The knowledge and support technical assistance (TA) Improving Market Linkages for Cottage and Small Industries (CSIs) will help Bhutan to develop the capacity of CSIs to expose and profitably operate in domestic and international markets. The TA will support the Government in streamlining its standardization and certification processes while implementing an integrated market access program to promote select high-end CSI products. The TA is aligned with three operational priorities of ADB Strategy 2030, i.e., addressing remaining poverty and reducing inequalities, accelerating progress in gender equality, and fostering regional cooperation and integration. The proposed project is also included in the Country Operations Business Plan (COBP) 2020 2022.
Project Name | Improving Market Linkages for Cottage and Small Industries | ||||
Project Number | 53428-001 | ||||
Country | Bhutan |
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Project Status | Active | ||||
Project Type / Modality of Assistance | Technical Assistance |
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Source of Funding / Amount |
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Strategic Agendas | Inclusive economic growth Regional integration |
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Drivers of Change | Gender Equity and Mainstreaming Governance and capacity development Partnerships |
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Sector / Subsector | Industry and trade / Small and medium enterprise development |
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Gender Equity and Mainstreaming | Effective gender mainstreaming | ||||
Description | The knowledge and support technical assistance (TA) Improving Market Linkages for Cottage and Small Industries (CSIs) will help Bhutan to develop the capacity of CSIs to expose and profitably operate in domestic and international markets. The TA will support the Government in streamlining its standardization and certification processes while implementing an integrated market access program to promote select high-end CSI products. The TA is aligned with three operational priorities of ADB Strategy 2030, i.e., addressing remaining poverty and reducing inequalities, accelerating progress in gender equality, and fostering regional cooperation and integration. The proposed project is also included in the Country Operations Business Plan (COBP) 2020 2022. | ||||
Project Rationale and Linkage to Country/Regional Strategy | 1. Socioeconomic Profile. Bhutan is one of the smallest, but fastest-growing economies. Its annual average economic growth of 7.0% since the late 1980s. Despite high growth rates, Bhutan has faced a persistent development challenge the economy remains relatively undiversified and heavily reliant on hydropower exports. CSIs account for 95% of total number of industries in the country and provide an estimated employment of 99,228. The CSI sector is considered significant in terms of future growth potential and economic diversification. While the sector is perceived to be promising for employment and broad-based economic growth, it faces a number of challenges. 2. CSI growth in the country is impeded by factors including weak market access. Although CSIs are considered crucial to drive Bhutan's economic growth, the performance of CSIs is constrained by factors that prevent them from realizing their full potentials. Some of the main challenges faced by CSIs are poor entrepreneurship culture, lack of access to finance, lack of access to effective business development services, and weak market linkages. In order to expose and gain sustained market access for CSI products in higher value domestic and international markets, there is a need to undertake a multipronged strategy including direct and indirect support to CSIs. 3. Weak coordination and limited capacity to formulate and implement a harmonized product standardization and certification. Currently, the Department of Cottage and Small Industry (DCSI), Bhutan Agriculture and Food Regulatory Authority (BAFRA), Department of Trade (DoT), and Bhutan Standards Bureau (BSB) are mandated to support CSI product standardization and certification. However, there is a lack of proper institutional network and coordination among these agencies. Fragmentation of strategy formulation, weak communication and coordination among agencies impedes the establishment of a harmonized framework for product standardization and certification as well as the setting up of a one-window service delivery system. 4. CSI products need to leverage on Brand Bhutan to overcome inherent sector challenges. CSI products are not competitive in the regional and international market due to challenges posed by a lack of economies of scale, high transportation costs, and underdeveloped logistics. These challenges translate into higher prices for CSI products relegating them as uncompetitive in the regional international market. In order to capitalize on the unique features of Bhutanese CSI products demonstrated in aspirations of Brand Bhutan, CSIs must leverage on this brand to gain exposure first and then sustained access to international market. 5. CSIs lack capacity for proper packaging and labeling. Packaging and labeling play an important role in influencing consumer choice and decision. While proper packaging ensures integrity and quality of the product, consumers rely on the information provided on the labels to understand the quality and value attributes of the products. Currently, CSIs do not understand and appreciate the value of proper packaging and labeling in promoting their products. It is, therefore, crucial to build the capacity of CSIs for enhanced packaging methods to realize the aspirations of Brand Bhutan and enhance access to regional and international market. 6. Additional support needed in the sector to consolidate planned investment. The government recognizes that a strong CSI base can become the bedrock of economic development for the country. Cognizant of the importance of the sector, the government has approved a Nu. 1.2 billion flagship program for CSI development in the 12th five-year plan. The program aims to promote high growth potential CSIs to enable them to become competitive in creating a niche in regional and international markets and to mainstream CSIs into the economy (footnote 3). To help the government achieve the results of the program, it is important to rally all possible support to consolidate these results and fill in missing links. 7. ADB experiences and Lessons. In 2007, ADB supported the CSI sector through the Micro, Small and Medium-Sized Enterprise Development Program to carry out policy reforms, stimulate credit to the sector and support business development services. The proposed TA reflects lessons from these ADB projects in terms of : (i) need for concerted efforts from agencies mandated to improve market linkages for SHG products; and (ii) emphasize product design, packaging and labeling to gain access to higher value markets. |
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Impact | Increased contribution of CSIs to GDP and employment. |
Project Outcome | |
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Description of Outcome | CSIs' access to higher value domestic and international market improved. |
Progress Toward Outcome | |
Implementation Progress | |
Description of Project Outputs | National level framework for CSI product standardization and certification established Bhutan CSI product brands developed. Integrated market access program for the promotion of select CSI products designed and implemented. |
Status of Implementation Progress (Outputs, Activities, and Issues) | |
Geographical Location | Nation-wide, Bhutan |
Summary of Environmental and Social Aspects | |
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Environmental Aspects | |
Involuntary Resettlement | |
Indigenous Peoples | |
Stakeholder Communication, Participation, and Consultation | |
During Project Design | |
During Project Implementation |
Business Opportunities | |
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Consulting Services | (2) firms will be recruited for CSI Product Promotion through CQS (5) individual consultants will be recruited |
Procurement | no procurement envisaged |
Responsible ADB Officer | Tshering, Nidup |
Responsible ADB Department | South Asia Department |
Responsible ADB Division | BHRM |
Timetable | |
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Concept Clearance | 03 Feb 2020 |
Fact Finding | 18 Mar 2020 to 20 Mar 2020 |
MRM | - |
Approval | 09 Jul 2020 |
Last Review Mission | - |
Last PDS Update | 16 Jul 2020 |
TA 6537-BHU
Milestones | |||||
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Approval | Signing Date | Effectivity Date | Closing | ||
Original | Revised | Actual | |||
09 Jul 2020 | 16 Jul 2020 | 16 Jul 2020 | 30 Jun 2023 | - | - |
Financing Plan/TA Utilization | Cumulative Disbursements | |||||||
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ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
Gov | Beneficiaries | Project Sponsor | Others | |||||
0.00 | 2,000,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 2,000,000.00 | 09 Jul 2020 | 22,898.24 |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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Title | Document Type | Document Date |
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Improving Market Linkages for Cottage and Small Industries: Technical Assistance Report | Technical Assistance Reports | Jul 2020 |
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
Related Publications
None currently available.
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Tenders
Tender Title | Type | Status | Posting Date | Deadline |
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National Media and Communications Firm | Firm - Consulting | Closed | 16 Sep 2020 | 30 Sep 2020 |
Improving Market Linkages for Cottage and Small Industries | Individual - Consulting | Closed | 15 Sep 2020 | 21 Sep 2020 |
Improving Market Linkages for Cottage and Small Industries | Individual - Consulting | Closed | 30 Jul 2020 | 05 Aug 2020 |
Improving Market Linkages for Cottage and Small Industries | Individual - Consulting | Closed | 30 Jul 2020 | 05 Aug 2020 |
Contracts Awarded
Contract Title | Approval Number | Contract Date | Contractor | Contractor Address | Executing Agency | Contract Description | Total Contract Amount (US$) | Contract Amount Financed by ADB (US$) |
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Capacity Development | Technical Assistance 6537 | 08 Jan 2021 | iDruk Consultancy (BHUTAN) | Zilukha (en-route to Dechenphodrang), Thimphu, Bhutan | Ministry of Economic Affairs | 145,410.00 | — |
Procurement Plan
None currently available.