Fronting has to be stopped

One impediment to private sector growth, especially in trading business, is because of fronting- the case of lending business licenses by Bhutanese to Indians. Rampant fronting business in borer towns had not only drained out colossal amount of revenue but also swallowed business opportunities of local people.
Fronting is an economic evil that has been enduring for last several decades. Despite a few diminutive attempts taken to curb this problem, government has failed to take serious action to root it out of the system.
Fronting has become rampant because of two reasons. One, the lure of making easy money has always been too hard to resist for Bhutanese businessmen who resort to fronting. All they need to do is to take out a license in their name and hand over to their Indian partner. The license holders get a comfortable cut from the profits doing virtually nothing.
Two, the Bhutanese government has literally failed to impose strict penalties in the past. Slapping with nominal amount as fine or forfeiture of the business license had little or no impact at all.
Moreover, fronting is a very lucrative option for Indian investors because they can then take advantage of concessions meant for the Bhutanese businesses like tax breaks, subsidized and cheap electricity, lease land from the government etc.
Its consequences are too grave if one really contemplates. It poses serious threat on national security apart from loss of business opportunities and revenue outflow.
This issue will endure unless severe actions are not taken. Nu 10,000 fine and cancellation of trade license will not give desired results. Policy makers need to do some home works and try thinking how it should be sorted out.
Last years, when Anti-Corruption Commission (ACC) unearthed series of fronting business in border towns, some sense of fear rippled across the country. Imposing heavy penalties and detaining some perpetrators did ring the bell but our law is little vague. ACC Act doesn’t mention word ‘fronting’ in it and therefore the penalties. This offence is hardly spelled out in our laws.
When a monk was put behind the bar for three years a few years ago for trying to smuggle tobacco products, every single Bhutanese voiced out against the severity of law. Today, fronting is plaguing our local business setups and its impacts are graver. But they escape paying some amount as fine. This is clear lopsided law of our country.
It is time that fronting has to be stopped.

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