1.What is Druk Holding and Investments Limited (DHI)?
DHI is a company incorporated under the Companies Act of Bhutan and it holds shares in selected companies on behalf of the government.DHI is also the investment arm of the Government and Ministry of Finance (MoF) is the sole shareholder of DHI.
2.How was the DHI conceived?
The conception of DHI including the underlying motivation was envisioned by His Majesty, the King to safeguard the wealth of the nation for future generations.
3.What is the mandate and purpose of DHI?
To safeguard and enhance the national wealth of the country through prudent management of funds and efficient utilization of public resources.
To strengthen corporate governance by ensuring clear separation of the ownership and management of the DHI and its portfolio companies. This will allow the Ministry of Finance to focus on its overarching role of developing policies and plans.
To enhance the performance of the DHI Portfolio Companies (DPCs) by making them responsible and accountable for their performance.
To make investments by optimal usage of resources or raising funds. Through these investments, DHI shall increase employment opportunities for the Bhutanese people.
To nurture and retain business talent for the corporate sector of Bhutan To support democracy by strengthening the national economy
4.What is the source of income for DHI?
DHI's primary source of income is the dividends received from its portfolio companies.
5.What is the Blue Ribbon Panel (BRP)?
The BRP is a committee consisting of eminent persons whose only function is to nominate the Board of Directors of DHI and to determine the Board size of DHI in consultation with the DHI Board of Directors
6.How would the DHI operate with respect to companies where government has only part share holding?
Where government has part shareholdings, DHI will only exercise its mandate as per the Companies Act of Bhutan and may have directors on the Board to represent DHI.
7.What is DHI's priority area of investment?
As the government's investment arm, DHI shall be guided by the priority areas listed in Schedule 1 and 2 of the FDI policy 2010.
DHI shall also invest in commercially viable large projects and reserved sectors where the private sector may not have the capacity and there is long gestation period on the returns on investments.
8.How will DHI invest outside Bhutan?
Where there are good opportunities for investments outside Bhutan, DHI will consider making investments.
These investments might be in strategic areas for Bhutan such as the electricity sector in India.
DHI could buy shares in these kinds of strategic companies.
9.How will DHI support democracy?
DHI as an enduring institution will be responsible for safeguarding the wealth of the Nation for posterity and will continue to provide resources to the elected governments.
A strong economy will be necessary to promote a vibrant democracy.
DHI is being set up to specifically hold and manage the government's resources, it will be able to accelerate investments and create additional employment opportunities which will help in the economic development.
With its linkages across all sectors (government, private, corporate, Bretton Wood Institutions, ADB and Indian Commercial Sector), DHI could provide policy feedback that would help in economic development.
DHI will enhance transparency, accountability and responsibility in the corporate and private sector and will help promote a clean (corruption free) democracy.
As a well managed organization, DHI should be able to generate additional funds for the government for its social activities and budgetary support.
10. How would DHI promote equitable distribution of revenue from national resources?
The government would be in the best position to equitably distribute the national revenue. Through prudent management of resources, DHI will maximize revenues for the government.
Where commercially viable, DHI could undertake projects that would promote balanced regional development.
11.How would the people of Bhutan benefit?
DHI as an enduring institution will be responsible for safeguarding the wealth of the nation for future generations.
Government's social activities would be mostly rural based and increased revenue provided through DHI would help the government in accelerating the rural development.
Through DHI's investment in large scale commercial activities, employment opportunities would be increased.
Through its performance benchmark which would include customer services improvement, DHI will help develop the corporate and the private sector to improve services to the public.
12.With DHI, what would be the role of various government agencies?
The government (MoF) and DHI will set mutually agreed upon performance targets for DHI.
MOF will monitor DHI's performance.
The government will create enabling environment for economic development based on policy feedbacks from DHI.
The government will provide active support to DHI in sourcing of funds and negotiations.
The government will also support DHI in institutional building and capacity development.
13. How would government agencies benefit?
With the creation of DHI, the government agencies will be able to focus on their primary role of policy, planning, regulation, etc. Increased revenues from DHI will allow for larger budgets.
DHI will develop business talent for the corporate and private sector and civil servants will not be deputed to the corporate sector. DHI can act as the governments arm for investment outside Bhutan which the government cannot do.
DHI can also raise funds from outside Bhutan.
By providing services more efficiently, DHI will enhance the image of the government and country.
DHI will be able to provide technical backstopping services to the government and carry out implementation activities of the government.
14.Won't the DHI take away revenues from the MOF?
DHI fully realizes that the revenues from the Portfolio companies form a substantial percentage of the revenues to the government and it will continue providing these revenues to the government. In fact, the objective of DHI is to increase these revenues to the MOF.
There will be a clear agreement between MOF and DHI on the dividends to be provided by DHI to MOF. This will be based on revenues that have been provided in the past by these Portfolio companies to MOF.
15.How would the Portfolio Companies benefit from DHI?
Portfolio Companies will report to a full time commercially oriented professional management team that would be able to provide better guidance and support.
DHI will set the performance benchmarks for the Portfolio Companies and monitor them.
DHI will source funds through use of consolidated reserve funds, dividends and balance sheets.
DHI will appoint Portfolio Companies' board members based on the competencies needed at the Boards of the Portfolio Companies The Boards will be monitored closely to ensure that they provide good value addition to the companies.
DHI will pool in resources and establish common platform for technologies, procurement, and HRD.
16.How will parity amongst the Portfolio Companies be maintained?
DHI will provide the guidelines for the Portfolio Companies with the guiding principle that their remuneration and incentives will be based purely on their performance.
Performance targets will be objective and based on the type of business and industries that the Portfolio Companies are in.
17.How would the private sector of Bhutan benefit?
DHI will provide support where private sector is currently lacking resources.
DHI will be a trend setter in corporate governance and act as a catalyst for governance, management, benchmarking in corporate affairs.
DHI will develop pool of business talents which could spill over into the private sector.
Liaise with government agencies to facilitate an enabling environment through credible long-term government policies for the development of a dynamic private sector.
Facilitate research and development to identify changing potentials and challenges for broader investment avenues in and outside the country.
Promote and market a strong brand that capitalizes on the strength of Bhutan.
Increase private sector shareholding by divesting shares in select companies.
DHI will be open to various forms of partnerships. (Public Private Partnerships, Joint Ventures, Foreign Direct Investments, Consolidations, Mergers and Acquisitions, etc).
18.Won't the DHI stifle the private sector?
DHI would complement and not compete head on with the private sector as its investment would be in the following areas which might not be attractive to private sector :
Ventures with long gestation period
Strategically necessary but potentially higher risk ventures
Commercially viable but lower returns
19.Will DHI divest shares of profitable Portfolio Companies such as Bhutan Telecom, Hydropower Companies?
DHI will be considering making divestment but this would be done after the investment and divestment policies are put in place. However, this would require certain time frame to assess market conditions.
DHI will need a revenue base to meet its obligations to the Ministry of Finance and to create revenues to undertake its plans and projections. On the other hand, DHI will create new opportunities for private sector investment in hydropower companies as well as other attractive commercial ventures. These would be taken into consideration before making any divestment proposals.