Bhutan flag Bhutan:

Country risk of Bhutan : Investment

The share of FDI in Bhutan's GDP remains relatively low compared to other developing countries. According to UNCTAD 2021 World Investment Report, the total stock was estimated at USD 139 million in 2020. After turning negative in 2017 ( USD -9 million), FDI inflows recovered in 2018 when they reached USD 7 million. However, they declined to USD 3 million in 2019 and 2020, partly due to the global economic crisis triggered by the Covid-19 pandemic. Despite the recent rise in FDI inflows, Bhutan still is the Asian country attracting the least FDI, partially due to its small size. India is the largest investor (mainly in the manufacturing industry), followed by Singapore and Thailand.

Bhutan recorded a 40 per cent decline in foreign direct investment (FDI) in 2021. In 2021 65% of FDIs came from Asia, 22% from Europe, 10% from America, and around 3% from the Oceania region. Most of the FDI projects are located in the capital Thimphu. The service sector dominates the overall FDI composition with a 78 per cent share. The hotel sector has the highest number of FDI projects, accounting for 38 per cent in 2021. The share of FDI in the information technology (IT) or IT-enabled service sector increased to 21% in 2021 from 19% in 2019. Forty per cent of the FDI projects are concentrated in the capital Thimphu and the remaining are located in the dzongkhags, or districts, of Paro and Chukha. A total of 4,747 Bhutanese were directly employed by 57 operating FDI projects as of December 2020 (Department of Industry, Bhutan & Phnom Penh Post, 2022).       

The Government of Bhutan has been among the most active in South Asia in terms of introducing reforms, creating a public information and credit register and simplifying the procedures necessary for business establishment. In 2015, the Government relaxed FDI regulations and foreign investors are now able to buy land and can invest in Bhutan with a minimum stake of 10%. In selected sectors, ownership is permitted up to 100%, and the pharmaceutical sector is now open to FDI. A measure has been introduced which makes it easier to exchange local currency into foreign currencies. However, outside of concerns to protect its culture and environment, geographical factors hold back the region: the country has a small territory, is landlocked and very mountainous, thus making infrastructure construction very difficult and costly. In addition, FDI development is limited by a substantially controlled system and an inadequate policy in the areas of industrial license, trade, work and finance. The shortage of skilled labour is also a hindrance to development. Furthermore, the government of Bhutan wishes to continue restricting FDI in certain sectors in order to avoid competition with local traders. Bhutan is ranked 89th out of 190 countries in the last World Bank's 2020 Doing Business Report, eight spots lower than a year earlier. However, the score is relatively high for the country's income category (lower middle income) and region (south Asia).

 

Investment Opportunities

Tenders, Projects and Public Procurement
Asian Development Bank, Proposed Projects in Asia
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Bhutan.
 

Business Setup Procedures

Setting Up a Company Bhutan South Asia
Procedures (number) 8.00 7.12
Time (days) 12.00 14.56

Source: Doing Business.

Return to top

Any Comment About This Content? Report It to Us.

 

> Export Entreprises SA, All Rights Reserved.
Latest Update: May 2022