Sunday, August 24, 2014

Exporting Cordeceps, The Dilemma of Bhutanese Millionars

Picture Coutesy: Lhendup Tharchen
In Bhutan, collection and trade in cordecep was legalized in 2004. The Royal vision behind this initiative was to bring economic blessings to the Bhutanese nomads. To keep this business exclusively for highlanders, the collection of the same is strictly monitored. After fixing the minimum royalty, the seasonal collection permits are issued by the Government to each households. This, I believe this is more to do with sustainability of the good. Thanks to the insatiable demand from the outside world, the good has become the most sought after items for export. Since then, the bizarre fungal plant that has the potential of earning millions for highlanders annually has become a trading commodity.

In ten years time, The business in cordecep boomed. With boom came structural changes. It became an investment avenue for many Bhutanese millionaires!  No doubt about that. But this boom also attracted many third parties. In most cases those third parties are nomads themselves. I call them the "easy pickers". What easy pickers do is an interesting thing to behold. They transport necessity items like salt, rice, oil, liquors and vegetables and then barter them with cordeceps painfully collected by their nomad relatives. There are often instances where an actual collector had to surrender his entire collection in lieu of the price for the amount of necessities he availed.

I am thinking that a ration delivery helicopter could prove a real blessing here. Perhaps PDP government could think more on it. But for now, it is doubtful as to whether the trade worth millions of Nu. is really benefiting the needy nomads? 

All cordecep collected in a given period are then sold off  to the exporters in an auction. Since those exporters deal in millions, I call them Bhutanese millionaires. This is again an affair closely monitored by the Government. Hence the real process of transferring the goods to the international market begins. In Bhutan, some official documents like Certificate of origin, commercial invoice, sanitary certificate and Customs export declaration are mandatory. 

As for Bhutan, the major market for cordecep are China, Taiwan, Hong Hong, and Malaysia. Since the cordecep is not a duty free goods in those countires, the real dilemma of  exporting begins here. Contrary to the normal international trade regime, here is what Bhutanese exporter and International importer do. They make a deal which is as bizarre as the fungal plant itself. 

To evade the the applicable duties in the countries of Exportation, the exporter and importer both travel till Thailand. (one to reach the goods and other to pick up the same) There is another hurdle here. They have to evade Thai Customs duty as well. In the process, Bhutanese millionaires and international importers are making legal business illegal.  In the past, some may have gone lucky. I think they  must have made fortune through  such deception.  

But in recent past, Thai authorities have come stronger with their enforcement capability. There are instances where authorities have intercepted Bhutanese exporters for non declaration of the goods. There are also instances where cordeceps worth millions of Nu. are directed back to Bhutan, causing a lot of inconveniences both for Customs officials and for exporters themselves. Therefore as a concern Bhutanese, I would like to make the following pleas to our millionares who are in cordecep business.

Firstly, such act may distort international trade figures. Please avoid such practices 

Secondly, it tarnishes our National image. Such acts may lead to other Customs administration labeling us as people of High risk

Thirdly, Non declaration in most case is a crime

Fourthly, Cordycep is not contraband or prohibited item in most of the countries. Especially in Thailand, The concern importer should have proper import permits/license from Thai Authorities i.e. Food & Health Control Organization (FHCO) under Ministry of Public Health

Fifthly, It is levied 30% Custom Duty, roughly equivalent to Thai Bath 200,000/ per KG (depending upon quality assessed

Sixthly, Be mindful that if illegally imported, any goods will be confiscated

Seventhly, If the confiscation is challenged in any manner, the case will be forwarded to Thai Airport Police, which may result in detention of both goods and person

Eightly, While goods may be confiscated, the person may be charged for attempted criminal act

Ninthly, If found guilty, person shall be punished with imprisonment plus the fines and penalties that exceeds 130% of the goods seized

For more details visit Thai Custom webpage


Before, I close this post, I am anxious with the following points

I am anxious about the amount these exporters are paying to our Government exchequer as Business Income Tax.

I am anxious about the level of information sharing with relevant agencies on the issue and the overall transparency of the business

I am anxious as to whether the nomadic people are really benefiting from the trade...

1 comment:

  1. well-written, insightful, informative and an analytical one.

    ReplyDelete

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