the economic contribution of copyright-based industries in ... · 2.5.4 handicrafts, furniture and...

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan


1

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

2

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


3

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

4

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


5

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

6

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


7

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

8

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


9

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

10

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.


11

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

12

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.


13

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

14

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.


15

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

16

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


17

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

18

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.


19

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

20

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;


21

(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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

22

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.


23

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

24

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


25

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.’

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

26

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.


27

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

28

Chart 2: Share of CBIs in GDP (%)

Source:Table12

Chart 3: Share in the GVA of Core Copyright Industries in 2008

Source:Table10


29

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

30

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).


31

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

32

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.


33

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

34

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.


35

Chart 6: Share of Women in Labour Force

Source:CensusofManufacturingIndustries2001

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

36

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.


37

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

38

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.


39

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

40

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%).


41

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

42

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.


43

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

44

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


45

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

46

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.


47

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

48

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.


49

[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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

50

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)


51

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

52

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


53

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).

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

54

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.


55

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)

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

56

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?

___________________________________________________________________________________________


57

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

58

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


59

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

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

60

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


61

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.

The E

cono

mic C

ontri

butio

n of

Copy

right

-Bas

ed In

dustr

ies i

n Bhu

tan

62

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.

the economic contribution of copyright-based industries in ... · 2.5.4 handicrafts, furniture and...

Documents