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Bhutan at glimpse

Cooperatives in Bhutan 1 st Asia Pacific Cooperative Registrars conference, malaysia 9 th – 13 th December 2013 Dorji Dhradhul Director / Registrar of Cooperatives of Bhutan Department of Agricultural Marketing and Cooperatives Ministry of Agriculture and Forest Bhutan. Area:38,394 km2

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Bhutan at glimpse

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  1. Cooperatives in Bhutan1st Asia Pacific Cooperative Registrars conference, malaysia 9th – 13th December 2013Dorji DhradhulDirector / Registrar of Cooperatives of BhutanDepartment of Agricultural Marketing and CooperativesMinistry of Agriculture and ForestBhutan

  2. Area:38,394 km2 • Pop: 700,000 • Young democracy • 1st constitution & 1st parliamentary elections in 2008 • Development Philosophy -GNH Bhutan at glimpse

  3. National Symbols of Bhutan National Flower Blue Poppy National Bird Raven National Animal Takin National Tree Bhutan Cypress

  4. Agrarian and rural based country - 3/4 in rural areas • GDP per capita at around US $ 3000 - Significant rise in living standards and improvements in human development outcomes • Enjoy robust economic growth – GDP growth rate of 8 % • Economic structure from a traditional and agriculture-based economy to a more vibrant secondary and tertiary-based economy • hydropower, • construction, • tourism, • Transport • communication as key drivers Development Context

  5. Cooperatives in Bhutan Concept of Farmer Groups (FGs) not new to Bhutan However, concept of FGs as a vehicle to development started in early 1970s Today with the Cooperative Act of Bhutan 2009, we have farmers groups and Cooperatives as two distinct legal entities

  6. Four pillars of Cooperative Development in Bhutan Pillar 1 Support to the development of strong Farmers Groups and Cooperatives Pillar 2 Capacity Building to Provide Support Services to Farmers Groups and Cooperatives Pillar 3 Building up good linkages to Financial Service Providers Pillar 4 Support the set-up of Cooperative Federations if and as possible

  7. Cooperatives by sector

  8. Farmers Group by sector

  9. The Cooperative (Amendment) Act of Bhutan, 2009 (CAB 200)

  10. CAB 2009 was enacted in August 2009. • Cooperative is defined as ..”An association of persons united voluntarily to meet their common economic needs and aspirations through a jointly owned and governed enterprise” • Coops shall be promoted, organized and developed based on the values of self-reliance and self-management, and to the service of Tsa Wa Sum based on voluntary initiatives, equality, equity and solidarity and also on the ethical values of honesty, openness and caring.

  11. State Policy on Coops • Royal Government shall : • facilitate the development of coops as strong pillars of the • private sector, that will contribute to economic • development, especially the poor. • create the legal environment for the registration and • monitoring, mediation, conciliation and provision of legal • services on research, education and information. • Complementary to legal support government shall provide • support for the economic development of coops. • Royal Government recognizes coops as private enterprises with economic purposes

  12. Principles of Cooperatives • Voluntary and open membership. • Effective member governance. Members actively participate in setting their policies and making own decisions. Equal voting rights(1 person, 1 vote). • Member economic participation. Members contribute equitably to the capital of the coop. • Autonomy and independence. Coops enter into agreements with other organizations based on mutually agreed upon terms to ensure effective governance and maintain coop autonomy. • Education, training and information for members, Officers, mgt., employees and general public. • Cooperation among Cooperatives • Concern for the community.

  13. Governance of Cooperatives: Cooperative Authorities and Management Structure in Bhutan • Ministry of Agriculture and Forests (MoAF) has the mandate to implement the CAB 2009 • Within MoAF, the Department of Agriculture Marketing and Cooperatives (DAMC) has been further mandated to execute the MoAF’s mandate to implement the CAB 2009. • Head of DAMC is the ex-officio the Registrar of Cooperatives (RoC) and the national regulatory authority for Cooperatives & FGs in the country. • RoC may delegate authority to the District Cooperative Registrars to carry out functions related to cooperatives in his/her behalf.

  14. Creation and responsibility of Task Force mandated by article 30 of CAB 2009. DAMC in consultation with Ministries/Agencies call for creation of a task force with the Cooperative Focal Persons as its members. Task force has the purpose of providing information and coordination on all matters related with the regulation, promotion, development, support planning and monitoring of coops and registered FGs on Bhutan. Agencies involved: Ministry of Agriculture and Forests (Department of Agriculture, Department of Livestock. Department of Forest and Park Services), Ministry of Economic Affairs; Ministry of Finance;Gross National Happiness Commission; Ministry of Home and Cultural Affairs, Ministry of Labour and Human Resources; Ministry of Works and Human Settlement; Task force for Cooperatives and farmers Groups

  15. Cooperative Development Structure in Bhutan UNION OF COOPERATIVE REGISTRAR (DAMC, MoAF COOPERATIVE TASK FORCE FEDERATIONS OF COOPERATIVES DZONGKHAG ADMINISTRATION DT PRIMARY COOPERATIVES GT GUPS PRIMARY COOPERATIVES FARMER’S GROUPS NON FARMER’S GROUPS NON FARMER’S GROUPS FARMER’S GROUPS NON FARMERS FARMERS NATURAL BHUTANESE PERSONS

  16. Types/Levels of Coops • Primary Coop • Federation of coops • Union of Coops • Special type coops • Coop bank • Insurance coop

  17. What is required to register a primary coop • Minimum of 15 Bhutanese citizens with common interest; • 3 copies of duly accomplished constitution and By-laws; • Evidence that the proposed coop is organized based on: • Member’s common needs or demand • Economies of scale and requirements of the market of business undertaking • Bond of accountable officers • Proof of bank account

  18. How is a Coop to be governed • Coop shall be governed by constitution and by-laws. • Constitution and By-laws must conform to the Act, the rules of MoAF and other related laws, coop values and principles and accepted morals of Bhutanese society. • Constitution articulates the purpose and objectives, relations with government and other parties, and overall framework for decision making. Includes the following provision: Name and address of coop, Purpose of the coop,Type of coop, scope of business and area of operations; Overall system of governance, Names and postal address of member-incorporators; The list of names of members of the BOD; The amount of share capital and the names and addresses of contributors • By-Laws: Prescribes in detail the internal mgt. of the coop. Includes the following: Membership, General Assembly, BOD and committees; Systems of mediation and conciliation; Resource mgt.

  19. Coop Financial Management • Capitalization of coops include but not limited to the following: • Member’s share capital • Loans and borrowings including deposits • Revolving capital from deferred payment of patronage refund or interest of share capital; • Subsidies, donations, legacies, grants, • Share capital: • All coop members shall contribute to the share capital of the coop. • Coop shall issue share certificate as proof of contribution. • Share contribution shall earn interest as per constitution and by-laws • No member(other than the coop) shall own or hold more than 10% of total shares of the coop

  20. Investment: Coop may invest funds in any of the following: • Shares, debentures, securities of other coops; • reputable bank in the country or any company listed under the stock exchange; • real estate for the use of the coop or its members; • As per constitution and by-laws and approved by the GA • Records: All registered coops shall maintain official records required by the Act including: • Directory of members • Official receipts • Duly audited financial reports • Annual reports • Minutes of meeting of GA, BOD and committees

  21. Net Surplus • Net surplus shall not be construed as profit (but as an excess of payment made by a member from business transaction with the coop). • At the end of accounting period, Net surplus shall be distributed in the ff. order: • Reserve fund –30%(to protect/restore stability) • CETF –10% (50% for the coop and 50% for the Coop Union). • Optional fund –not more than 10% (to acquire properties or contribute to economic and educational advancement of communities). • Interest on capital and patronage refund (of the remaining balance after deducting 1,2 and 3)

  22. All Farmers Groups, community organizations and other organizations who wish to become Cooperatives shall fulfill the : • A minimum of fifteen Bhutanese citizens from a minimum of fifteen different households and having a common bond of interest in the area of operation of the Cooperative; • Three copies of duly accomplished Constitution and By-laws; • A business plan evidencing that the proposed Primary Cooperative is organized based on a) the members’ common needs or demand, and b) the economies of scale and requirements of the market of its business under takings • Proof of bank account. • Members have met and elected a group of key people as their office bearers for the formation of a Cooperatives • Bond of undertaking by the office bearers Registration Requirements

  23. FINANCIAL MANAGEMENT OF COOPERATIVES Sources of Funds: • Share capital – all members of a Cooperative shall make mandatory contributions to the share capital. As provided under Article 20 of the Act , no individual member except the Cooperative itself can hold more than 10% of the total amount of shares of the Cooperative. • Membership fee - the Cooperatives shall impose membership fees on its members. • The membership fee shall be considered as payment for the services rendered by the Cooperative and shall be collected annually during the General Assembly session. The membership fee shall be used to meet operational expenses of the Cooperative and shall not be refundable. • Fines - There shall be a system of levying fines by the Cooperatives which shall be described in their respective by-laws, in order to facilitate their smooth functioning and proper management. • The Cooperatives may also explore financing from external sources in terms of loans, donations, subsidies and grants depending upon the availability of funds. However, as provided under Article 18(4) of the Act it shall obtain prior approval from the Ministry of Finance to mobilize funds from any local or external sources

  24. Challenges • Cooperative movement is new and emerging in Bhutan • Geographic Terrain • Small Membership size • Small scale of economy • Immature organizational and institutional capabilities.

  25. Prospects and Opportunities • Department as facilitating agencies foresee several opportunities to learn and benefit from conferences • Establish a networking on information and knowledge for Cooperatives, especially trading at international levels. • Creation of linkages between Bhutan and the relevant international and regional institutes and agencies

  26. Thank You and TashiDelek

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