cable TV 0Non-dedicated Telephone booths 0Non-dedicated Cyber café 0.02
Source:Samplesurvey
1.6 Structure of the StudyThestudyisdividedintoninesections.Section1introducesthestudyandcoversitsbackground,objective,processandmethodology,datasourcesandestimationprocedures.Section2providesanoverviewofCBIs,includingtheirbackground,definition,description,legalandinstitutionalframework,andareviewofrecentdevelopments.Sections3to7formthecoreofthestudyandfocusonestimatingthecontributionofCBIsandtheirperformanceindicators.Section8discussespolicyrecommendationsandSection9looksatfuturedirections.
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2 . O v e r v i e w o f t h e C o p y r i g h t I n d u s t r i e s
2.1 BackgroundCopyrightisarelativelynewconceptinBhutanthatwasintroducedinthekingdominthe1990s.Bhutanesesociety is basically community-based, thus it is not surprising that it believes in sharing knowledge andcreativityforthewellbeingofthecommunityasawhole.CreationisaformofmeditationinBhutan.‘Artissynonymouswithspiritualpracticeandtheexecutionofartearnsmerit.’ (DoC,p.2).Hence,abelief inearningmeritleadsonetocreateartsandcraftsforthebenefitofthesociety.
TheBhutanesepeopleutilisenaturalresourcesinlocalsurroundingsforproducingdifferentgoods.Thisisclearifonelooks,forinstance,atBhutaneseartsandcrafts,beittraditionalarchitecture,painting,weavingoranycraftfromamongits13majorcraftscollectivelyknownas‘Zorig Chusum’.Bhutan’ssuccessiverulers,clergyandlaymanalike,havepreservedthesecraftsovercenturies.The13craftsare:
(i) bambooandcaneweaving(ii) woodcrafts(iii) handloomweaving(iv) goldandsilvercrafts(v) sculptureandpottery(vi) casting(vii) papermaking(viii) painting(ix) embroideryandappliquéworks(x) carpentry(xi) masonry(xii) woodcarvingand(xiii) blacksmithing
Thecreativityinartsandcraftshasassumedanewmeaningwiththedevelopmentandmonetisationofitsbartereconomysincethe1960s,andmorespecificallyafteropeningthecountryfortourismin1974.Theseproductsintheirsocialandcommunitysettinghaveformedanimportantsourceofincomeformanyartisans,thoughthereismuchroomfortheirimprovementinquality,standardandsophistication.
2.2 definitionCopyright is one of the two branches of intellectual property (IP), the other being industrial property.AccordingtoWIPO, ‘Itapplies toeveryproduction in the literary, scientificandartisticdomain,whatevermaybethemodeorformofitsexpression.’(WIPO2003,p.13).Unlikepatents,copyrightprotectsonlytheformofexpressionofideasbutnottheideasthemselves.Itisaimedatprotectingthecreator’srightoverunauthorisedcopyingforcommercialpurposes.
AsCBIsaresometimetermedasculturalorcreativeindustries,itisimportanttoclarifytheseterms.CultureplaysapivotalroleinsocialandeconomicdevelopmentandsoCBIsandculturalindustrieshavetobeseentogether.‘Culturalindustries’refertothoseindustriesthatproducefairlylarge-scaleindustrialproductswithsignificantculturalcontentandareoftenused inrelationtomass-mediaproduction.Ontheotherhand,theterm‘creativeindustries’ iswider inscopeand‘includes,besidesthecultural industries,allculturalorartisticproduction,whetherliveorproducedasanindividualunit,andistraditionallyusedinrelationtoliveperformances,culturalheritageandsimilar‘highart’activities.Theborderlinebetweenthetwoisoftenveryfine’(WIPO2003,p.18);thoughWIPOclarifiesitbystatingthatcreativeindustriesarecopyright-dependent(WIPO2007).Inthecontextofthestudy,theterm‘copyrightandrelatedright-basedindustries’(CBIs)isusedmostofthetimeandiftheothertwotermsareused,itistodenotetheirgeneralcontextthatcopyrightplaysasignificantandidentifiablerolewithinthoseindustries.Theclassificationofculturalindustries,creativeindustriesandCBIsisgiveninTable3.
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Table 3: Classification of Copyright-based, Creative and Cultural Industries
Copyright-based industries Cultural industries Creative industriesCore Copyright Industries:
Press and LiteratureMusic, Theatrical Production, OperasMotion Picture and VideosRadio and TelevisionPhotographySoftware and DatabasesVisual and Graphic ArtsAdvertising ServicesCopyright Collecting Societies
Printed Matter and LiteratureMusic and Performing Arts
Visual ArtsAudio-Visual MediaCinema and Photography
Radio and TV
AdvertisingCraftsDesignDesigner FashionFilm and VideosInteractive LeisureSoftwareMusicTV and RadioPerforming ArtsPublishingSoftware
Interdependent Industries:
TV Sets, Radios, VCRs, CD PlayersDVD Players, Cassette Players, Electronic Games Equipment, and other similar equipmentComputers and EquipmentMusical InstrumentsPhotographic and Cinematographic InstrumentsBlank Recording MaterialPaper
Cultural HeritageSocio-Cultural ActivitiesSports and GamesEnvironment and Nature
Partial Copyright Industries:
Apparel, Textiles, and FootwearJewellery and CoinsOther CraftFurnitureHousehold Goods, China, and GlassWall Coverings and CarpetsToys and GamesArchitecture, Engineering, surveyingInterior DesignMuseums
Arts and Antique MarketsArchitecture
Non-dedicated Support Industries:
General wholesales and retailingGeneral transportationTelephony and Internet
Compiledfrom:UNIDO2005,WIPO2003&UNESCOn.d.
WIPO places CBIs into four categories for statistical and functional purposes. These are core copyrightindustries, interdependent copyright industries, partial copyright industries and non-dedicated supportcopyrightindustries(WIPO2003).Thesearefurtherdividedintosub-groupsascanbeseeninTable3.ThecoreCBIsreferto‘industriesthatarewhollyengagedincreation,productionandmanufacturing,performance,broadcast,communicationandexhibition,ordistributionandsalesofworksandotherprotectedsubjectmatter.’Theyarefurtherdividedintoninesub-groups.
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Theinterdependentcopyrightindustriesaredefinedasthose‘engagedinproduction,manufactureandsaleofequipmentwhosefunctioniswhollyorprimarilytofacilitatethecreation,productionanduseofworksandotherprotectedsubjectmatter’.Thiscategoryisdividedintotwosub-groups–coreinterdependentandpartial interdependent,bothofwhichcovermanufacture,wholesaleandretail trade.Thefirst sub-groupunderthiscategoryisintegraltothecorecopyrightindustrieswhilethelatterhasasupportiveroleonly.
The partial CBIs are defined as those in which ‘a portion of the activities is related to works and otherprotectedsubjectmatterandmayinvolvecreation,productionandmanufacturing,performance,broadcast,communicationandexhibitionordistributionandsales’.Thisgroupmayhaveaparticularservicecomponentinit.
Finally,theNDSindustriesarethoseinwhich‘aportionoftheactivitiesisrelatedtofacilitatingbroadcast,communication,distributionorsalesofworksandotherprotectedsubjectmatter,andwhoseactivitieshavenotbeenincludedinthecorecopyrightindustries’.
2.3 Legal and Institutional frameworkLawsaregenerallyinitiatedbytheagencythatisresponsibleformanagingaparticularsector;forinstance,theIPDinregardtointellectualproperty.However,sincetheestablishmentofademocraticsystemofgovernmentinApril2008,theParliament,consistingoftheNationalCouncil(UpperHouse)andtheNationalAssembly(LowerHouse),hasassumedagreaterroleintheformulation,reviewandamendmentoflegislation.
While lawsmaybe initiatedby a concernedagency andpassedby the Parliament, these are left to thecourts(atthedistrict,sub-districtsandHighCourtlevels)forenforcement.Thecourtsarenottraditionallyused toadminister lawsoncopyright,despite theeffortsof the IPD in thepast tocreateawarenessandpromoteinter-agencycoordinationandcollaborationforlawenforcement.Eveniftheirworksarecopied,theownersofcopyrightthemselvesareunawareorhesitanttogotothecourtduetohasslesinmeetinglegalrequirementstoproveviolationofthelaw.
ForallIPmatters,theIPDistheleadorganisation.Itsprincipalfunctionsare:toinitiateappropriatelegislation,rulesandregulations;tocreatenationalawarenessonIPissues;tomaintainregistriesforpatents,trademarksandindustrialdesigns;tosupportright-holders inthecommercialisationoftheirworksandtostrengthenenforcementofIPrights.Inregardtocopyright,theprotectionisautomatic,asBhutanisasignatorytotheBerneConventionfortheProtectionofLiteraryandArtisticWorks.Inothercountries,thecopyright-holdersthemselvescooperatethroughCollectiveManagementOrganisations(CMOs),whichareabsentinBhutan,toprotecttheirrights.TwostudieswerecarriedoutwithWIPO’sassistancetoassessthefeasibilityofsettingupaCMOinBhutan.Forthepresent,resourceconstraintsmakeCMOsunfeasible.
The IPD organises activities in cooperation with WIPO and other relevant international organisations tocreateawarenessonIPanditsmultipledimensions.ItinitiatesdialoguewitheducationalinstitutionsaboutincorporatingIPintheircurricula.Inaddition,thereisacontinuousprocessofinstitutionalbuildingthroughparticipationofstakeholdersinseminarsandworkshops,andimplementationofnationalprojects,includingICTprojectsanddatabasedevelopment.
2.4 protection of copyrightThecopyrightelementinBhutanisbasedmoreinthecontextofcreativeindustriesthathavetraditionallybeenlumpedandinterpretedunderthebroadframeworkofculture.CBIs,therefore,areadeparturefromthetraditionalunderstandingofcreativityinartsandcrafts,andembracethemeaningofcopyrightasusedsince2001whentheCopyrightActwasadopted.
TheCopyrightAct,2001providesfortheprotectionofliteraryandartisticworksaswellasderivativeworks,asoutlined inTable4below.Noprotection isgrantedforan idea,principle,concept,procedure,system,discoveryordata,officialtextsortheirtranslations.
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Table 4: Protection of Copyright Works
A. Literary and Artistic Works
These are original intellectual creations in literary and artistic works and include:
a. Books, pamphlets, articles, computer programs and other writings;b. Speeches, lectures, addresses, sermons and other oral works;c. Dramatic and dramatic-musical works, pantomimes, choreographic works and other works created for stage
productions;d. Stage productions of works mentioned above and of expressions of folklore that are apt for such productions;e. Musical works, with or without accompanying words;f. Audio-visual works;g. Works of architecture;h. Works of drawing, painting, sculpture, engraving, lithography, tapestry and other works of fine art;i. Photographic works;j. Works of applied art; andk. Illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture
or science. B. Derivative Works
a. Translations, adaptations, arrangements and other transformations of works; andb. Collections of works and collections of mere data (databases), whether in machine readable or other form,
provided that such collections are original by reasons of selection, coordination or arrangement of their contents.
Source:CopyrightActofBhutan,2001
Theownerofcopyrighthastheexclusiveeconomicandmoralrightsonhisorherworks.Theeconomicrightsrelatetoreproduction,translation,adaptation,distribution,rentalorpubliclendingoftheoriginalorcopyofaudio-visualwork,acomputerprogram,adatabase,musicalworkingraphicform,importationofthecopiesofthework,publicdisplayandperformance,broadcastingandothermodesofcommunicationtothepublic.Themoralrightsincludeclaimondisplayofauthorshiporownership,theworkorotherwiseaswellastherighttoobjectanydistortionofsuchwork.
Therecognitionoftheneedtoprotectcopyrightislow,bothwiththeownersandenforcementagencies,despiteeffortsbeingmadebytheIPDtocreatepublicawareness.ArecentstudycarriedoutbytheMoEAconfirmsthissituationandoutlinesmeasuresforimprovement(MoEA2010a).Themeasuresthathavebeenrecommendedinclude:‘suo moto’ raidsbythepoliceonsuspectedcasesofviolation;expeditioussettlementofcases;trainingofjudgesfordealingwithIPlaws;trainingofpolicepersonnelandIPprosecutors;promotionofgreaterpublicawareness;aclearnationalpolicystatementonIP;andgreatercooperationandcoordinationofeffortsamongstakeholders.Aguidelineforenforcementofrightshasalsobeenprepared,onwhichactionisawaitedfromthegovernment(MoEA2010b).
Table 5: Milestones on Copyright in Bhutan
Year Milestones1994 Accession to Convention establishing WIPO
1997 Establishment of the Intellectual Property Division
2001 Enactment of Copyright Act of the Kingdom of Bhutan
2004 Accession to the Berne Convention for the Protection of Literary and Artistic Works
2008 Trial on the voluntary registration of copyright system2010 Drafting of an enforcement mechanism as well as rules and regulation under the Copyright Act, 2001
Source:IPD,MoEA
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The Copyright Act, 2001 governs the protection of copyright, and its milestones are given in Table 5above. The Act deals with copyright works and protection of performers, producers of sound recordingandbroadcastingorganisations,andenforcementbycourts.Thecopyrightworksdefineliteraryandartisticworks,derivativeworks,economicandmoralrights,andprovideforreproductionforquotation,personal,educationalandbroadcasting,informationandlibrarypurposeswithdueacknowledgmenttothesourceofthework.Performers,producersandbroadcastingorganisationscanauthorisetheirworksandprogrammesforreproduction.Finally,thecourtscantreatviolationofthecopyrightlawasanyinfringementofthecivilandcriminallaw.TheenforcementrightsaresummarisedinTable6.
Table 6: Enforcement of Rights under the Copyright Act, 2001
A. Provisional measures
A court can apply civil and criminal law to:
1. Grant information against infringement of rights;2. Impound copies of works or sound recordings produced or imported without owner’s authorisation; and3. Apply Part V on Border Measures & Customs Rules under the Industrial Property Act, 2001.
B. Civil remedies cover:
1. Compensation to owners of any right protected under the Act by the infringer, the amount to be fixed by the court;
2. Authority to destroy or dispose of pirated goods unless the owner of copyright requests otherwise; 3. Minimising risks of further infringement; and4. Issuance of order prohibiting acts of infringement and imposition of fines ranging from Nu. 5,000.00 to
Nu. 50,000.00 when the order is violated.C. Criminal sanctions cover:
1. Wilful infringement of copyright for profit-making purposes will result in punishment of up to one year or a fine of Nu. 1,000,000.00 or both; and
2. Power to the court to increase the upper limit to increase the above fine up to double the amount if a defendant commits another crime within five years of the first conviction.
D. Abuse of technical means:
1. Application of civil remedies and criminal sanctions as indicated above if technical devices used in the protection or management of copyright devices or means are violated through applicant of various methods; and
2. The owner of the copyright will be compensated in the same manner as in the case of infringement if the protection device is made or imported for sale or rent with a view to alter the technical devices including devices to circumvent the encrypted programme broadcast.
Source:CopyrightActofBhutan,2001
2.5 review of recent developments in Key cBIs of BhutanThissectiontracesthedevelopmentofthekeyCBIsandrelatedsectorsinBhutan.TheCBIsaredispersedundervariouspublicandprivateorganisations,anddataand information isdifficulttoobtain.Theyhavenotbeenstudiedfromthecopyrightperspective,notevenasinglesectororsub-sector.Whilethoseareasmentioned below are growing on their own, areas like photography, software and database as well asadvertising services candobetter inan improvedpolicyenvironment for thedevelopmentof theprivatesector.
2.5.1 Film and Music
Thoughawareness about copyright is generally low, a small groupof entrepreneurs engaged in creativeworks is keen toexploit their commercial potential. This is discernibleparticularly in themusic, filmandbroadcastingsectors.Piracyofmoviesandmusicandunauthorisedbroadcastingofprogrammesbycabletelevisionchannelsandprivateradiostationshavecreatednewsheadlinesinthelocalmediainrecentyears.
Movietheatreownersandsellersofaudiocassettes,CDsandDVDshaveoftencomplainedoflosingbusinessduetopiracy,whichisalsoaseriousglobalandregionalproblem.TheporousborderwithIndia,whichitself
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isfightinga longbattleagainstpiracy,doesnotprovideaconduciveenvironment forBhutan toenforcecopyrightlaws.Onlyafewcaseshavebeenfiledincourts,thoughmanysuchcasesgounreportedduetolackofawarenessandtheonusofsubmittingprooftothecourts.Thelegalprofessionitselfisnotsufficientlyequippedtohandlesuchcases.
In2008,legalactionwastakenagainstthreepersonsforfloutingthecopyrightlaw.Atleastfourlegalcaseshavebeendealtwithbythecourtsorsettledoutsidethecourtsinthepastsixyears,themostnotablebeingtheonebetweentheBhutanBroadcastingService (BBS)andSigmaCables inThimphu(Kuensel,31May2003).ThelatterwasaccusedofbroadcastingaBBSproductionwithouttheproducer’spermission.BBSwonthecase,sendingastrongsignaltothemarketthatsuchabuserswouldnotescapethehandsofthelawinfuture.
Thesedevelopmentsarewelcome,as theycouldpotentiallydetersimilarcases inthe longrun.However,intheshortrun,theonusofprovingcopyrightownershipnotonlyremainsdifficultandcostlybutalsoliesexclusivelywiththecreator.TheIPDmaintainsthatitsresponsibilityislimitedtodevelopingaproperlegalframeworkforcopyrightandcreatingpublicawareness,andnotinlawenforcement,whichistheworkofthepoliceandcourts.However,copyrightholdersareseekinghelp,betterinstitutionalsupportandenforcementof the law by the relevant government agencies. Meanwhile, film and music producers are reluctant toreleasemoviesandmusicalbumsinCDs,VCDs,DVDsandaudiocassettesbeforetheyfullyrecovertheircostofproduction.Forinstance,outof86moviesproducedtill2008,onlysixhavebeenreleasedasVCDsandDVDs(Kuensel,30May2008).
SincetheproductionofthefirstBhutanesemotionpicturein1988,theBhutanesefilmindustryhasmadeaconsiderableimpactonentertainmentandasasourceofpublicityforBhutanintheoutsideworld.ThereplacementofforeignfilmsbyindigenousfilmshascontributedtoshowcasingBhutanesecultureandhasgeneratedrevenueandemployment.Forinstance,theentertainmentindustryasawhole–ofwhichfilmsareanimportantcomponent–wastheseventhlargestcontributorofrevenuetothegovernmentin2007.Ithas78producers,14productionhouses,12music-recordingstudiosandemploysabout50persons(full-timeandpart-time)onaverage inproducingafilm.Asof2008,a totalof116Bhutanesefilms (featureanddocumentary)andabout400musicalbumswereproduced.Theindustrytodayboastsofasmanyasthree international awards including the one from the Cannes Film Festival and six international awardsfor documentaries. The potential for the industry to contribute to the national economy is considerable(Wangchuk2008).
The above progress has been achieved with little support from the government and virtually no foreigncollaboration,butthroughtheenterprisingspiritanddriveofasmallgroupofBhutaneseartists.TheMotionPicture Association of Bhutan (MPAB), which was formed in 1999, has 90 members today representingfeaturefilms,musicandperformingarts.Apartfrompiracy,someofthemainproblemsfacedbytheindustryincludelackofprofessionalism,difficultiesinobtainingloansfromfinancialinstitutions,limitedmovietheatresfor screening, and cumbersome government procedures for compliance. The Media Development Fund,establishedunder theBhutan Information,CommunicationandMediaAuthority (BICMA), lacks funding.TheMPABisstrivinghardtoimprovetheindustry,whichin2010sawasmanyas31moviesbeingproduced,thehighestnumberproducedinayearsofar.Thecorrespondingfiguresfor2008and2009were16and20filmsrespectively.
AwelcomedevelopmentfortheindustryisthegovernmentsupportandincentiveoutlinedintheEconomicDevelopmentPolicy(EDP)in2010bywayofwaiverofcustomsdutyandsalestaxonimportofprofessionalequipment.ThePolicyalsoexemptsincometaxonearningsfromfilms,documentariesandserialsproducedforpublicbroadcastingandreducedthesalestaxonfilmticketsfrom30%to10%between2010and2015.Further,theGoldenAward,fromHisMajestytheKingontheNationalDayinDecember2009,totheMPABrepresentsthehighestrecognitionforitscontributiontotheBhutanesesociety,whichshouldprovidesomeimpetustotheindustry.
2.5.2 Print and Media
Theprintingindustryisgrowingrapidly.Thecapacityforprintingdifferenttypesofworkswithinthecountryhasincreasedandimprovedinrecentyearswiththegrowthindemandforprinting.Mostoftheprintingpressesdependongovernmentordersfortheirsurvival,asthedemandfromtheprivatesectorissmall.The
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printingofschooltextbooksisanimportantsegmentoftheindustry,thoughtheactualprintingisoftendoneinIndiaowingtolowerproductioncosts,therebydivertingthepotentialbenefitsofemploymentandincometotheeconomy.
TheincreasingproductionofwrittenmaterialaboutBhutanbyBhutaneseandforeignauthors(CBS2009)canbeseenfromTable7below.Afewauthorshaveproducedmultipleworks,particularlyinthenationallanguage,thushelpingtofulfilthegovernmentobjectiveofpromotingDzongkha.
InSeptember1999,theCentreforBhutanStudies(CBS)wasdesignatedasthenationalagencyforissuinginternationalstandardbooknumbers(ISBN).Between2000and2008,1,176books,magazines,articlesandgovernmentpublicationswereissuedwithISBNs,outofwhich25%werefromtheMinistryofEducation.About38%of the registeredworkswere thecreationofan individualor jointauthorship,which showsencouragingsignsofcreativityamongthegrowingnumberofwritersinBhutan.
Table 7: Issuance of ISBN from 2000 to 2008 on Works by Different Groups
Year Authors Govt. Agencies
Printing Press
Business, NGOs & Int. Organisations
Total Remarks
2000 10 53 3 66 Issuance of ISBN starts2001 26 54 7 6 932002 13 17 5 352003 37 19 23 1 802004 19 22 9 11 612005 18 45 3 3 692006 32 53 9 1 952007 27 59 1 13 1002008 214 70 15 13 302 Coronation & Centennial
CelebrationsYears not specified
46 42 153 34 275 Year of ISBN issued unknown
TOTAL 442 434 210 90 1,176
Source:CentreforBhutanStudies,2009.
AsobtainingtheISBNisvoluntary,manypublicationsmaynotbesubmittedtoCBSforregistrationandarethusexcludedfromtheabovedata.Hence,thedataisonlyindicative.Eventhen,itshowsacleargrowthtrendfrom2006onwards,reachingthemaximumin2008whenmanypublicationswereissuedtocommemoratetheCoronationandCentennialCelebrationsoftheMonarchy.Thereare275ISBNswhoseyearofregistrationremainsunknown.
Themediaplaysavital role inanascentdemocracy likeBhutanas ithelps to shapepublicopinion,andseeksaccountabilityandtransparencyinthefunctioningofthegovernmentandnationalinstitutions.TheconvergenceofmediaandICTbecomesapowerfulforceforthegrowthofbusinessenterprisesandcreativity.ArecentMediaImpactStudyfoundthatone-thirdofthepopulationisalreadyusingmobilephones,aservicethatbeganonlyin2003(MoIC2008).ThereisalsosignificantgrowthinaccesstomediaintheformofTV,radioandnewspapers. Themedia content is alsomoving from its traditional informationdomain to thegrowingdemandforentertainment(MoIC2008).
Theprint, radio and telecommunicationsnetworks in the country have also expanded rapidly. Fromonegovernmentradiostationuntilrecently,fouradditionalradiostationsintheprivatesectorhavenowbeensetupprovidingcompetitionandvarietyininformative,educationalandentertainmentprogrammes.Similarly,therearetwodailyandsevenweeklynewspaperstoday,ascomparedtooneuntil20078.Fifty-twoprivatecableoperatorsprovide24-hournewscoverageandentertainmentonasmanyas50internationalchannels.ThenationalTVservicethatwasstartedonlyin1999remainstheonlystationtoprovidelocalandnationalprogrammesthatarereflectiveofindigenouscreativity.
8TwoweeklynewspapersinDzongkhaandaweeklyfortheyouthinEnglishwerestartedin2010and2011.
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2.5.3 Handloom Weaving
WeavingisanimportantcottageindustryinBhutan,asitisextensivelypractisedasacashincomebusinessincentralandeasternBhutan.Thehandloomdesignsarelargelytraditional,havepasseddownfromonegenerationtoanotherandareinthepublicdomain.Theindustryispredominantlyintheinformalsector,asonlythreeweavingbusinesswereregisteredaspertheBaselineStudy9.Dataonproduction,salesandemploymentcannotbeobtainedeasilyandthereforearenotcapturedinthenationaldata.
Someeffortshavebeenmadebythegovernmentsincethe1980sto improvecolouranddesignsandtoproducedifferentgarmentsfromhandloomforexport.ThegovernmentdevelopedahandloomdesignandweavingcentreinKhalingthatwaslaterhandedovertotheNationalWomen’sAssociationofBhutan(NWAB),a non-government organisation devoted to promoting income-generating activities for women. Anotherproject in the1990sthatalsoproduceddifferent itemsfromhandwovenmaterialswasprivatised.Morerecently,twoUN-assistedprojectstriedtocarryforwardthedesignandproductionofnewgarmentsandotherproductsfordomesticandexportmarkets.TheseeffortshaveencouragedafewindividualstocreatenewdesignsthatarenowrecognisedthroughanannualdesigncompetitionarrangedbytheDepartmentofCulture.Thesedesignshavenot,however,beenregistered,becauseeithertheydonotmeetthecriteriaorthedesignerssimplydonotregistertheirnewcreations.ThoughindustrialdesignsareseparatefromcopyrightintermsofIPclassification,theyarenonethelesscloselyrelated,assuchdesignscanbeeasilycopiedbytheuseofITandmultipliedwithouttheknowledgeofthecreator.Thisisaspecialareawherecreativitycanbepromotedandprotectedthroughcombinedeffortsbetweenindustrialdesignsandcopyrightdomains.
2.5.4 Handicrafts, Furniture and Visual Arts
Bhutanesehandicraftsaredominatedbybambooandcanebaskets,woodencupsandbowls,scrollpaintings,varioushandloomproducts,traditionaljewellery,masks,andclayandmetalsculptures.Theprincipalmarketis the growing tourist industry, though these products are also consumed in the domestic market. Dataonproductionandsalesarealsosketchyandunreliable.Thelittleexportthattakesplaceisthroughcarry-onbaggageofpassengerstravellingabroadratherthanexportconsignments,andthereforeescapesfromofficialrecords.Increasingthenumberoftouristsandtheintroductionofcreditcardsisexpectedtoincreasesalestotourists.
Along with marketing, a combination of creativity, skills and quality plays a critical role in developing asuccessfulhandicraftsindustry.Itrequiresaproperstrategyandpolicysupportfordevelopment.Governmentintervention remains largelyuncoordinated, thoughdifferent agencies like the Instituteof ZorigChusumcarryoutproductdevelopmentandimprovementprogrammes.However,thenewlyestablishedDepartmentof Cottage and Small Industries (DCSI) and the Agency for Promotion of Indigenous Crafts (APIC) – anautonomouspublicagency–areexpectedtofill thisvacuumtosomeextentandto fosteramore rapidgrowthofthehandicraftssectorinlinewithrenewedgovernmentfocusonthesector.
Carved Bhutanese furniture has some potential, but the market is disorganised. The high labour costalso makes products uncompetitive for export; it is largely produced for the domestic market. The dataonproduction,saleandexportoffurniturearelackingandoftenunreliable.Itwilltakemoretimebeforeentrepreneurscaninvestinproducingcarvedfurniturewithdifferentdesignsatcommerciallevels.
Asinthegeneralhandicraftsandothercreativesectors,theconceptofcopyrighthasnotyetseepedintothemindsofmostvisualartists,exceptthosewhoengageinmodernpaintings.Yet,visualartistraditionallya very important aspect of the Bhutanese culture in various forms of painting, masonry, sculpture, andwoodandmetalcarving.WhiletheIPownershiphastraditionallyremainedinthepublicdomain,productadaptationandinnovationisimpossiblewithoutprotectingthecreativityoftheartist.EnhancingknowledgeandawarenessonIP,andparticularlycopyright,isneededforthebenefitoftheartistsinthesefields.
9ThisisthefirstcomprehensivestudydoneonculturalindustriesinBhutan,whichwascompletedinJune2009basedonasurveycarriedoutbytheDepartmentofCultureandCSOwiththesupportofUNDP,UNESCOandUNIDO.
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2.5.5 Other Related Areas
Informationandcommunicationtechnology(ICT)hasassumedprominencesincethebeginningofthedecadewiththeBhutanICTPolicyandStrategy(BIPS)issuedin2004.BIPSwasacommitmentfromthegovernmenttoharnessthepotentialofICTbyensuringgoodgovernance,creatinganinformationcultureandapplyingICTinbusinessandindustrywithaviewtoimprovingBhutan’scompetitivenessintheregion.BIPSwasalsomeanttoaddresssectoralpolicies,infrastructure,humancapacity,contentandapplication,andenterpriseinrelationtoICT.OneofitsactivitieswastoenforceIPlegislationincooperationwiththeIPD,DRC,JudiciaryandPolice,andtheworkinthisrespectisongoing.Areviewin2009foundthattheimplementationofBIPSwasgenerallysatisfactoryandoncourse.
DespitethegrowingapplicationofICTinpublicandprivatesectors,thereismuchtobedonetoengenderindividualcreativity that isvital foreconomicgrowth.Thenationalcapacity remains low,with littleornoprogressinsoftwareanddatabasedevelopment.TheICTismainlyconfinedtointernetandmobiletelephoneconnectivity,aswellassupplyof importedequipmentandICT-relatedservices.Themajor ITusersarethegovernmentandcorporatesector.AstheydonothavesufficientconfidenceinlocalITfirmsandprofessionals,theycontinuetoengageexternalconsultancyfirmsandexpertiseinITandsoftwaredevelopment.
AnotableachievementistheadoptioninAugust2009oftheVisionfortheInformationSociety(VIS)thatseekstoraisenationalconsciousnessandidentityinBhutanandpromotecreativitythroughinformation.Media,ITandcultureareidentifiedasthreeintegratedcomponentsoftheInformationSocietyinthe21stcentury.TheVISdefinesthescopeof‘media’asoral,TV,radio,internet,filmandmusic,printingandpublishing,gamingandmobilephones.‘IT’isrecognisedasaninfrastructure,asameansofimpartingskillsandencouragingcreativity.‘Culture’embodieslibraries,visualandperformingartswithintheVIS,butexcludesreligiousandotherculturalactivities,artsandcrafts.TheMinistryofInformationandCommunications(MoIC)ismandatedtotaketheleadinrealisingtheVisionasa‘ministryofcreativeclusters’andsupportingtangible(commercial)andintangibleformsofactivitiesforanewInformationSociety.
2.6 the promotion of culture-Based creative IndustriesAconcertedefforttostudytheroleofcreative industries,butprincipallycultural industries,wasmade in2007undertheUNsystemtosupportBhutaninimplementingtheParoInitiativeonCulturalCooperationintheBIMSTECregion,adoptedin2006.ThisfollowedtheinitiativetakenbyBIMSTECcountriesin2004toenhancetheroleofcultureinsocio-economicdevelopmentofthemembercountrieswithBhutanassumingtheleadingroleforitsimplementationwithintheregionalbody.
Aprojectentitled:‘ThePromotionofCulture-BasedCreativeIndustryforPovertyReductionandCommunityVitalisation’wasimplementedbetween2007and2009resulting,inter alia,intheBaselineReportreferredtoearlier.Thesecondoutputoftheprojectwastobringaboutimprovementsinthemarketing,design,quality,productionandentrepreneurialdevelopmentofthecraftsector.TheBaselineReportismeanttoserveasapilotstudythatcanbeappliedinotherBIMSTECcountriestocollectandanalysedataonculturalindustries.Theaimistoultimatelycreatea‘culturalindex’inBIMSTECtomeasurethecontributionofculturetosocio-economicdevelopmentintheregion.
Although the role of IP is recognised in the project document, there is no specific component on it.Nonetheless, the Baseline Report forms a useful reference point for this study, as some information onCBIshasbeencollatedandtheWIPOclassificationisusedindatacompilation.Itskeyfindingswithinthelimitationsimposedbytheavailabilityofdataare:
(a) Avarietyofculture-basedindustriesexistsinBhutan,withnewenterpriseslikeTVproductionandthemovieindustryenteringthescene;
(b) The number of persons involved in the culture-based industries, or having skills related to thoseindustries,aresignificantbyinternationalcomparisons.About10percentoftheworkforce(25,278)isengagedintheculturalsector,asperthe2005PopulationandHousingCensus.However,about60,118peopleprofessedtohavesomeskillsinculture-basedindustries–35%inurbanand65%intheruralareas;
(c) Amajorityoftheculture-basedindustriesareinruralareasandoutsidetheformalsector.Thedatafromtheseindustriesarethereforenotcapturedfullybysurveysorstudiesinthepast;
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(d) Culture-basedindustriesgenerallyfallintofivemaincategories–artsandappliedarts,culturalandreligiousservices,crafts-basedmanufacture,mediaandculturaltourism;
(e) Furniture-makingisthelargestsub-sectorfollowedbytheprintedpress;and(f) Craftsareproducedprimarilyfordomesticuse,thoughsomeexportthroughtouristsistakingplace.
Buttherearenodatamaintainedonit.Thedataontradeofculturalproductsarethereforeskimpyandunreliable.
Anotherrelateddevelopmentistheapproval in2008oftheindexforGrossNationalHappiness(GNH),aphilosophythatBhutanhaschampionedinthelastdecade.GNHseekstomeasureeconomicgrowth,notintermsofGDP,butinamoreholisticconceptofdevelopmentthatincludessocialandemotionalwellbeingofpeople.CulturaldiversityandresilienceisoneoftheninedimensionsorcomponentsoftheGNHindex.Artisanskill(meaningtraditionalskill)isanaspectoftheculturaldimensionthatbringsindividualcontentment.Theotherdimensionsarepsychologicalwellbeing,timeuse,communityvitality,health,education,environmentaldiversity,livingstandardandgovernance.Themainchallenge,however,liesintheoperationalisationoftheGNHindex.
The two initiatives mentioned above have far-reaching implications for the creativity of CBIs and thedevelopmentofculturalindustriesinBhutaninthefuture.
2.7 Key Issues and constraints
2.7.1 Weak Database
Thoughthecopyrightlegislationwaspassedin2001,littleefforthasbeenmadethusfartowardsgatheringdataandinformationonCBIsinthecountry.TherehasalsobeenpoorcoordinationofpoliciesandprogrammeswithrespecttoCBIs.
Ascreativeactivities,manyCBIsinBhutanoperatewithinindividualsettingsandhencetheyarenotcapturedbyofficial datagatheredon thebasis of licence, or registrationdatamaintainedby variousgovernmentorganisations–principallytheMoEA.Theproductionofgoodsandservicesforcommercialpurposesrequiresbusinesspermits(termedalicence).However,ifthetotalinvestmentofacommercialenterpriseislessthanNu.1million,onlyaregistrationisneeded.
2.7.2 Poor Inter-Agency Coordination
Theprocessofcapturingdatahasbecomeevenmorecumbersomewiththedispersalofresponsibilitiestootherorganisationswithinthegovernmentonthebasisoftheirevolvingmandates.AsmanyCBIs,suchasmedia,filmsandmusicandICT,fallwithinthepurviewoftheinformationandcommunicationsector,theyarenowmonitoredandregulatedbyBICMA,anautonomousregulatorybody.OtherCBIs,especiallythoseengagedinwholesaleandretailtrade,remainwithMoEA,withtheexceptionoflandtransport,whichisregulatedbytheRoadsandSurfaceTransportAuthority(RSTA),functioningunderMoIC.Inaddition,othercreativeandculturalindustries,suchasvisualandgraphicart,dramaandtheatre,aretheresponsibilityoftheDepartmentofCultureundertheMinistryofHomeandCulturalAffairs.Therearenon-governmentalorganisations,liketheNWAB,HandicraftsAssociationofBhutan,TarayanaFoundationandYouthDevelopmentFund,whichareinvolvedindevelopingvariousartsandcraftstobenefitwomen,youthanddisadvantagedgroupsinsociety.Acentralbodyisthereforenecessaryinthegovernmenttocoordinatetheseinitiativesanddirectresourcesfortheiracceleratedgrowth.Thedispersalofresponsibilitiestovariousagencieshasalsocontributedtoalackoffocusedapproachinpromotingcreativeindustries,orCBIsforthatmatter,asmuchastheculturalindustries.Asstressedabove, themandatefor thedevelopmentofCBIs issubsumedunderanumberofparentorganisations(MoHCA,MoEAandMoLHR),eachofwhichhasitsownagendaandnotspecificallythatofitsCBIcomponents.Insuchanenvironmentandintheabsenceofaprogrammedapproachtotheirdevelopment,thedevelopmentofCBIsreceiveslittleattention.
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2.7.3 Lack of Awareness of Copyright Protection and Enforcement
DespitetheeffortsoftheIPDtocreateawarenessanddisseminateknowledgeandinformation,thevalueofprotectingIPisyettopercolatethroughtheBhutanesesocietyatlarge.Thisisparticularlytrueforruralareas,despitearelativelystrongbaseforcreativityinhandicraftsandcottageindustries.Whateverawarenesshasbeencreated,itislimitedtothemusicandmovieindustries,aswellasthemediathatareconcentratedinurbanareas–particularlyThimphu.Boththesesectorsarealreadymakingvisibleimpactwiththeirgrowingpopularity.Themedia,inparticular,israpidlychangingviewsofthepeoplethatmayhavealastingimpactinsociety.
Basedon thedatamaintainedbyMoEA, therewereapproximately15,148CBIs in2008.This represents8%ofthetotal registeredbusinessactivities inthecountry.Thoughthefiguremaybetentative,assuchsegregationhasneverbeendonesofar,itshowstheirrelativeimportanceintheBhutaneseeconomy.Whatisnoteworthyisthegrowthinthemediaandentertainmentsectorinrecentyears,asectorthathasalsobeenthemostactiveinprotectionofcopyright,asobservedbytheirconcernforpiracyandlegalcaseshandledbythecourts.
Witha rather slowstart in IPenforcement, somemomentumhasgathered in recentyears,as shownbythenumberofcasesdealtbythecourts–suchastheonebetweenBBSandaprivatecableoperator.TheMPABisalsotakinginitiativesonitsowntocurbcopyrightinfringement,bothwithinthecountryandintheneighbourhood.Thegovernmentrealisestheneedtotakeadditionalmeasures–morecopyrightprotectionand better enforcement of the law through capacity-building programmes, within the government andprivatesector,throughworkshopsandseminars–andistakinginitiativeslikethedraftingofenforcementmechanismsandrulesandregulationsfortheCopyrightAct,2001.
2.7.4 Lack of Innovation and R&D
Asforcreativityandinnovation,theyarerelativelyweakingeneral.Thisisevidentfromthesamplesurveycarriedoutforthisstudy,whichshowsthatlessthan1%ofthetotaltimeisdevotedtoworkusedforcreativepurposes.ConsideringtheverylowlevelofR&DthattakesplaceinBhutaneseindustries,thelowlevelsofcreativityandinnovationarenotsurprising.However,theirpotentialcannotbeover-emphasised.
2.7.5 Lack of Skills Training
The study shows the share of CBIs in total employment as 10.1%, which is quite significant. However,only8.7%ofthe labourforceemployed inCBIsaretrained,andabouthalfof themhavea low levelofeducation atGrade8.Given thehigher level of productivity inCBIs, a better-trained labour force couldbemoreproductiveandtherebymeettheexcesscapacitiesoftheseindustries.Heretoo,thepotentialforemploymentinCBIsisconsiderable.
2.7.6 Inadequate Access to Funding
TheCBIsinBhutangenerallyhaveinadequateaccesstoformalcreditfacilities.Theygenerallyaredependentonfundsfromtheunorganisedandinformalsector.LendingbytheBankofBhutan,which isthe largestbank,istakenasaproxyvariableforfinancesmadeavailablebytheorganisedfinancialmarket.LendingtosectorsthatarecloselyrelatedtoCBIsisgiveninTable8.Itisclearthatlessthanonepercentisdisbursedtothesmallbusinesssector,anareawhereindividualcreativityandcopyrightusuallytakesplace.
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Table 8: Bank of Bhutan: Loans to Major CBI-related Sectors as of December 2008
Sector Amount (Nu. in million) PercentageManufacturing industries 1,906.341 23.51Trade, commerce and export finance 975.809 12.03Service industries and tourism 1,312.097 16.18Personal loan 1,716.467 21.17Equity finance 6.808 0.08Small business loans 5.320 0.07Others* 2,186.848 26.35
*Includeshousing,transport,staffandagriculturalloansSource:RMAAnnualReports
Bhutanesebanksgenerallydonotlendeasily,especiallytosmallerenterprises.Project-tiedfinancingisnotcommon,particularlyforSMEs,andbanksoftenensurethatthereisbothadequatemortgageandrepaymentmodepriortolending.Bankofficialsarenotalwaystrainedinloanappraisals.Havingsaidthis,bankstoohave faced losseswhenentrepreneurshavebecomebankrupt in thepast. However,of late, therehavebeensomeimprovementswithrespecttoloanprocessing.TherearealsoveryfewbanksinBhutanandintheabsenceofcompetition,bankswilltendtoberisk-averse.Nonetheless,withtwonewbanksenteringthemarketandwith improvements in the legislativeandpolicy framework for theoperationoffinancialinstitutionsbyRMA,lendingtosmallbusinessesislikelytoimprove.TheestablishmentofspecialisedbanksandfinancialinstitutionstoprovidecreditsupporttoCBIsisalsoastepintherightdirection.
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3 . C o n t r i b u t i o n o f C B I s
3.1 IntroductionTheimportanceofknowledgeintheprocessofeconomicgrowthiswidelyrecognisedtoday.MoresystematicandinstitutionalsupporttothisideawasprovidedthroughtheincorporationofTRIPSunderWTO,towhichBhutanisnotyetparty10.ItwasastepforwardtoacknowledgetherelevanceofIPtotradeissues.Copyrightis one of the legal ways to protect newly created knowledge or products from free riding. Copyright isincreasinglybeingrecognisedforitsimportanceinenhancingcompetitiveadvantagetoarangeofindustries,includingcreativeindustries.Copyright,byprovidingcompetitiveadvantage,becomescrucialforeconomicgrowth,employment,internationaltradeandfinally,atoolforpovertyalleviationandhumandevelopment.EspeciallyforacountrythatdiligentlypursuesthegoalofGNH,itisanimportantsourceofhappiness.Forthesereasons,itisessentialtoknowthecontributionthatCBIsmaketotheeconomy.
TobetterunderstandthecontributionofCBIstotheeconomy,itisnecessarytobeginwithabriefdescriptionofthestructureoftheBhutaneseeconomy.ThisisfollowedbyadiscussionontheeconomiccontributionofCBIstoBhutan.
3.2 the Structure of the Economy of BhutanBhutanisasmallland-lockedcountry,withapopulationof671,083andanareaof38,394km2.Bhutanisadevelopingcountry,asitspercapitaGDPin2008wasUS$1,852.4(NSB2009).Bhutanisalsocategorisedamongthegroupofcountriesknownasthe‘leastdevelopedcountries’(LDCs)’11.
TheBhutaneseeconomyhasexperiencedsustainedeconomicgrowthsince1980,averagingat7.2%from1980to2008(Table9).Thedifferentialgrowthratesofthevarioussectorshavecontributedtosignificantstructural changes in the economy, the more significant being the shift away from agricultural to non-agriculturalactivities.Asa land-lockedstate, theeconomy isalsohighly trade-intensive.Thegrowth rateoftheagriculturesectorfrom2000onwardsdeceleratedsteeplytoalmosthalfofthe1980slevel.Ontheotherhand,theservicesectoracceleratedconsistentlythroughouttheperiodunderconsideration,whilethesecondarysectordeceleratedinthe1990sbutrecoveredtosomeextentafter2000.
Table 9: Annual Average Growth Rates of Real Gdp by Major Economic Sectors at Constant Prices (in %).
Period Primary Sector Secondary Sector Tertiary Sector GDP
1980-2008 3.6 12.9 7.9 7.2
1980-1989 5.2 18.2 6.7 7.5
1990-1999 3.0 9.0 7.3 5.9
2001-2008 2.2 12.9 10.7 9.0
Source:DerivedfromvariousissuesofNational Accounts Statistics
Economicgrowthwasmainlypropelledbytwosectors–hydroelectricityandconstruction.Thegrowthoftheconstructionsectoriscloselytiedtothegrowthofthehydroelectricitysector(SeeChart1).
10BhutanhasalreadyappliedforWTOmembershipanditsWorkingPartyhasmadeconsiderableprogressonthenegotiationsasof2008.However,thegovernmentisreviewingitsdecisionformembership.Seehttp://www.wto.org/english/thewto_e/acc_e/a1_bhoutan_e.htm
11Since1971,theUnitedNationshasdenominated‘LeastDevelopedCountries‘(LDCs)acategoryofStatesthataredeemedhighlydisadvantagedintheirdevelopmentprocess(manyofthemforgeographicalreasons),andfacingmorethanothercountriestheriskoffailingtocomeoutofpoverty.Assuch,theLDCsareconsideredtobeinneedofthehighestdegreeofattentiononthepartoftheinternationalcommunity.http://www.unctad.org/Templates/Page.asp?intItemID=3618&lang=1
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Themanufacturingsectorunderwentlong-termdecelerationafter1990.Theaverageannualgrowthrateofthemanufacturingsectordeclinedfrom17.7%in1980sto4.1%inthefirstsixyearsofthepresentdecade12.SincemanyoftheinterdependentCBIsaremainlymanufacturinginnature,thishasaffectedthecontributionofthisgroupofCBIs.
Themanufacturingsectorhasalsoexperiencedadecelerationinitsgrowthratesafter1990.
Chart 1: Percentage Share of Different Economic Sectors to GDP (2008)
Source:National Accounts Statistics2000-2008
Chart1showsthat,in2008,theprimarysectorcontributed21%,thesecondarysectorcontributed39%andthetertiarysectorcontributed40%.Today,theelectricitysector(20%)contributesmorethantheagriculturesector(19%)comparedto1990whentheagriculturesectorcontributedabout45%toGDP.Likewise,theshareofthemanufacturingsectorhasfallento9%ofGDP.
The private sector in Bhutan is relatively under-developed, as it is still constrained by state controls andregulations.Theregulatoryenvironmentmakesprivateinvestmentlessprofitable.Theproblemiscompounded,ironically,bythefreetradepolicywithIndia,whichmakesdomesticproductionuncompetitiveduetomorecompetitiveandefficientforeignfirms.
12MaindocumentoftheTenth Five-Year Plan(2008-2013),page25,statesclearlythisinfollowingwords:‘Themanufacturingsub-sectors’contributiontothenationaleconomyhasdeclinedsteadilyfromaround16%ofGDPbetween1990and1995toaround5%ofGDPoverthelastfiveyears.Additionally,themanufacturingsector,traditionallyamongthelargestemployersaroundtheworld,hasgeneratedlittlequalityemployment.’
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3.3 Economic contribution of cBIsTheeconomiccontributionofCBIscanbeexploredthroughtheanalysisofthreemajorvariables:
(a) ShareofCBIsinGDP;(b) ShareofCBIsinemployment;and(c) ShareofCBIsininternationaltrade
Thesevariablesareanalysedfortheyears1997,2001,2005and2008fortheentiresectorofCBIsaswellasforeachofthefourCBIgroups.Section3.4discussesthecontributionoftheCBIstoGDP,whileSection3.5analysesthecontributionintermofemployment.ThecontributionofCBIstointernationaltradeisexaminedinSection6.
3.4 Share of cBIs in gdpIn 2008, theCBIs collectively contributed about 5.5% toGDP (Table 12). The shareofCBIs inGDPhasconsistentlyincreasedsince2001.TheshareofCBIsinGDPwas3.3%in1997anddeclinedto2.8%in2001,beforerisingto5.5%in2005.Ithasalmostremainedunchangedsincethen.
Intra-CBI compositionhaschangedsignificantly since1997.Within theCBIs, the shareof corecopyrightindustriesinGDPincreasedsharplyfrom0.3%in1997to1.3%in2005andto1.9%in2008.TheshareofpartialcopyrightindustriesinGDPreflectsasteadyincreaseovertheperiod:from2.1%in1997to2.2%in2008.Theshareofnon-dedicatedsupportindustriesinGDPfluctuatedmarginally.Theirsharewas0.7%inboth1997and2001.Thisthenincreasedto0.8%in2005andagaindeclinedto0.7%in2008.
3.4.1 Structural Composition of CBIs
ThepaneldatarelatingtoGVAofCBIsisprovidedinTables10,11and12.AmongtheCBIs,thepartialcopyrightindustrygroupisthelargest.In2008,itaccountedforabout41%ofthetotalGVAoftheCBIs,decliningfromabout66%in1997(Table12).Ontheotherhand,theGVA
shareofthecoreCBIswasestimatedat
about8%in1997,buthassinceincreasedconsistentlytoabout34%in2008andfurtherto36%in201013.Oneplausibleexplanationforthesharpincrease,especiallysince2001,couldbetheunreliableestimatesinthe1997CensusonManufacturingIndustryandmainlybecauseofthesubstantialgrowthinmanyofthecorecopyrightactivities,suchaspressandliterature,ITandIT-enabledservicesespeciallyaftertheyear2000.
TheGVAofpartialCBIsgrewconsistentlytill2001butdeclinedthereafter.Thistrendisnotcompletelydevoidofanyexplanation.ThereasonforthehighershareofthepartialCBIsistheoverwhelmingdependenceoftheBhutaneseeconomyonnaturalresources.ThepartialCBIsarelargelynaturalresourceintensiveinnature,astheyusenaturalresourcesdrawnfromforests.TheseindustriesalsoformtheZorigChusomindustriesofBhutan.TheshareoftheinterdependentCBIsintheGVAofallCBIsdeclinedafter1997,butincreasedverymarginallysincetheyear2001.
Table 10: Nominal GVA of the Core CBIs (in Nu. millions)
Type of Core CBI 2005 2008 2010
Press and literature 197.4 473.9 662.0
Music, theatrical production, opera 38.9 76.2 84.5
Motion picture and video 40.7 81.4 90.7Radio and TV 82.0 164.2 200.8Photography 41.6 83.2 104.0Software and database 45.7 93.0 143.1Advertising agencies 15.2 30.4 38.0Total 461.46 1,002.31 1,323.10
Source:ConsultationswithmajorcoreCBIs
13ThecontributionofcoreCBIstoGDPwasdeterminedthroughconsultationswithmajorcoreCBIsastheNSBdoesnothaverelevantdata.TheircontributiontoGDPin2008isimputedonthebasisofdataobtainedfor2010.
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AstourisminBhutanismainlyofaculturalnature,theentiretourismindustryistakenasculturaltourism–Bhutan followsapolicyofhigh-valueand low-volume tourism inorder toprotect itsuniquecultureandnatural environment. The value added by the tourism sector is rising significantly. It grew at an annualcompoundrateof25.3%between2001and2005andat27.5%between2005and2008.ItisbecauseoftherapidgrowthofculturaltourismthattheGVAshareofthepartialCBIsintotalCBIshasbeenthehighestinspiteofthedeclineintheshareofpartialCBIsinGDP(seeTable12).
Table 11: Real GVA at Market Price (base year 2000, in Nu.) of Non-Core CBIs
Type of CBI Industry 1997 2001 2005 2008
PC Bronze casting 0.5 0.7 0.8 1.3PC Gold and silver smith 1.9 6.4 7.8 12.3PC Wood carving/bowl and cups 6.1 0.1 0.2 0.3PC Weaving handloom 0.6 6.5 8.0 12.6PC Martha factory 0.6 3.0 3.7 5.8PC Carpet factory 2.3 0.8 0.9 1.5PC Handicrafts 19.7 13.8 17.0 26.7PC Furniture 107.2 125.4 154.0 242.1PC Handmade paper 3.7 2.1 2.6 20PC Incense 1.2 2.1 2.6 4.0PC Cultural tourism 175.6 331.2 817.6 1,696.5NDS WRT 50.7 52.3 104.4 134.7NDS TSC 51.1 104.1 194.5 268.3
GDP at market price (at constant prices)
13,971.0 22,894.0 35,497.0 54,150.0
Source:CensusofManufacturingIndustries,1997&2001;National Account Statistics,2000-2008
Table 12: Percentage Share of Each Category of CBIs in GVA of all CBIs and GDP
1997 2001 2005 2008
GVA% of
GVA of CBIs
% GDP
GVA
% of GVA
of CBIs
% GDP
GVA% of
GVA of CBIs
% GDP
GVA% of
GVA of CBIs
% GDP
Core 38.3 8.4 0.3 3.6 0.5 0.0 461.5 23.7 1.3 1,002.3 33.9 1.9
PC 299.7 66.0 2.1 487.5 75.1 2.1 1,009.0 51.9 2.8 1,211.4 40.9 2.2
Interdep. 14.5 3.2 0.1 1.4 0.2 0.0 174.9 9.0 0.5 342.4 11.6 0.6
Non-ded 101.8 22.4 0.7 156.4 24.1 0.7 299.0 15.4 0.8 403.0 13.6 0.7
CBIs 454.4 100.0 3.3 648.8 100.0 2.8 1,944.3 100.0 5.48 2,959.1 100.0 5.46
Source:DerivedfromTables10and11
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Chart 2: Share of CBIs in GDP (%)
Source:Table12
Chart 3: Share in the GVA of Core Copyright Industries in 2008
Source:Table10
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3.4.2 GVA Growth of CBIs
ItwouldalsobeofinteresttoknowtheGVAgrowthrateofCBIsandtheirmajorcomponentsduringthisperiodunderstudy.ThiswillbeusefulinunderstandingthechangingimportanceoftheseindustriesintheoveralleconomyandthestructuralchangeswithinCBIs.
ThesegrowthestimatesaredividedintothreeperiodsasshowninTable13–Period1(1997-2001),Period2(2001-2005)andPeriod3(2005-2008).Astheestimatesfromthe1997CensusofManufacturingIndustryare less than reliable, an analysis of thegrowth rates in Period2 andPeriod3 ismoremeaningful. TheaverageannualgrowthrateofGVAforeachcomponentofCBIsandGDPiscalculatedasshowninTable13.ThetotalGVAofCBIsrecordedthehighestaverageannualgrowthrateof31.6%inPeriod2.Thegrowth,however,declinedto15%inPeriod3.Despitethedeceleration,GVAofCBIsgrewatahigherratethanGDP.ThecoefficientofcovariancebetweentheaverageannualgrowthrateofGDPandtheaverageannualgrowthrateofGVAofCBIsis0.3514.ThisshowsthatonestandarddeviationchangeinGVAofCBIscauses0.35standarddeviationchangeinGDP.Thereisevidenceofmediumpositiveassociationbetweenthetwovariables,implyingthattheassociationbetweenGVAofCBIswithGDPismediumandanychangeinGVAofCBIshasamoderateimpactonGDP.
Table 13: Average Annual Growth Rate of GVA (in %)
Period 1
1997-2001Period 2
2001-2005Period 3
2005-2008GVA of core copyright industries -10.0 237.3 29.5GVA of partial copyright industries 16.6 26.9 32.7GVA of non-dedicated support industries 13.4 22.8 11.6GVA of all CBIs 13.3 31.6 15 GDP 6.3 7.8 9.5
Source:Table12
ThecoreCBIsgrewatanaverageannualrateof237.3%inPeriod2,andby29.5%inPeriod3.ThisreflectsthedynamismofthecoreCBIsinBhutan.Ifthistrendcontinues,theshareofcorecopyrightindustriesinGDPwillincreasesubstantiallyinthecomingyears.
ThepartialCBIsnotonlyexperiencedaccelerationintheaverageannualgrowthratesofGVAbutalsogrewatthehighestrateinPeriods1and3.Itgrewat26.9%inPeriod2,acceleratingto32.7%inPeriod3.TheaverageannualgrowthrateofGVAoftheNDSgroupwas22.8%inPeriod2,butitdeceleratedinPeriod3.Itnonethelessregisteredadouble-digitgrowthof11.6%.ThegrowthanalysisindicatesthatCBIsinBhutanaredynamicandhavegoodpotentialinthenearfuture.
14ThecovarianceiscalculatedusingSPSS11.5forWindows.
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Chart 4: Average Annual Growth Rates of Different CBIs
Source:Table13
3.5 Share of cBIs in EmploymentBefore discussing the share of CBIs in total employment, it is pertinent to give a brief overview of theemploymentscenarioinBhutan.
Bhutan has a very small population base and its population census is a recent phenomenon. The firstprofessionalcensuswascarriedoutin2005andthisistheonlysourceofareliabledemographicdatabase.According to the 2005 Population and Housing Census (PHC), the population of Bhutan was 634,981.Theprojectedpopulationfortheyear2008,asgivenbytheLabourMarketInformationBulletin,2008was671,083,whiletheLabourForceParticipationRate(LFPR)was67.3%.Therateofunemploymentin2008wasestimatedat3.7%.Asinmostcountries,theLFPRforfemalesislower,at46.4comparedto49.5formales.
LiketheanalysisofthecontributionofCBIstoGDP,thecontributionofCBIstoemploymentisdoneintwosegments.
3.5.1 Share of CBIs in Total Employment
In2008,about66.7%ofthelabourforcewereengagedintheprimarysectorandtherestinthesecondaryandtertiarysectors.Thetotalworkforceintheeconomywas249,030,ofwhich25,215personswereemployedinCBIsasshowninTable14.ThismeansthattheshareofCBIsintotalemploymentwas10.13%.Inthesameyear,2,574peoplewereemployedincoreCBIs,whichconstitutedabout1.03%oftotalemployment.InthepartialCBIs,17,914personswereemployedconstituting7.19%oftotalemployment.Thenon-dedicatedsupportindustriesemployed4,012persons,accountingforabout1.61%oftotalemployment(Table15).
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Table 14: Employment in CBIs in 2008
Category IndustryPersons
employed
Core Press and literature 712
Core Music, theatrical production, opera 522
Core Motion picture and video 52
Core Radio and TV 968
Core Photography 40
Core Software and database 255
Core Advertising agencies 25
PC Gold, silver and blacksmiths, potters 548
PC Bronze casting 49
PC Wood and stone carving/bowl and cups 5,372
PC Handicraft, weaving handloom, martha and carpet 6,086
PC Handmade paper 71
PC Incense 40
PC Furniture 5,225
PC Cultural tourism 523
NDS Wholesale and retail trade 1,828
NDS Transport, storage and communications 2,184
Interdependent 715
Total employment in CBIs 25,215
Total employment in the economy 249,030
Source:DerivedfromthePopulationandHousingCensus,2005fornon-core,andconsultationswithcoreCBIsin2011
Thenumberofpeopleemployedineachindustryisbasedontheirprimaryoccupationandexcludespersonswhoareinvolvedinanyeconomicactivityasasecondaryoccupation.Thebestpracticewouldhavebeentouseman-hoursinvolvedineachactivityratherthanthenumberofpeopleinvolved.Suchanexercisewouldhavegivenmorepreciseestimatesofthelabourdevotedtoeachactivity.Intheabsenceofsuchinformation,theanalysisofthecontributionofCBIstototalemploymentisthereforeanunder-estimation.
Table 15: Share of CBIs in Employment 2008
Core Partial Interdependent Non-dedicated All CBIsNo. of employees 2,574 17,914 715 4,012 25,215Share in employment in CBIs (in %) 10.21 71.05 2.84 15.91 100Share in total employment (in %) 1.03 7.19 0.29 1.61 10.13
Source:DerivedfromTable14
AnotableaspectoftheemploymentinCBIsisthattheaverageproductivityoflabourinCBIsislowerthanthenational average. Evidenceof this observation canbe found in the ratioof thepercentage shareofCBIsinGDPtothepercentageshareofCBIsintotalemployment.Thisratioisusedasanindicatoroftheaverage labour productivity index. In 2008, the shareofCBIs inGDPwas5.5%,while its share in total
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employmentwas10.13%15asindicatedinTable15.Theratioisabout1.84,whichimpliesthat,onaverage,CBIscontributeproportionatelylesstoGDPperemploymentexceptforcoreCBIs.Furtherdisaggregationofthedatahighlightsintra-CBIdifferencesinthestandardsofproductivity.ThecoreCBIsappeartobethemostproductivesegmentofCBIsasreflectedbytheshareinGDPtoshareinemployment.Thepartialcopyrightindustriesalsohaverelativelylowerproductivity.Ontheotherhand,theNDSindustriesarerelativelymoreproductiveintermsoflabourproductivity(seeTable16).
Table 16: Relative Productivity of Labour in CBIs in 2008
Share in GDP (in %) Share in employment (in %)Share in GDP/share in
employment
Core copyright 1.9 1.0 1.8
Partial copyright 2.8 7.2 0.4
Non-dedicated support 0.8 1.6 0.5
All CBIs 5.5 10.1 0.5
Source:Tables10,11and14
Thedataprovidedbythe2001CensusforManufacturingIndustriesrevealsthatcoreandpartialCBIsemployed1,983persons,ofwhich73%weremaleemployees.ThedataprovidedbythisCensusalsoshowsthat5.4%ofthepersonsemployedwereproprietors;therestwerehiredemployeesashighlightedinTable17.Onlya fourthof the total labouremployed inCBIswere skilled.Theaverage labourproductivity in these twosegmentsislowbecauseofthelowskillcontentoflabour.Skill-wisedistributionoflabourincoreandpartialcoreCBIsisillustratedinChart5.
15Employmentestimatesof2008arebasedontwosources,PopulationandHousingCensus2005fornon-coreCBIsandconsultationsin2011forcoreCBIs.The2005estimatesarerevisedfor2008usinggrowthrateofGVAofeachcategoryofnon-coreCBIs.SimilarmethodologyisappliedtoconvertinformationcollectedforcoreCBIsthroughconsultationsin2011.
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Table 17: Employment Distribution across Core Copyright and Partial Copyright Industries in 2001
Type of CBI
Industry Proprietor Employee Casual Skilled Unskilled Total
PC Weaving handloom 11 17 89 43 43 203
PC Martha factory 0 4 7 11 0 22
PC Carpet factory 1 10 67 35 0 113
PC Handicrafts 18 83 91 106 7 305
PC Furniture 31 269 183 103 150 736
PC Handmade paper 12 52 21 13 26 124
PC Incense 4 12 8 4 6 34
PC Wood carving/bowl and cups
16 3 9 15 11 54
PC Bronze casting 1 27 10 14 0 52
PC Gold and silver smithing
11 69 5 38 47 170
Sub Total 105.8 546 490 382 290 1,813
% share 5.8 30.1 27.9 21.1 16 100
Type of CBI
Industry Proprietor Employee Casual Skilled Unskilled Total
C Printing/press 1 16 2 0 0 19
C Audio visual and video movies
2 25 124 0 0 151
Sub Total 3 41 126 0 0 170
% Share 1.8 24.1 74.1 0 0 100
Grand Total 108 587 616 382 290 1,983
% Share 5.4 29.6 31.1 19.3 14.6 100
Source:DerivedfromtheCensusofManufacturingIndustries,2001
Chart 5: Skill-wise Distribution of Labour in Core and Partial CBIs
Source:CensusofManufacturingIndustries,2001
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3.5.2 Employment Distribution within the CBIs
Ithasalreadybeennotedthatthepartialcopyrightindustriescreatethelargestemploymentopportunitiesfrom among CBIs. Within the partial core segment, weaving/ handloom, wood and stone carving andfurnitureconstitute the largestemployer,as theyemploy24.1%,21.3%and20.7%, respectively,of theworkforceengaged inCBIs.TheWRTandTSCsectorsarethenextbiggestemployerswithintheCBIsasshowninTable18.
Table 18: Major Employment Share within CBIs in 2008
Type of CBIs Industry Share in CBIs employment (in %)NDS Transportation, storage and communication 8.7 NDS Wholesale and retail trade 7.2Interdependent Altogether 2.8PC Weaving handloom 24.1 PC Wood and stone carving/bowl and cups 21.3 PC Furniture 20.7 PC Incense 0.1PC Handmade paper 0.3PC Cultural tourism 2.1PC Gold, silver and black smiths and potters 2.2 PC Bronze casting 0.1Core Printing press 2.8 Core Radio and TV 3.8
Source:DerivedfromTable14
Handloom weaving, wood and stone carving, and furniture together engage about two-thirds of thoseemployedinCBIs.ItshouldalsobenotedthatweavinginBhutanisprimarilycarriedoutunderthedomainofcottageindustriesandmanyruralhouseholdsareinvolvedintheseactivities.Itisoftenundertakenasasecondaryoccupationandnotasaprimaryoccupation.Inthissense,theshareofweavinginemploymentmaybeunder-estimated.
3.5.3 Female Participation in CBIs
The sample survey suggests thatabout47%of the labour involved inCBIsare femalesbut they receiveonly14.5%shareinthetotalcompensationofemployees.Thismaybebecauseofafewfemaleemployeesathigherpositionswhoarebetterpaid.TheshareoffemalesinthelabourforceandinthecompensationofemployeesisreflectedinChart6.Thefemaleemployeesreceivealessthanproportionateshareinthecompensationofemployees.ThedifferencecouldbeduetothefemalelabouremployedinCBIsbeinglessskilledthantheirmalecounterparts.
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Chart 6: Share of Women in Labour Force
Source:CensusofManufacturingIndustries2001
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4 . P e r f o r m a n c e o f C B I s
4.1 IntroductionThe detailed information on the performance of CBIs is derived from the sample survey undertaken forthisstudy.Theinformationcollectedfromthissurveyisusedtoanalysethefinancialandphysicalvariablesrelatingtotheirperformance.Thispartofthestudywillhelpto identifytheindustrialhealthofCBIsandidentifyareasrequiringtheimmediateattentionofentrepreneursandplanners.
4.2 performance IndicatorsThebookvalueofinstalledcapitalinthesampleCBIsisworthNu.171.123millionandtheyhaveprovidedemploymentto778persons.Foreachlabouremployed,acapitalequivalentofNu.219,954.00isinvestedinCBIs.TheplantloadfactorforCBIsis59.1%,whichimpliesthatCBIsuseonly60%oftheirexistingcapacity.Thus,thereisanexcesscapacityofabout40%inthisclassofindustries.
Table19providesa comparativeanalysisof theperformance indicatorsofdifferent categoriesofCBIs inBhutan.Thecapital-outputratio(K/O)fortheCBIsis1.5,whichmeansthattoproduceoneunitofoutput,1.5unitofcapitalisrequired.Theinput-outputratio(I/O)is2.2implyingthatforeachunitofoutput,2.2unitofinputisrequiredbytheCBIsinBhutan.
Table 19: Performance Indicators of CBIs
Indicators All CBIs Core Interdependent PartialNon-dedicated
support
Capital output ratio 1.5 1.7 0.4 1.3 1.6Input-output ratio 2.2 2.6 0.1 1.4 3.8Plant load factor 59.1% 52.6% 37.9% 74.2% 18.0%Total sales to total capital 2.8 2.8 2.1 2.1 4.7NVA/sales 35.1% 37.4% 80.4% 36.9% 18.1%Rate of depreciation 11.5% 14% 12.2% 4.5% 12.2%Gross Profit/NVA 40% 32.2% 37.4% 54.9% 11.3%Gross profit/sales 12.6% 12.3% 30.1% 20.3% 2.1%Net exports/NVA -75.9% -89.3% -2.9% -24.4% -84.5%
Source:Consultant’ssamplesurvey
Theinterdependentandpartialcopyrightindustriesarethemostprofitablefirms,astheirprofitabilityratiosarehigherthanothers.NetexportstonetvalueaddedratioisnegativeforalltheCBIsandishighestforthecoreandNDScopyrightindustries.Theoverallpictureismixedanditisnoteasytoidentifyonegroupasthepoorestperformer.TheNDSindustriesaretheworstperformersintermsofcapacityutilisationastheyhaveexcesscapacityofabout82%.Theyalsohavethelowestprofitabilityratioandareamongthehighestnetimporters.Theycanthereforearguablybetheweakestperformer.
Itisevidentfromtheabovethatsubstantialunder-utilisationofthescarcecapitalexistsinBhutaneseCBIsandtheresourceuseefficiencyisverylow.ImprovementintheoperationalefficiencywoulddefinitelystrengthenthefinancialviabilityandprospectsofCBIs.Thoughtheidentificationofthecausesofsuchinefficiencyisbeyondthescopeofthestudy,anattemptismadetoanalysethisaspectbriefly.However,thefindingsfromthesamplesurveyonoperationalefficiencyoftheCBIsshouldbeusedwithcaution.Theidentificationofthecausesofoperativeinefficiencyshouldbetakenupseparatelybyinterestedparties.
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ThefindingsofthesurveyastabulatedinTable20suggestthatonly8.7%ofthelabourforceemployedinCBIsareprofessionallytrained,andabouthalfofthelabouremployedintheseindustrieshavereceivedlessthanaGrade8levelofschooleducation.Paradoxically,thesurveyrevealsthatonlyaminisculefraction(lessthanapercent)ofthetotaltimedevotedtoworkisusedforcreativeworkandtheCBIstogetherspendonly3.7%oftheirtotalgrossprofitonresearchanddevelopment(R&D)andtrainingofstaff.TheCBIsinBhutanareseeminglycaughtinaviciouscycleoflowskill,lowproductivityandlowspendingonR&D.ThelowerspendinginthecrucialareasofproductivityandcompetitiveadvantageexplainswhytheexportsoriginatingfromCBIsareverymeagre,withahightradedeficit.
Table 20: Education Level of Employees in CBIs
Level of education No. of employees % of total employees< Grade 8 403 47.5Grades 8-12 242 28.5Graduate 99 11.7Postgraduate 31 3.7Professionally trained 74 8.7Total 849 100
Source:Consultant’ssamplesurvey
ToexplaintheNVA,amultipleregressionmodelisdeveloped,asgiveninAnnex7.TheNVAtendstohaveanegativeassociationwith thechanges innetexports.Apossibleexplanationfor this relationship is theoverwhelmingdependenceofBhutaneseindustriesonimportsforacquiringcapitalgoods,skilledmanpowerandrawmaterials.Theresultsshowthatbettercapacityutilisation,greaterpercentageoftrainedmanpowerandgreaterexpenditureonR&DwouldenableCBIstocreategreatervalueadded.
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5 . E c o n o m i c L i n k a g e s o f C B I s
5.1 Introduction
Thecontributionofanysectortoeconomicgrowthdepends,notonlyonitsdirectcontributiontooutput,employmentandinternationaltrade,but,mostimportantly,onthelinkagesthatanysectorhaswiththerestoftheeconomy.Thegreaterthelinkageeffects–bothbackwardsandforwards–thegreaterthestimulusitcreatesfortherestoftheeconomy.Themagnitudeofsuchlinkagesisusuallycalculatedbyusingdetailedinput-outputtablespreparedfordevelopmentplanningbythecentralplanningauthority.Sinceadetailedinput-outputtableiseithernotpreparedornotputinthepublicdomaininBhutan,thefollowinganalysisisbasedoninformationcollectedthroughthesamplesurvey.
5.2 Backward and forward Linkages Thebackwardandforwardlinkagesarefoundbypreparingaclosedinput-outputtablefortheCBIsasawholeandforeachcategoryofCBIs.Thebackwardlinkagesdependonthepurchasesmadebyanysectorfromallothersectors.Onaverage, theCBIsbuyabout64%of their inputs fromabroad,19%fromtheagriculturesector,15%fromservicesectorandonly2%fromtheindustrialsector16.ThegreaterbenefitsofthegrowthofCBIsthereforepercolatetotherestoftheworld.Theinput-outputcoefficientfortheCBIsis2.2.TheinputcoefficientsarecalculatedforeachcategoryofCBIstodeterminethemagnitudeofbackwardlinkages.
ItisevidentfromAnnex8thatonlythepartialcopyrightindustrieshavethehighestbackwardlinkageswiththedomesticmarket,whiletheothershavepredominantbackwardlinkageswiththerestoftheworld.Thepartialcopyrightindustrieshavethegreatestlinkageswiththeagriculturesectorandthustheycanplayamoredominantroleinruraldevelopmentandpovertyalleviation.TheequationsalsosuggestthattheCBIsandalltheircomponentshaveverynegligiblebackwardlinkagewiththeindustrialsector.Thisisbecausethemanufacturingsectorisstillrelativelyundevelopedandtherequiredmanufacturedgoods,bothcapitalgoodsandrawmaterials,havetobeimported.ThisexplainstheoverwhelmingdependenceofCBIsontherestoftheworld.Thedevelopmentofthemanufacturingsectorwouldthushelptoretaindomesticallythebenefitsassociatedwithbackwardlinkages.
TheforwardlinkagesoftheCBIssuggestthat90-100%ofthesalesofdifferentcategoriesofCBIsaremadetotheservicesector.Themostprobableexplanationliesinthehospitalitysector(tourism),whichisthemainbuyerofcopyrightproducts,giventhesmallpopulationbaseandlowpurchasingpowerofthepeople.
16Thispartofthestudyisbasedonthedatacollectedfromthesamplesurvey.
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6 . C o n t r i b u t i o n o f C B I s t o I n t e r n a t i o n a l Tr a d e
6.1 IntroductionTheanalysisofthecontributionofCBIstointernationaltradeisdividedintotwocategories:shareinexportsandimports.
6.2 Share of cBIs in International tradeIn2008, thetotalvolumeof international tradewasNu.46,085.72million,ofwhichNu2,517.2millionwasfromtheCBIs(Table21).Inotherwords,theCBIscontributed5.46%tothetotaltradeofBhutan.ThecontributionofCBIstoexportswas4.04%andtheircontributiontoimportswas6.9percent.
TheinternationaltradeofCBIsconstituted103.8%ofthecombinedGVAoftheCBIs.ThiswasslightlymorethantheoveralltradeintensityofBhutan.In2008,internationaltradecontributed85.1%toGDP.Thepartialcopyrightindustriesconstituted4.1%oftotaltradein2008,whiletheircontributiontothetradegeneratedbytheCBIswasabout75percent.
Table 21: Share of CBIs in International Trade (in million Nu.) in 2008
Category of CBIs
Industry group Exports% share in exports by
CBIs
% share in total exports
Imports% share in imports by
CBIs
% share in total imports
Core Printing press 10.7 1.2 0.05 277.8 17.3 1.2Core Audio-visual &
video movies 0.1 0.0 0.0005 177.6 11.1 0.8
Total core 10.8 1.2 0.05 456.4 28.4 2.0Partial Weaving
handloom, Martha, carpet and handicrafts
441.4 48.4 1.95 20.6 1.3 0.1
Partial Gold and silver smith 1.0 0.1 0.004
Partial Furniture 454.4 49.8 2.01 970.6 60.5 4.1Partial Handmade paper 5.6 0.6 0.02 0.8 0.01 0.004Total partial 901.4 98.8 3.99 992 61.8 4.2Non- dedicated
WRT 0.0 0.0 0.0 66.8 1.5 0.3
Non- dedicated
TSC 0.0 0.0 0.0 89.6 2 0.4
Total NDS 0 0 0 1,56.4 3.5 0.7Total of CBIs 912.4 100 4.04 1,604.8 100 6.9Total for Bhutan 22,590.6 23,495.1
Source:TradeStatistics2005and2008,DRC,MoF
FurtheranalysisofdatainTable21revealsthatCBIsarenetimportersandconsequentlyrecordtradedeficits.In2008,thecollectivetradedeficitofCBIswasNu.692.4million.ThelargesttradedeficitamongtheCBIsisrecordedbythecorecopyrightindustries,whichatcontributeabout64%ofthecombinedtradedeficitofCBIsinBhutan.ThetradedeficitofCBIswasrelativelylargerthanthetotaltradedeficitin2008.TheweavingandhandmadepaperindustriesaretheonlynetexportersamongtheCBIsandthustheonlynetforeignexchangeearners.
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The CBI exports are estimated at 4.04% of total exports. However, the export by each CBI is extremelylopsided.Thepartialcopyrightindustriescontributeanoverwhelming98.8%ofthetotalexportsgeneratedbyCBIs,amountingtoNu901.4million.
Bhutan’s export structure is highly skewed towards a few commodities. For instance, the top 10 exportcommodities17accountedfor81%ofthetotalvalueofexportsin2008.Hence,theshareofcorecopyrightindustriesintotalexportsisjust0.05%,whileitsshareintotalimportsis1.9%.Partialcopyrightindustriescontribute4.22%tototalimportsand3.99%tototalexports.
6.3 Inter-temporal changes in trade contribution of cBIs Inter-temporalchanges in thecontributionof theCBIs to tradeshowthatexports fromCBIsdeclinedby4.4%between2005and2008,whiletheimportsofCBIsincreasedby9.1%duringthisperiod(Table22).Meanwhile, exports increased at 25.6%,whichwasgreater than thegrowth rate of imports at 18.2%.Thehighergrowthrateofexportsmeantthatthetradebalance improvedduringtheperiod2005-2008.But,despitethehighergrowthrateofinternationaltrade,theshareofCBIstointernationaltradedeclinedin2008ascomparedto2005.In2005,theirsharewas7.05%,whichdeclinedto5.46%in2008.ThisisbecausethegrowthrateofinternationaltradegeneratedbyCBIsincreasedatalowerratethanthatoftheeconomyasawhole.
Table 22: Inter-temporal Changes in International Trade of CBIs
Export (in Nu. millions)
2005
Imports (In Nu. millions)
2005
Growth of exports in 2008 over 2005
(In %)
Growth of imports in 2008 over 2005
(In %)Core Printing press 4.6 296.3 134.5 -6.2
Core Audio-visual and video movies 0.01 270.6 188.7 -34.4
Total core 4.61 566.9 134.3 -19.5
PC Gold and silver smith 0.0 59.1 -100.0 -98.4
PC Weaving handloom 617.0 21.4 -28.4 -3.8PC Furniture 329.1 761.6 38.1 27.4PC Handmade paper 3.5 1.2 59.3 -32.0Total PC 949.6 843.3 -5.06 17.6NDS WRT 0.0 92.6 0.0 -27.9NDS TSC 0.0 46.5 0.0 92.6Total NDS 0 139.1 0 12.4
Total CBIs 954.2 1,549.3 -4.4 9.1
Total for Bhutan 17,990 19,875 25.6 18.2
Source:TradeStatistics2005,DRC,MoF
17Thetopcommoditiesofexportsareelectricalenergy (60%), ferro-silicon (15%),carbides (4.64),copperwire (4%),manganese,cement,vegetablefatsandfreecuttingsteel.Thetopcommoditiesofimportsarelightoilandpreparations(26%),vehicles (19%),motor spirit (10%), rice (10%),manganeseore (8%),coal (8%),edibleoil (6%)andwoodcharcoal(6%).
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Chart 7: International Trade of CBIs (in million Nu.)
Source:DerivedfromTables22and23
Despitetheexpansioninoutput,exportfromCBIshasdeclined.WithintheCBIs,theinter-industrydifferencesarequitehigh,ascanbeseenfromTable23.Theexportofaudio-visualandmoviesin2008increasedbyawhopping188.7%,largelyduetotheirverylowbasein2005.Printingpressandhandmadepaperregisteredthesecondandthirdhighestgrowthinexportsin2008,i.e.by134.5%and59.3%respectively.
ThecoreCBIgrouprecordedthehighestgrowth.Thisisapositivetrend,eventhoughthebaseforthecoregroupin2005wassmall.ThistrendsuggeststhatthecoreCBIshavethepotentialtoexporttheirproductsabroadifappropriatepoliciesaredesignedandimplemented.Thedeclineinexportsfromweavingisacauseforconcern,asthisindustryaccountedforthelargestshareofthetotalexportsfromtheCBIs.Thepositivetrendwasmainlyduetotheriseintheexportfromthefurniture-basedindustries
AsshowninTable23,thetradebalanceofCBIsdeterioratedfurtherin2008by16.3%,fromNu.595millionin2005toNu.692millionin2008.However,forprintingpress,audio-visualmoviesandhandmadepaper,thetradebalanceimprovedin2008.OnlytwoindustrieswithintheCBIs,i.e.weavingandhandmadepaper,haveregisteredatradesurplus.Thisisbecausetheseindustriesdrawmostoftheirrawmaterialsdomestically.
Table 23: Trade Balance of CBIs (in Nu. millions)
Industrial Group 2005 2008
Printing press -291.8 -267.1Audio-visual and video movies -270.5 -177.5Gold and silver smith -59.1 -1.0Weaving and handloom 595.5 420.9Furniture -432.4 -516.1Handmade paper 2.3 4.8Wholesale and retail trade -92.6 -66.8Transport, storage and communications -46.5 -89.6Total for CBIs -595.1 -692.4
Source:TradeStatistics,DRC,MoF
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7 . A C o m p a r a t i v e C o u n t r y A n a l y s i s o f C B I c o n t r i b u t i o n
Inthissection,acomparativecountryanalysisiscarriedouttoseehowBhutan’sCBIsperformvis-à-visothercountries.ExistingresearchshowsthatthesizeofCBIshasbeengrowingatafasterratethantheoveralleconomy,therebyincreasingtheirroleinthegrowthanddevelopmentoftheeconomies.Table24showsthecomparativegrowthofCBIsinselectedcountries.
Table 24: Average Annual Growth Rate of Value-Added of CBIs in Selected Countries
Country PeriodRate of growth of gross value added
by CBIs (in %)Rate of growth of GDP
(in %)USA 1977-2001 7.0 3.0Australia 1996-2001 5.7 4.9Netherlands 1994-1998 5.6 3.2Bhutan 1997-2001
2001-2005 2005-2008
13.3 31.6 15.0
6.3 7.8 9.5
Source:http://www.wipo.int/copyright/en/publications/pdf/copyright_pub_893.pdfpara.5.3
ThedatainTable24reflectthatGVAgrowthofCBIsexceededtheoverallgrowthofGDPinallcountries.ExceptfortheNetherlands,GVAgrewatalmosttwicethegrowthrateofGDP.Asaresult,theirshareinGDPhasalsobeenrising.
Table25showstherelativesizeoftotalCBIsandthecoreCBIsintermsofGDP.
Table 25: Cross-sectional Study on the Relative Size of CBIs
Country PeriodPercentage share of CBIs
in GDP Percentage share of core copyright
industries in GDPLatvia 2000 4.0 2.9Jamaica 2005 4.8 1.7USA 2001 12.0 4.9Singapore 2001 5.7 2.9Philippines 1999 4.8 2.6Mexico 2003 8.1 2.6Malaysia 2005 5.8 2.9Bhutan 2001
20082.87 5.46
0.05 1.85
Source:Copyrightindustriespublicationsofdifferentcountries
TherelativesizeofCBIstoGDPvariesfromaslowas4%inLatviatoashighas12%inUSA,andBhutan’sCBIshareinGDP,atabout5.46%,isinthemiddle.ThoughBhutan’stotalCBIshareisrelativelyhigh,itscorecopyrightindustries’contributionisrelativelylowat1.85%.ThisdichotomyarisesbecausetherelativesizeoftheNDSindustriesinBhutanisveryhighascomparedtoothercountries.TheexplanationisembeddedinthestructureoftheBhutaneseeconomy,whichisdifferentfromothersintermsofthelevelofdevelopmentaswellasthedisproportionatesizeofthetradeandcommunicationssectors.Theshareofwholesaleandretailtrade,andtransportation,storageandcommunicationisabout15%oftheGDP,whichismuchhigherthaninothercountries.
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AcomparativestudyoftheshareofthecoreCBIsininternationaltradeindifferentcountriesisshowninTable26.ForBhutan,theshareofcoreCBIstomerchandiseexportsisthelowestandisaboutatenthofthatinthecountriescoveredinthisstudy.GiventhedifferencesintheIPregimeamongthecountriescovered,thedifferencesintheshareofcorecopyrightindustriesintotalmerchandiseexportsandimportsisjustifiable.However,duetotherelativelyhighimportintensityoftheBhutaneseeconomy,theshareofcoreCBIsintotalmerchandiseimportsishigher.
Table 26: Cross-country Comparisons on the Share of Core CBIs in Total Trade
Country Percentage share in merchandise exportsPercentage share in merchandise
imports
India (1989) 0.1 0.4Republic of Korea (1989) 1.3 0.2
Brazil (1989) 0.1 0.7Spain (1989) 0.6 0.6Australia (1996-97) 0.5 2.2
Bhutan (2008) 0.05 1.9
Source:http://www.wipo.int/copyright/en/publications/pdf/copyright_pub_893.pdfpara.5.3,exceptforBhutan
The shareofCBIs in total employment is a crucial indexof theeconomic contributionofCBIs. Table27showsthecomparativecontributionofCBIstototalemploymentinBhutan,JamaicaandLatvia.TheCBIsinJamaicahaveaverylimitedshareintotalemploymentintheeconomyatjust3%,whereastheCBIsinLatviacontributeaboutathirdtothetotalemployment.However,theCBIsinBhutancontributeabout10.13%tototalemploymentinthecountry.Asexpected,theshareofthecoreCBIsintotalemploymentinBhutanisthelowestat1.03%;whereastheJamaicancoreCBIscontributeabout1.8%oftototalemployment.IncountrieslikethePhilippines,MalaysiaandUSA,thecoreCBIscontributemorethan4%oftotalemployment.Infact,inthePhilippines,coreCBIscontribute8.8%oftotalemployment.
Table 27: Cross-sectional Study on Share of CBIs in Total Employment, 2008
CountryPercentage share of CBIs in total
employmentPercentage share of core copyright industries in the
total employmentLatvia 5.59 3.7
Jamaica 3.03 1.8
Bhutan 10.13 1.03
Source:CopyrightindustriespublicationsofJamaicaandLatvia,WIPO
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8 . P o l i c y R e c o m m e n d a t i o n s
8.1 IntroductionExperiencesuggeststhatappropriatepolicysupportisnecessaryatallstagesofthevaluechainfrominputs,production, marketing, distribution and consumption. The major policy measures for cultural industriesidentifiedbyUNESCOthatcanalsobeappliedinCBIsinBhutanaregiveninAnnex9(citedinUNIDO2005).
Inlinewithproposalsforthedevelopmentofculturalindustries,itisrecommendedthatsupportingpolicies,suchasadvocacyandstrategydevelopmentaswellasculturalassetmanagement,beimplementedforCBIs.Preparingacomprehensivepolicyandstrategyisthefirststepintheirdevelopmentalongwithhumanresource(HR),technologyandinfrastructuredevelopment.Thesemustbeaccompaniedbyclearresponsibilitiesforcoordination,follow-upandimplementation.
TheHRand technologicaldevelopmentare crucial forgeneratingnew ideasandushering creativity. ThegovernmenthasprioritisedHRD,witheachrelevantagencyhavingitsownprogrammeforimplementation,thoughsuchprogrammesarenotclearlytargetedatCBIs.Technologicaldevelopment,ontheotherhand,hasreceivedlittleattentionsofar.Thisisnotsurprising,asinvestmentinR&Disnegligibleinboththepublicandprivatesectors.TherolesofR&Dandskillsarecentralinthisrespectalongwithpolicyandinfrastructure.
The10thFive-YearPlanoutlinesanewapproachforcreativeindustriestobepromotedinclustersindifferentpartsof thecountryfor incomegenerationandpovertyreduction.Thismeansthateffortsneedtofocusatnationalandlocallevels.Mostoftheseindustriesfallinthecottage,smallandmediumscales,requiringstrong support for growth. A strong institutional organisation is therefore necessary to lead the sector.TheestablishmentofaseparateDepartmentforCottageandSmall Industries inMoEAin2010,tofocusexclusivelyonthedevelopmentofthissector,followedbythecreationofAPIC,tobeoverseenbyamulti-sectoralmanagerialBoard in2011,are steps in the rightdirection.Thepast interventionsmade throughtheentrepreneurshipandruralenterprisedevelopmentprogrammesandinitiativescanyieldbetterresultswithgreater coordinationof effortswithin thegovernmentandwith sustainedpartnershipbetween thegovernmentandprivate sector. TheAPIC shouldenableand facilitatebetter synergies amongcopyright,creativeandculturalindustriesaswellasthehandicraftssectorasawholeandprovidetheneededthrustfortheirexpansionandacceleratedgrowth.
Inthelightoftheabove,thefollowingmeasuresaresuggested:
8.2 Improve data collection and disseminationOneofthemajorproblemsisthelackofcomprehensivedataonCBIs,ashighlightedintheBaselineStudyforculturalindustries.Thereisastrongtendencyforeachorganisationtoconductsuchstudiesonitsowntomeetitsspecificneeds,butthesefailtomeetnationalstatisticalstandards.WithBhutanassumingtheleadershiprolewithinBIMSTECforthepromotionofcooperationinculturalindustries,itisimperativethatthecultural,copyrightandcreativeindustriesbebuiltup.
Asmany cultural industries fall in the creativeor copyright-based industries category, itmakes sense forcoordinationamongstthefiveministriesofHomeandCulturalAffairs,EconomicAffairs,LabourandHumanResources, InformationandCommunicationandFinance,aswellastheNationalStatisticsBureau.AstheNSBistheclearinghousefornationaldata,ithastobeinvolvedincheckingthequalityofdata,forwhichitsinvolvementinthestatisticalsurveysandstudiesisinvariablyrequired.
The government should provide a specific and legal mandate to an agency like the proposed CulturalCommissionorDCSI/APICforsuchcooperation,takingintoaccounttheneedforgenerationandtransparencyof data for measuring the contribution of CBIs and associate industries to GDP, employment and trade.Themandateof thisbodywould include, inter alia: (a) clarificationanddelineationof responsibilities formaintaininganddevelopingdataonCBIs,creativeandculturalindustrieswiththeseparationofeachofthese;(b)cooperationincarryingoutanystatisticalsurveys,includingagreementontheirtermsofreferencesothatastudycanservetheneedofmorethanoneagencyandmeetNSB’squalitativerequirements;(c)measuring
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tradeflowsoftheseindustriesinmoredetail;and(d)cooperationinpolicyandprogrammeimplementationaswellastrainingandHRDtobuildnationalcapacity,avoidingduplicationofeffortsandresources.TheIPDshouldplayanactiverolewhenitcomestocopyrightandcreativeindustries,forcoordinationanddirectionincooperationwiththeleadcentralagency.
It is strongly felt that national income accounts should be prepared in a more detailed manner so thatdisaggregated data for various activities are also available to planners and researchers. For a developingeconomy like Bhutan, where planning still plays an important role, availability of detailed and reliableinformationisimperative.TheNSBhastotakealeadingroleinthisregardaswell.
8.3 Strengthen the Intellectual property divisionThe IPDhascomea longwaysince itwaselevatedtothestatusofaDivision in1997. Its functionsandresponsibilitiesasanationalorganisationonIPhavealsoexpandedovertime,especiallywiththeenactmentoflegislationincopyright,patentsandtrademarks.Itsroleasanimportantlinkbothbetweengovernmentagencies and private sector in IP matters has not been fully appreciated, and as such it lacks sufficientrecognitionandstatus.Itsworkinadvocacyandcreatingpublicawareness,aswellasbuildingcapacitiesinthegovernmentandprivatesectoronIPmatters,mustbestrengthened.
It must play a more proactive role in disseminating information and knowledge that can translate intocreativityandinnovationinthelongrun.Itswebsitehastobemoreuser-friendly,withinformation,factsandfiguresthatcanbeeasilyunderstoodbythereader.Inaddition,incooperationwiththeRoyalBhutanPoliceandjudiciary,itmustprovidegreatersupporttotheprivatesectorindealingwithpiracyandotherkindsofIPabusesandeventuallydevelopajointpublic-privatesectorstrategytocombatthisgrowingproblem.AstrongcultureofIPprotectionhastodevelopfromthebeginningwithinBhutanesesocietysothatitcanplayapositiveroleineconomicdevelopmentinthefuture.
Anoption tovitalise the IPD is to transform it intoanautonomousgovernmentagencyas is thecase inMalaysiaandothercountries.Asitsactivitiescutacrossmanypublicandprivateinstitutions,itwouldfunctionmoreeffectivelyasanautonomousagencyunderaboardofdirectorsdrawnfromdifferentprofessions.Itcanassumegreaterflexibilityinprogrammeoperationsandachievebettercoordinationwithotheragencies.ItisnotequippedtoplaythisroleatpresentasaDivisionwithinMoEA.Ifautonomyisnotgiven,itshouldbeelevatedtothestatusofaDepartmentasaminimumrequirement.TheIPD’sexistingfacilitiesandstaffshouldbe reviewedand strengthenedwherenecessary to enable it tomeet theabove functions and toelevateitsprofilewithinthegovernment.
8.4 foster public-private partnershipTheemphasisontheroleoftheprivatesectorasanengineofeconomicgrowthcannotbeoveremphasised.Inaland-lockedandhigh-costeconomylikeBhutan,theprivatesectorfindsitdifficulttocompeteintheregionalandglobalmarketsinexportsofbothmanufacturedgoodsandservices.Inanageofglobalisationwherethefactorsofproductionmovefromonecountrytoanothertotakeadvantageofthelowcostofproduction,Bhutandoesnothaveanedge.Thisisonlypossibleifthecountryfocuseson,andbuildscapacityin,afewnicheproducts,manyofwhichcouldbewithintheCBIs,suchasqualityhandicrafts,handloomweaving,ecoproductsandtheprospectsfromICTandsoftwaredevelopmentasothercountrieshavedone.This,however,requiresarightmixofpolicyinstrumentsandentrepreneurialzeal.
Theprivatesectorisstillyoungandneedsnurturing.Thisispossibleonlythroughanactivesupportofthegovernment.TheCBIs thereforeare ideal forsuchcollaborationwiththegovernment,providingthattherightpolicyandincentivespackagesforloweringthecostofproductionexist,andtheprivatesectoriswillingtotaketherisktoinvest.Aclusterforcreativeindustriesshouldthereforebedeveloped,similartotheITPark,withtheencouragementofforeigndirectinvestment(FDI)thatcanbringnewtechnology,differentskillsandmuch-neededcapitalforinvestmentincollaborationwiththeBhutaneseprivatesector.AnimportantareaforjointactionisR&D,whichiscompletelyabsentatpresent.Thetimeispropitiousfortheseinitiatives,asaneweconomicdevelopmentpolicyandanFDIpolicywereadoptedin2010.
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8.5 provide adequate credit ItisextremelyimportantforthegovernmenttoexaminethewaysinwhichfinancingforSMEscanbemadeeasier,asthisisamajorproblemthatcomesthroughinthediscussionwiththeprivatesectorrepresentatives,aswellas theWorldBank reportonDoing Business: Bhutan 2010. Themainelementsof sucha facilityshouldinclude: improvedcredit information;betterprojectappraisal;removalorat leastrelaxationoftherequirementsofcollateralsforloans;andimprovedlegalprotectionforbothbanksandborrowers.SomeoftheseelementsarebeingaddressedbytheRMA,buteventhenaseparatewindoworfacilityforlendingtoSMEsisnecessarytoencouragetheirgrowth.
8.6 conduct in-depth Sector-Specific StudiesThestudyshowssomeemergingareaswithmuchpotential.Theseincludefilmsandmusic,printandmedia,handloomweaving,handicrafts,furnitureandvisualarts.Amongthese,thefirstthreeindustrieshavebetterprospects.Morein-depthsector-specificanalysisshouldbecarriedoutfortheseindustries,toidentifyissuesandchallengesfacingthemandtotargetpoliciesandprogrammesaccordingly.
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9 . F u t u r e D i r e c t i o n s
Theoutcomeof the study is heavily influencedby thequality and consistencyof data in estimating thecontributionofCBIs toeconomicgrowth,employmentandtrade.While theavailabilityofeconomicandsocial dataonBhutanhas improved considerably in recent years, there ismore tobedone in capturingspecificdatarequiredforastudyofthisnature.Severalgovernmentagenciescollectdata,butsuchdataarenotconsistentovertime,therebyhinderinganymeaningfultrendanalysis.SuchdatashouldbeauditedbyNSBsothattheirqualityandconsistencycanbeassured.ThestudyhasmaderecommendationsregardingtheneedforbettercoordinationamongsuchagenciesandidentifyingaleadagencyamongstthemtoplanandimplementdevelopmentprogrammesonCBIsandculturalindustries.TogetherwithclosercooperationwithNSB,suchaneffortwillhelptoimprovethequalityofdata.ItissuggestedthatasimilarstudyonCBIsshouldbeundertakenafterafewyearswhenthecurrentrecommendationshavebeen implementedandastherequireddataisavailable.Meanwhile,inasmuchasthefindingsofthisstudyshouldberegardedastentative,thestudycanbethebasisoffurtherworkonthesubjectinthefuture.Itwillbeofcrucialimportancetosetupapermanentmonitoringmechanismtoproducenewdataandmonitortrendsinthecreativesector.
An important finding of the study is that the CBIs suffer from low levels of operative efficiency. Thestakeholdersshouldcarryoutaseparatestudy,notnecessarilylinkedtotheoneproposedabove,tofindthereasonsforthisproblemsothatcorrectivemeasurescanbedesignedandimplemented.ThiswillhelpCBIsandtheeconomyinthelongrun.
Notwithstandingtheabove,thegovernmentisontherighttrackinprotectingandoptimisingthebenefitsofIPRsinagrowingeconomy.Theknowledgeeconomythatstartedattheendofthe20thcenturywilldominatethe21stcentury.Thepotentialforcreatingnewgoodsandservicesisinfinitewhenknowledgeisappliedincombinationwithinformationandcommunicationstechnology.Whilethispromisesnewopportunitiesforproduction,manufacturing,tradeandemployment,italsobringsnewchallengesinprotectingtheIPofthosewhomakethispossible.Bhutanwillberequiredtoplayitspartincreatingsuchanenvironmenttobenefitfromtheemergingknowledgeeconomiesforimprovingthequalityoflifeofitspeople.Itwouldalsohavetoprotectthecreativityofindividuals,withoutwhichthesocietywillnotbenefitfromtheircreations.Thiswillrequireappropriatepoliciesandlegislationaswellasastronginstitutionalmechanismfortheirapplicationand enforcement. Such an institution is possible through cooperation of all stakeholders in intellectualpropertyandcopyright-basedindustries.
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R e f e r e n c e s
[1] Agreement on the Promotion of Culture-Based Industry for Poverty Reduction and CommunityVitalisation2007, Ministry of Finance, Ministry of Home & Cultural Affairs and UNDP,Bhutan.
[2] Bhutan:ALivingCulture,‘TheArtsandCraftsofaHimalayanKingdom,’n.d.,DOC.
[3] BhutanCulturalIndustriesSectorDevelopment:ABaselineReport2009,RGOB.
[4] BIPS2004,BhutanICTPolicyandStrategy,<http://www.moic.gov.bt>viewed5.1.2010.
[5] CensusofManufacturingIndustries,1997and2001.
[6] CopyrightActoftheKingdomofBhutan2001.
[7] DRC2005,‘TradeStatistics,’DRC, Ministry of Finance.
[8] DRC2008,‘TradeStatistics,’DRC, Ministry of Finance.
[9] FCS2009,‘The2009UNESCOFrameworkforCulturalStatistics(CFS),’UNESCO.
[10] GNHC2009,‘10thFive-YearPlan(2008-2013),Vol.1and2,GNH Commission.
[11] Kanapathy,V.,2008,‘FinalReport:StudyontheEconomicContributionoftheCopyrightandRelatedRight-basedIndustriesinMalaysia.’
[12] KuenselNewspaper,Bhutan(variousissuesasreferred).
[13] MoEA2010a,‘FactFindingReportonEnforcementofRightsMechanismundertheCopyrightActofBhutan,’Thimphu.
[14] MoEA2010b,‘GuidelinesforImplementingPartIVoftheCopyrightAct,’Thimphu.
[15] MoIC2008,‘BhutanMediaImpactStudy2008,’<http://www.moic.gov.bt>viewed6.1.2010.
[16] MoLHR2008,‘LabourMarketInformationBulletin’MoLHR,TNPrintingPress,Bhutan.
[17] NSB2000,‘NationalAccountStatistics,1980-2000,’NSB,TNPrintingPress,Bhutan.
[18] NSB2009,‘NationalAccountsStatistics,2000-2008,’NSB,TNPrintingPress,Bhutan.
[19] RGOB2005,‘PopulationandHousingCensusofBhutan,’Ministry of Home & Cultural Affairs.
[20] RGOB2010,‘EconomicDevelopmentPolicy,’Royal Government of Bhutan,Thimphu.
[21] Siwek, Stephen E., 2004, ‘The Economic Contribution of Copyright-Based Industries in USA,CreativeIndustriesSeriesNo.1,WIPO’’.http://www.wipo.int/ip-development/en/creative_industry/pdf/ecostudy-usa.pdf
[22] Stapleton, J.,2007, ‘Studyon theEconomic, Social andCultural Impactof Intellectual Property intheCreativeIndustries,’datedAugust30,2007,viewedon30July2010athttp://www.wipo.int/ip-development/en/creative_industry/studies.html
[23] TheConstitutionoftheKingdomofBhutan2008.
[24] UNCTAD2008,‘TheCreativeEconomyReport.’
[25] UNESCOn.d.,‘UnderstandingCreativeIndustries:Culturalstatisticsforpublicpolicymaking,’ http://portal.unesco.org/culture/en/files/30297/11942616973cultural_stat_EN.pdf/cultural_stat_EN.pdf
[26] UNIDO2005,‘CreativeIndustriesandMicroandSmallScaleEnterpriseDevelopment:Acontributiontopovertyalleviation,’Project XP/RAS/05/02, UNIDO.
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[27] VisionforanInformationSociety2009,<http://www.moic.gov.bt>viewed7.1.2010.
[28] Wangchuk,D2008,‘Bhutanesefilmindustry:nationalexperience,’IPD, MoEA.
[29] WIPO2003,‘GuideonsurveyingtheEconomicContributionoftheCopyright-basedIndustries,’WIPO.
[30] WorldBank2010,‘DoingBusiness:Bhutan2010,’World Bank & International Finance Corporation,WashingtonDC.
[31] www.wipo.int/ip-development/en/creative_industry/pdf/1009E-3.pdf
[32] www.wipo.int/ip-development/en/creative_industry/.../ecostudy-latvia.pdf
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A n n e x 1 : I S I C C o d e s F o r B h u t a n
Descriptionofcopyrightandcopyright-basedindustries(CBIs)
core copyright industries
Press and literature
2211 Publishingofbooks,brochuresandotherpublications2212 Publishingofnewspapers,journalsandperiodicals2219 Otherpublishing(cards,maps,directoriesandotherpublishedmaterial)2221 Printing(pre-press,printing,andpost-pressofbooks,magazines,newspapers,advertisingmaterials)2222 Serviceactivitiesrelatingtoprinting(pre-andpost-pressas2221)–supplyofprintingmaterials5239 Otherretailsaleinspecialisedshops(retailofpressandliterature)9214 Dramaticarts,musicandotheractivities(authors,writers,translators)
Music, theatrical production, operas
2213 Printingandpublishingofmusic2230 Reproductionofrecordedmedia(productionandmanufacturingofrecordedmusic)5233 Retailsaleofhouseholdappliances,articlesandequipment(incl.rentalofrecordedmusic)9214 Dramaticarts,musicandotherartsactivities
Motion picture and video
2230 Reproductionofrecordedmedia9211 Motionpictureandvideoproductionanddistribution(incl.rentalandsale)9212 Motionpictureprojection(andexhibition)9214 Dramaticarts,musicandotherartsactivities(writers,directors,actors)
Radio and TV
6420 Telecommunications(cableandsatelliteTV)7499 Otherbusinessactivities(independentproducers)9213 RadioandTVactivities(national,privateandalliedactivities)
Photography
2222 Serviceactivitiesrelatingtoprinting(photoagenciesandlibraries)7494 Photographicactivities(studioandcommercialphotography)
Software and databases
5151 Wholesaleofcomputers,computerperipheralequipmentandsoftware(pre-packagedsoftware–business,educationalandvideogames)
7229 Othersoftwareconsultancyandsupply(asin7221)
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Visual and graphic arts
7494 Photographicactivities(pictureframingandotheralliedservices)7499 Otherbusinessactivities(graphicdesign)includingthefollowing: Wallpainting Painting(mural,scroll,Thanka,house) Masonry(slateandstonecarving) Woodcarving Metalcarvingandsmithy(gold,silver,iron) Sculpture(statues,masks)9214 Activitiesbyauthors,musiccomposers,andotherindependentartists Dramatic arts, music and other activities (art galleries and other wholesale and retail, graphic
design)
Advertising services
7430 Advertising(agencies,buyingservices)
Interdependent copyright industries
Core interdependent
5139 Wholesaleofotherhouseholdgoods(electronics,computers,musicalinstruments)5151 Wholesaleofcomputer,computerperipheralequipmentandsoftware5233 Retailsaleofhouseholdappliances,articlesandequipment(electronics,musicalinstruments)7123 Rentingofofficemachineryandequipment(incl.computers)
Partial interdependent
2101 Manufactureofpulp,paperandpaperboard5149 Wholesaleofotherintermediateproducts,wasteandscrap(paper)5152 Wholesaleofelectronicandtelecommunicationpartsandequipment(blankrecordingmaterial)5233 Retailsaleofhouseholdappliances,articlesandequipment(blankrecordingmaterial)5239 Otherretailsaleinspecialisedstores(photographicandcinematographicequipment,paper)
partial copyright industries 1711 Preparationandspinningoftextilefibres,weavingoftextiles1721 Manufactureofmadeuptextilesarticles Bhutanesetentmaking1722 Manufactureofcarpetsandrugs1730 Manufactureofknittedandcrochetedfabricsandarticles1810 Manufactureofwearingapparel(Gho and Kira)1920 Manufactureoffootwear (Chhog Lham)2029 Manufactureofotherproductsofwood(householdgoods) Bambooandcaneproducts2101 Manufactureofpulp,paperandpaperboardincludingBhutanesehandmadepaper2109 Manufactureofotherarticlesofpaperandpaperboard2422 Manufactureofnaturaldyes2423 Manufactureofpharmaceuticals,medicinal,chemicalandbotanicalproductsincludingBhutanese
incense2424 Manufactureofperfumesandtoiletpreparations2693 Manufactureofclayandceramicproducts(non-refractory)2696 Cutting,shapingandfinishingofstone2899 Manufactureofotherfabricatedmetalproducts3610 Manufactureoffurniture
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3691 Manufactureofjewelleryandrelatedarticles(jewellery,coins)5139 Wholesaleofotherhouseholdgoods(jewellery,coins,furniture)5232 Retailsaleoftextiles,clothing,footwear,andleathergoods5233 Retailsaleofhouseholdappliances,articlesandequipment5239 Otherretailsaleinspecialisedstores(jewellery,coins,crafts,householdgoods,wallcoveringsand
carpets)7421 Architecturalandengineeringactivitiesandrelatedtechnicalconsultancy
9111 Activitiesofbusinessandprofessionalorganisations Cultural/creativetourism9199 Activitiesofothermembershiporganisations Religiousactivities9232 Museumactivitiesandpreservationofhistoricsitesandbuildings
non-dedicated support industries6023 Freighttransportbyroad6210 Scheduledairtransport6301 Cargohandling6302 Storageandwarehousing6304 Activitiesoftravelagenciesandtouroperators;touristassistanceactivities6309 Activitiesofothertransportagencies6411 Nationalpostactivities6412 Courieractivities6420 Telecommunications(telephony,Internet)
Note:Thecodealsoincludesitemswithinparenthesis
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A n n e x 2 : S o u r c e s o f D a t a a n d I n f o r m a t i o n
primary1. PopulationandHousingCensusofBhutan,2005,CensusCommission2. LabourForcesurvey,2006,Dept.ofLabour,MoLHR3. EstablishmentCensus,2008,Dept.ofEmployment,MoLHR4. National Revenue Report,2006-07,DRC,MinistryofFinance5. Bhutan Trade Statistics,2008,DRC,MinistryofFinance6. BhutanLivingStandardsurvey,2007,NSB7. Statistical Year Book of Bhutan,2007,NSB8. National Accounts Statistics,2000-07,NSB9. Annual Report,2006-07,RMA10.UNESCOBaselineStudyonCultureIndustryinBhutan,2009
Secondary1. Bhutan2020:Avisionforpeace,prosperityandhappiness,PlanningCommission,19992. EconomicPolicy,2010,MinistryofEconomicAffairs(MoEA)3. ForeignDirectInvestmentPolicy,2010,MoEA
Brief description of sourcesPopulation and Housing Census
The2005Censusgivesinformationaboutemploymentbydifferenteconomicsectors,majoroccupations,andmainsourceofincomethatwouldberelevantfortheStudy.
Labour Force Survey
The surveyprovidesoccupationaldataonBhutan.Ofparticular relevance to theStudy is thenumberofpersonsengagedincraftsandrelatedtrades,bysex,economicactivityandlevelofeducation.
Establishment Census
This document provides information on employees by major occupations including in crafts and relatedtrades.
National Revenue Report
TheReportisbroughtoutannually.Itgivessummaryofrevenuesbytax(directandindirect)andnon-taxforafinancialyear(July-June).Inparticular,ithasinformationonsalestaxoncableTVandcinema,andrevenuefromBhutanTelecom.
Bhutan Trade Statistics
ThisisanannualreportandcontainstradestatisticsasperBhutanTradeClassification(HarmonisedSystemCode)ateight-digitlevel.Whilethetradedataissufficientlydetailed,segregationforthestudyisamajorchallenge.
Bhutan Living Standard survey
This surveygives some informationondistributionof employmentbymajor sectors andbyemploymentstatus(regular,casual,unpaidfamilyworker,self-employedandotherunspecified).
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The National Accounts Statistics and the Statistical Yearbook of Bhutan
These are standard annual publications of NSB and need no elaboration. The data is compiled from allavailablenationalsources.
RMA Annual Report
Thisisparticularlyusefulformonetaryandtradedata.ItispublishedbyRMA.
UNESCO Report on data of culture Industries
Thisisperhapsoneofthebestreferencesforthestudy.Asthereportsuggests,thereareextensivedatagaps.
ThestudywascoordinatedbytheNSBonbehalfoftheMinistryofHome&CulturalAffairsandinternationalagencies(UNDP,UNESCOUNIDOandWIPO)involved.
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A n n e x 3 : Q u e s t i o n n a i r e
for the assessment of copyright-based (cBIs) Industries in Bhutan
Typeoftheunitsurveyed:Circletheappropriatetype,i.e.,A,B,CorD
Dateandtimeofinterview:
Place:
Nameofthesurveyor:
Samplecode:A=Core;B=Interdependent;C=PartialandD=Non-Dedicated
Q1.Whatisyourannualproductioncapacity?(Howmuchoutputyoucanproduceeveryyearifyouhavesufficientdemand?(Inquantity)
___________________________________________________________________________________________
Q2.Whatisthebookvalueofinstalledcapital?(Thevalueofthemachineryandequipmentpurchased–inNu.)
___________________________________________________________________________________________
Q3.Whatisyourannualproduction?(i.e.,outputlastyear–inquantity)_____________________________
Q4.Pleaseprovidethefollowingdetails(forlastfinancial/annualcalendar):
Value of sales In Nu.
Value of raw materials purchased
Wages paid
Salary paid
Rent paid
Interest paid
Indirect taxes paid (such as BIT, excise duty, import duty
Depreciation
Gross profit (i.e., profit before tax)
Q5.Pleaseprovidefollowingdetailsabouttherawmaterialspurchasedbyyourfirminthelastyear:
Raw materials purchased from Value of raw materials (in Nu.)
Domestic Agriculture Sector
Domestic Industrial Sector
Domestic Service Sector
Rest of the world (Imports)
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Q6.Pleaseprovideinformationaboutsalesmadebyyourorganisation.
Sales made to Value of sales (in Nu.)
Domestic Agriculture Sector
Domestic Industrial Sector
Domestic Service Sector
Rest of the world (Exports)
Q7.Pleaseprovidefollowinginformationabouttheemployeeshiredbyyourfirm.
Education level of employee No. of employees
Grade 0-8
Grade 8-12
Graduates
Postgraduates
Professionally trained
Q8.Howmanyofyouremployeesareexpatriates(Non-Bhutanese)?
Q9.Whatisthetotalpaymentmadetotheexpatriates?__________________________________________
Q10.Howmanyofyouremployeesarefemale?_________________________________________________
Q11.Whatisthetotalpaymentmadetothefemaleemployees?___________________________________
Q12.Howmuchmoneydidyouspentlastyearontrainingyourstaff? ______________________________
Q13.Howmuchforeignexchangedidyouearnlastyear?_________________________________________
Q14.HowmuchmoneydidyouspendlastyearonResearchandDevelopmentactivities?
___________________________________________________________________________________________
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A n n e x 4 : M e e t i n g s a n d G r o u p D i s c u s s i o n s
Meetings1. MrKuengaTshering,NSB2. MrDechenWangdi,NSB3. MrChedaJamtsho,NSB4. MrPemaWangda,Director-General,DepartmentofEmployment5. MrSubarnaLama,Director,IPD,MoEA6. MrLoknathChapagai,DepartmentofIndustry,MoEA7. MrDhanrajSubba,DoI,MoEA8. MrKinleyWangchuk,Director,BICMA9. MsPemaChoden,ManagingDirector,BhutanBroadcastingService(BBS)10.MrTashiDorji,BBS11.MrSherabGyeltshen,GeneralSecretary,MotionPictureAssociationofBhutan(MPAB),Thimphu12.MrTsheringGyeltshen,MPAB13.MsTsheringLham,President,HandicraftsAssociationofBhutan(HAB),Thimphu14.MrRinzinDorji,President,ITAssociationofBhutan(ITAB),Thimphu15.MrTenzinRigden,ManagingDirector,BhutanTimes,Thimphu16.MrChenchoDorji,ManagingDirector,KuenselCorporation17.MrManiDorji,Proprietor,KMTPrinting,Thimphu18.MsDagoBida,ManagingDirector,EthoMethoTours&Travels,Thimphu19.MrShyamBasnet,BhutanInternational,Thimphu20.MrManiPradhan,DigitalShangrila,Thimphu21.MsLhamoDukpa,Singer/Producer,Thimphu22.MrJosephLo,UNDP,Thimphu23.MrJigmeDukpa,Aa-YangMusicSchool,Thimphu.24.MrRinzinPenjor,Principal,RoyalAcademyofPerformingArts,Thimphu.25.MrNorbuTenzin,JungshiHandmadePaper,Thimphu.
group discussions1. DepartmentofIndustry2. NationalStatisticsBureau3. HandicraftsAssociationofBhutan4. MotionPicturesAssociationofBhutan5. ITAssociationofBhutan
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A n n e x 5 : C o r e C B I s u s e d f o r E s t i m a t i n g t h e i r C o n t r i b u t i o n t o G D P
(June2011)
Type ISIC Code
Publishing of books, brochures and others 2211Newspaper publishing 2212Production of music 2213Printing and publishing 2219/ 2221Recording of visual (film production) 2230Retail sale of video and audio production 5233Retail sale books/stationery 5239Cable and satellite TV 6420Data processing, software consultancy, and data publishing 5151/7229Publicity/advertising agency 7430Photo studio and photo frame 7494 Graphic design 7499Industrial property agent 9112Audio video production and distribution 9211Cinema 9212Music and other activities/writers, directors, actors 9214
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A n n e x 6 : F o r m u l a o n C o p y r i g h t F a c t o r
Thecopyrightfactorismeasuredonascaleof0to1,where0,atoneextreme,meanscopyrightrelatedaspectsareabsentand1,at theother,means theentire valueadded is createdby thecopyrightrelatedissues.Empiricalevidencesuggeststhatastheeconomydevelopstheintellectualproperty increasingly becomes significant and consequently the copyright factor approaches 1.In developing countries, traditional knowledge plays a more significant role in the productionprocesses.Thetraditionalknowledgefallsinthepublicdomainandconsequentlyisnotadequatelyprotectedbycopyrightlawingeneralthusleadinginunderestimationofthecopyrightfactorintraditionalsocietiesandlessdevelopedcountries.
TheratioofthesumofroyaltypaidandexpenditureonR&Dmadebyafirmtoitsnetvalueaddedatfactorcostisdefinedasthecopyrightfactor.
Where,
cf = copyrightfactor
r = royaltypaid
rd = expenditureonresearchanddevelopment
nva = netvalueaddedatfactorcost
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A n n e x 7 : C a l c u l a t i o n s o f N e t V a l u e A d d e d
Inorder tofindthemainexplanatory factors to theNVAcreatedbyCBIs,amultiple regressionmodel18 ispreparedthat includesthefollowingvariablesasexplanatoryvariables:percentageoftrainedemployees(PTE),expenditureonresearchanddevelopment(RD),plantloadfactor(PLF)andnetexports(NX)andnetvalueadded(NVA)asthedependentvariable.FindingsofthestudyareshowninTablesA,BandC.
Table A: Model Summary
Model R R2Adjusted R
SquareStd. Error of the
EstimateChange Statistics
R2 Change F Change df1 df2 Sig. F Change1 .683(a) .467 .443 1917639.681 .467 19.727 4 90 .000
aPredictors:(Constant),PTE,RD,PLF,NXbDependentVariable:NVA
Table B: ANOVA (b)
Model Sum of Squares Df Mean Square F Sig.1 Regression 290171178116376 4 72542794529094.00 19.727 .000(a)
Residual 330960775330909 90 3677341948121.219Total 621131953447285 94
aPredictors:(Constant),PTE,RD,PLF,NXbDependentVariable:NVA
Table C: Coefficients (a)
Model Un-standardised CoefficientsStandardised Coefficients
T Sig.
B Std. Error Beta1 (Constant) 741231.455 265644.747 2.790 .002
NX -.278 .033 -.667 -8.371 .000
PLF 321.459 2633.319 .009 .122 .003
RD -2.400 4.138 -.045 -.580 .003
PTE 93160.010 169621.988 .044 .549 .000
a:DependentVariable:NVA
Sincethecalculatedfvalue(19.7)farexceedsthepvalue(0),theexplanatoryvariablestogetherareeffectivetoexplainthechangesinthedependentvariables.AstheTableforcoefficientsreflectsthatthetvalueforeachoftheexplanatoryvariableexceedsthepvalue,eachoftheexplanatoryvariablesexplainsthechangesinthedependentvariable.Valueofrsquareis0.467,meaning1%standarddeviationchangeintheexplanatoryvariablescauses0.467%standarddeviationchangeindependentvariable.
18RegressionoutputisderivedusingSPSS11.5
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A n n e x 8 : E q u a t i o n s R e f l e c t i n g T h e I n p u t - O u t p u t C o e f f i c i e n t s F o r C B I s
TotalCBIX
cbi=0.40I
ag+0.039I
ind+0.33I
srv+1.41I
m
CoreX
core=0.02I
ag+0.04I
ind+0.558I
srv+2.16I
m
Interdependent X
intdp=0I
ag+0.004I
ind+0.0474I
srv+0.28I
m
PartialX
part=1.11I
ag+0.42I
ind+0.15I
srv+0.24I
m
Non-dedicatedSupportX
nds=0I
ag+0I
ind+0I
srv+3.81I
m
Notes:X=oneunitoutputandsubscriptscbi,core,intdp,partandndsstandforCBIsanditseachcategory(cbi=allCBIs,core=corecopyright,intdp=interdependent,part=partialcopyrightandnds=nondedicatedsupport)I=inputrequiredandsubscriptsag,srv,indandmstandfordifferentsectors(ag=agriculture,ind=industry,srv=servicesandm=importsfromrestoftheworld.
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A n n e x 9 : S u p p o r t i n g P o l i c y D e v e l o p m e n t f o r C u l t u r a l I n d u s t r i e s
Step in the process Examples of Activities 1. Advocacy and Strategy Development 1. Elaboration of a long-term Plan of Action.
a. Mapping the Sector Surveys, baseline data, need assessment, SWOT analysis, and stakeholder’s consultations.
b. Identification of Policy Issues Objectives and priorities, strategy, MSE development, marketing strategy.
c. Drivers Formulation of sub-sector specific priorities, targets and programmes.2. Human Resource Development 2. Institutionalisation of innovative and traditional training
opportunities related to cultural industries. Strengthening training in entrepreneurship, management, business development and skills development.
3. Cultural Assets Management 3. Strengthening archiving and research, promotion of international conventions.
4. Technological Development 4. A national plan for access of information, support for research and innovation in products and marketing, support cluster development, promotion of e-commerce.
5. Infrastructure a. Legislative Infrastructure IPR, business law for MSEs ICT legislation, copyright, etc. b. Institutional Infrastructure Develop institutional capacity to ensure enforcement, strengthen
professional organisations and knowledge sharing through ICT.
c. Financial Infrastructure Mechanisms to encourage MSEs cultural industries. Import-export regulation and taxation.
d. Physical Infrastructure Easy access to affordable, efficient transport and distribution of cultural industries products and services.
e. Inter-sectoral Coordination and Cooperation
Sector–wide approach to planning and implementation; information sharing among private and public enterprises using ICT; identification of external and national funding options; instruments for coordination and mobilisation of resources.
f. Financing Consolidated plan and instrument for mobilisation of resources; stakeholders consultations.
g. Programme Monitoring and Evaluation Integrated plan and schedule; coordination; integration of training activities in the subjects; benchmarking.
Source:UNESCO2005,quotedinUNIDO2005asAnnex2,p.105.