THIMPHU: An American real estate and construction company ‘Carpenter and company inc’ wants to invest in Bhutan’s mineral water resources, albeit with a clause that it be given exclusive rights to sell the water outside the India and Bhutan region. The company has been holding talks with Druk holdings investment (DHI) as a potential foreign direct investment (FDI) partner.

This has already raised opposition from those involved in the water sector, like Bhutan agro industries, saying that it would be an unfair monopoly.

There is also a constitutional question, since Article 14 on trade and industry under section 16 of the constitution says, “Parliament shall not enact laws that allow monopoly except to safeguard national security”. The constitution also recognises water to be a natural resource belonging to the government.

On the other hand, the government, along with DHI, is looking to bring in as much FDI as possible for faster economic growth.

Carpenter and co., before coming to DHI, had already approached the ministry of economic affairs around April 2009, enquiring about Bhutan’s policy on investment in the mineral water sector. The company, through a letter in May, was informed by the department of industry that their case could not be processed, since under current FDI rules no investment was yet open in the water sector.

However, that could change with the revised and liberalised draft FDI, allowing 74 percent equity to a foreign investor in the mineral water sector. The project size has to be a minimum of Nu 50 million. The revised FDI is expected to be approved soon, now that the economic development policy has been approved.

“Yes, the company did approach the ministry and wanted to find out the policy for investment in water,” said MEA secretary Dasho Sonam Tshering. He said that, if such a proposal came to him, they would allow such a condition only if the rules allowed it.

Bhutan agro industries, whose main product right now is mineral water that is also exported to India and Bangladesh, has expressed reservations. “Not only us, but all other companies dealing in water or planning to come into the business, would not be in favour if it allows a monopoly of marketing outside India and Bhutan,” said agro’s managing director, Gyem Tshering.

Mineral water is increasingly becoming a lucrative market with high-grade mineral water of companies like Fuji, Vitel, Pierre, fetching up to USD 5 to USD 10 a bottle in international markets. “The company must be targeting natural mountain spring water, which has a viable market outside,” said an industrialist. “They’d be looking to use the brand Bhutan image of a country with a clean environment and many mountain streams.”

Once the FDI is allowed, then the company will have to get local and other clearances to set up any plant. The company, if its project is approved, could be setting up manufacturing units along streams in Bhutan.

DHI remained tightlipped on the project, except to confirm that they were talking with the company. DHI is already in negotiations with an American investor, who has asked for exclusive mining rights for key minerals for the whole of Bhutan.