In addition to being the home to Gross National Happiness, Bhutan has demonstrated extraordinary growth over the past few years, largely driven by capitalization of its hydropower resources. With 10,000 MW of new hydropower projects slated to come online by 2020, the 7% growth trend over the past decade is expected to continue. While balancing its growth ambitions with the prioritization of environmental and social development, Bhutan is pursuing environmentally sustainable development through careful use of its abundant natural resources. The investment climate in Bhutan features a good progress in human development, good governance, stable political and the lowest corruption index in South Asia, according to Transparency International.

 With primary advantages being the availability of reliable affordable power and trained manpower in a secure, stable business environment, Bhutan is ideally poised to offer a strong business base. In terms of education level and labour productivity both are reported to be significantly better than regional standards by the World Bank report.

Following are several sectors in which Bhutan is open to investment.

  • Mines and Minerals: Bhutan has mapped and prospected only about 33% of the country with potential for further discovery in unexplored parts of the country. Past exploration has confirmed reserves of industrial minerals like limestone, dolomite, gypsum, quartzite, graphite, talc etc and metals including tungsten, lead-zinc, ferrous metals and copper.
  • Power Intensive Industries: Bhutan has, so far, tapped only about 7% of its potential 30,000 MW hydropower. By 2020 the installed capacity will reach 10,000 MW with a firm power of about 2000 MW. About 85% of the generation will be diverted to high voltage industries. Investment in power intensive industries remains attractive from this perspective.
  • Hospitality Sector: Bhutan’s tourism policy is guided by the principle of ‘high value low impact’. The Government is promoting sustainable tourism throughout the country all year round taking advantage of the country’s unique cultural heritage and natural environment while minimizing negative impacts. Focus areas are nature-based activities including wellness tourism, spiritual as well as meetings, incentives, conferences, and exhibitions (MICE).
  • Infrastructure: With its close proximity to the vast Indian market, Bhutan is developing Special Economic Zones (SEZs) to set up service, ICT, agro-based and manufacturing industries. Several incentives have been identified for SEZs which will be located in the border towns of Gelephu (700 acres), Samtse (500 acres) and Samdrup Jongkhar (150 acres).
  • Financial Services: A key determinant of socio-economic development, financial services have been identified as priority of the country’s 2010 Economic Development Policy. Partnership is sought in areas of insurance, health, agriculture, and to develop Bhutan into an International Offshore Financial Center and Financial Hub for the region.
  • ICT: Bhutan is transforming into a knowledge-based society and developing a high-end service industry through ICT. Thimphu TechPark was also launched by DHI in November 2011. The TechPark offers a superior business environment for diverse technology sectors, including IT/ITeS, BPOs, KPOs and Research with Grade A infrastructure and amenities to occupants, such as mains and back-up power, with electricity prices 70% lower than other parts of the region. TTP also offers high-capacity dual feed Internet connectivity.

FDI Policy: Foreign Investors are greeted with equal benefits, incentives and guarantees extended to domestic investors. Additionally, investment in sectors listed under priority list of the Foreign Direct Investment Policy, 2010 are fast tracked for approval and clearances. Investors also have access to government’s attractive fiscal incentives.

Monetary policy: Bhutan follows a fixed exchange rate system with Ngultrum pegged at par to the Indian Rupee in a conventional peg arrangement. The Royal Monetary Authority (RMA) manages the policy through prudential controls and reserve to regulate credit expansion and its impact on Bhutan’s external position, price levels, and the health of the financial system. Businesses have access to local banks for general financing and Druk Holding and Investments for equity financing option.

Human Capital: Bhutan has a highly educated manpower base, and a young population eager to work. The median age in Bhutan in 24 years old, and over 40% of workers have completed secondary education, the highest in the region by a margin. Another 15% have completed a university degree or higher. With an educational system based in English, Bhutanese youth have strong English language skills and can act as a resource for diverse industries. Bhutan is committed in its effort towards building human capital and has passed the Bhutan Education City Bill for the development of Bhutan’s Knowledge Hub.

Logistics: Drukair, the national airline, operates flights to Singapore, Bangkok, Kolkata, Bagdogra, Delhi, Bodhgaya, Kathmandu and Dhaka.  There are three major road entries to Bhutan, all from the Indian state of Assam to the South. Connection via road is through the bordering Indian cities of Siliguri (150 km) and Guwahati (100km). There is currently a draft plan to introduce rail links into the country along these three entry points. The nearest seaport is located 747 kms away in the Indian city of Kolkata.