Basnet Attorneys and Law is a reputable and well-established full service law firm based in Thimphu, Bhutan. Specializing in litigation (legal representation in Bhutanese Courts), arbitration, legal, and business consulting especially in FDIs, our experienced Bhutanese Lawyers are committed to providing customized solutions to meet the diverse needs of our clients. With a strong focus on delivering high-quality services, we adeptly guide clients through the intricacies of the Bhutanese legal system both within Bhutan and internationally. FDI Bhutan is top Bhutan FDI Advisory Department at Basnet Attorneys and Law - A Premier Law Firm in Bhutan. We specialize in Foreign Direct Investment (FDI) in Bhutan. Our expertise extends to collaborating with businesses, special economic zones, and industries globally, aiming to set up their business in Bhutan. As a leading authority, FDI Bhutan serves as one stop window for setting up FDI in Bhutan.
A Comprehensive Analysis of FDI Annual Report 2022 of Bhutan | Basnet Attorneys and Law
In the pristine landscapes of Bhutan, where culture intertwines with nature, a unique tale of economic evolution is unfolding. Bhutan, with its breathtaking scenery and rich cultural heritage, has set its sights on a journey of economic prosperity through the attraction of Foreign Direct Investments (FDIs). In this comprehensive exploration, we delve into the intricacies of Bhutan's current state of FDI, the opportunities and challenges it faces, the government's proactive initiatives, and the significant contributions of FDIs to the Bhutanese economy.
I. Bhutan's FDI Landscape: A Modest Odyssey
While embracing the benefits of FDI, Bhutan remains cautious and aligns its approach with its distinctive development philosophy. The government has strategically attracted FDI primarily in the hydropower sector, a key revenue source for the nation. This selective approach reflects Bhutan's commitment to balancing economic development with the preservation of its cultural and environmental heritage. Bhutan's FDI landscape, while modest, tells a story of resilience. Since 2010, annual FDI inflows have averaged less than USD 20 million, constituting less than 1 percent of the Gross Domestic Product (GDP). However, the adoption of the FDI Policy in 2002 and its subsequent implementation in 2005 marked a turning point. By 2022, 101 FDI projects amounting to Nu 43.62 billion were registered, with the hotel sector comprising 36 percent and Information Technology (IT) or IT-enabled services (ITES) at 22 percent. The government has set an ambitious target to double FDI inflows to Nu 100 billion by 2029.
II. Navigating Opportunities and Challenges
Bhutan's appeal lies in its underutilized preferential market access opportunities and regional integration benefits. Key sectors with growth potential include organic agriculture, agro-processing, IT/ITES, wellness, health, and education. The nation's strengths, including regional stability, an English-speaking population, a pristine environment, and the unique appeal of Brand Bhutan, position it as an attractive investment destination.
However, challenges persist. A small market, high transportation costs, a narrow-based private sector, and difficulties in acquiring government approval are hurdles. High finance costs, a shortage of skilled professionals, bureaucratic delays, and the hindrance of high and unreliable internet costs for ITES companies add to the complexity.
III. Government Initiatives: Paving the Way for Prosperity
Recognizing the need for a conducive environment, the Bhutanese government has undertaken initiatives to enhance the FDI landscape. Reforms aim to create a favorable business environment, encourage reinvestment, and facilitate easier cross-border payments. Comprehensive strategies for FDI promotion and support for building domestic skills are in place.
IV. Contributions of FDIs: Fueling Economic Growth
Despite challenges, operating FDI projects have become significant contributors to Bhutan's economy. As of December 2021, 49 FDI projects employed 4,601 Bhutanese citizens, making notable contributions to tax revenue. In 2021 alone, these companies contributed Nu 1.3 billion in taxes, reflecting a remarkable 63 percent increase compared to the previous year.
V. A Comprehensive Analysis of Bhutan's FDI Annual Report 2022
The FDI Annual Report of 2022 stands as a testament to Bhutan's resilient FDI sector, reflecting economic progress and international collaborations.
Origin and Sources of FDI IN BHUTAN: Building Bridges Across Continents
Bhutan's economic horizon broadened in 2022 with the approval of 8 FDI projects amounting to Nu. 356.29 million. Contributions from Europe (16%) and America (10%) underscore global interest, with India leading at 51%, followed by Singapore (15%) and Thailand (10%).
Sectoral Share of FDI in bhutan: A Mosaic of Opportunities
In 2022, the service sector captured 66% of total investments, with the hotel sector and IT/ITES sector playing significant roles. The adaptability of Bhutan's economic portfolio is evident, with power-intensive manufacturing also witnessing growth.
Employment: Empowering Bhutanese Workforce
In 2022, 4,601 Bhutanese found direct employment in 49 operating FDI projects, showcasing the IT/ITES sector as a major job provider.
Financial Contribution of FDI in Bhutan: Strengthening National Economy
Financially, FDI companies made substantial contributions, totaling Nu. 1,304 million in taxes for the income year 2021, a 63% increase. This signals a positive trajectory for Bhutan's economic health.
Other Information: Nurturing Growth and Sustainability
FDI projects concentrated in key regions, notably Thimphu, Paro, and Chukha Dzongkhag. In 2021, capital inflow reached Nu. 680 million, showcasing investment source diversity. However, the global FDI scenario in 2021, witnessing a significant uptick of $1.58 trillion, highlighted the need for continued efforts, especially in developing countries like Bhutan.
VI. Conclusion: Embracing a Prosperous Future
The FDI Annual Report of 2022 paints a promising picture of Bhutan's economic landscape, reflecting resilience, adaptability, and international collaboration. As Bhutan continues to attract diverse investments, the nation stands at the threshold of a prosperous future. The report's findings serve as a testament to Bhutan's ability to navigate the complexities of the global economy, fostering economic growth, employment opportunities, and financial stability for its people.
VII. Final Reflection: Shaping a Boundless Future
Bhutan's journey toward economic prosperity signifies more than numerical achievements. It reflects the nation's enduring spirit and collaborative vision. Together with international partners, Bhutan is shaping a future where opportunities know no bounds, ushering in a new era of limitless potential. In this unique narrative, Bhutan's path with FDIs becomes a beacon of hope and a testament to the power of partnership in shaping a prosperous future.
Lists of FDI Companies in Bhutan in IT fields
Serial No. Company Name
1 Scan Café Pvt. Ltd.
2 Southtech Bhutan Pvt. Ltd.
3 Secure Link Services Bhutan Pvt. Ltd.
4 MultiRational Pvt. Ltd.
5 ZOOP KG Pvt. Ltd.
6 Bhutan Data Scientist Pvt. Ltd.
7 Advantage Outsourced Solutions Pvt. Ltd.
8 TRX Bhutan Pvt. Ltd.
9 DrukSmart Pvt. Ltd.
10 Bid Ocean Pvt. Ltd.
11 Point Technologies Pvt. Ltd.
12 iMerit Bhutan Pvt. Ltd.
13 Paperless Management Solutions Pvt. Ltd.
14 314e Bhutan Pvt. Ltd.
15 TIJ-Tech Pvt. Ltd.
16 Avatar Tech Pvt. Ltd.
17 Yalamanhilli Intelligent Solutions Pvt. Ltd.
18 Blue Dragon Pvt. Ltd.
19 DragonConnect Pvt. Ltd.
Lists of allowed activities in the field of FDI in Bhutan
SCHEDULE I: PRODUCTION & MANUFACTURING
Agro-Based Production in Bhutan:
Agro processing
Bio-technology
Poultry
Fisheries
Floriculture
Health Food
Animal Feed
Bio-Fertilizer & Bio Pesticides
Meat Processing
Apiculture
Horticulture
Dairy
Minimum Project Cost: 20 Mn in Bhutanese Ngultrum
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Forest-Based Production in Bhutan:
Minimum Project Cost: 50 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Solar and Wind Energy / Other Renewable Energy in Bhutan:
Based on Alternative Renewable Energy Policy, 2013
Minimum Project Cost: 20 Mn
Maximum Foreign Investor’s Equity (%): 74
Water-Based Products in Bhutan:
Minimum Project Cost: 50 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Pharmaceutical Products:
Minimum Project Cost: 50 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: As per sector Policy
Other Manufacturing FDIs in Bhutan:
Electronics
Electricals
Computer hardware
Building materials
Minimum Project Cost: 50 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
SCHEDULE II: SERVICES
Priority List of Activities
FDI in Education Sector in Bhutan :
Primary Education
Secondary Education
Higher Education
Minimum Project Cost: 300 Mn
Maximum Foreign Investor’s Equity (%): 74
Condition/Requirements: As per sector Policy
FDI in Health Sector in Bhutan:
All-inclusive specialized hospital services
Specialized Medical Services
Specialized Dental Services
Specialized Medical Laboratory Services
Specialized Diagnostic Imaging Services
Specialized Traditional Medical Services
Minimum Project Cost: 200 Mn
Maximum Foreign Investor’s Equity (%): 100
Condition/Requirements: As per sector Policy
FDI in Hotels/Resorts –Five Star and Above in Bhutan:
Minimum Project Cost: 200 Mn
Maximum Foreign Investor’s Equity (%): 100
Conditions/Requirements: None
Infrastructure Facilities on PPP Model:
Conditions/Requirements: As per the PPP Policy
Sports and Recreation Facilities:
Minimum Project Cost: 25 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Wellness Centre:
Minimum Project Cost: 25 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
IT Park Development:
Minimum Project Cost: 200 Mn
Maximum Foreign Investor’s Equity (%): 100
Conditions/Requirements: None
Research & Development:
Minimum Project Cost: 10 Mn
Maximum Foreign Investor’s Equity (%): 100
Conditions/Requirements: Established firms employing a minimum of 5 experts
Head Office Services:
Minimum Project Cost: 5 Mn
Maximum Foreign Investor’s Equity (%): 100
Conditions/Requirements: None
IT/ITES:
Inside IT Park
Investment: NA
Outside IT Park
Minimum Project Costs: 3 Mn
Conditions/Requirements: As per sector Policy
Construction Services:
Minimum Project Cost: 100 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Waste Management:
Recycling of domestic waste
Waste management services
Minimum Project Cost: 25 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Water Supply and Management / Urban Water Treatment and Supply:
Minimum Project Cost: 25 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: As per sector Policy
4 Star Hotels:
Minimum Project Cost: 25 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Technical and Vocational Education:
Minimum Project Cost: 25 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: None
Consultancy Services:
Minimum Project Cost: 5 Mn
Maximum Foreign Investor’s Equity (%): 74
Conditions/Requirements: Established firms employing a minimum of 5 experts and having a presence in more than two countries or experience in the international market.
Financial Services:
As per FSA
Maximum Foreign Investor’s Equity (%): 51
Conditions/Requirements: As per Financial Services Act
SCHEDULE III: SMALL SCALE ACTIVITIES
Value Added Agro-based Products (based on domestic produces):
Fruit and vegetable processing
Food Processing
Herbal and medicinal products
Honey-based products
Spices
Confectioneries
Minimum Project Cost: 5 Mn
Maximum Foreign Investor’s Equity (%): 49
Forest-based Production:
Value-added hand-made paper products
Waste wood products
Bamboo products
Cosmetics
Essential oil products
Minimum Project Cost: 5 Mn
Maximum Foreign Investor’s Equity (%): 49
Others:
Souvenir
Ceramic products
Minimum Project Cost: 5 Mn
Maximum Foreign Investor’s Equity (%): 49
SCHEDULE IV: NEGATIVE LIST (FDIs in Bhutan are not allowed to start the following businesses)
News Media
Distribution Services including Wholesale, Retail, and Micro Trade
Mining for Sale of Minerals in Primary or Raw Form
Hotel 3 Star and Below
General Health Services
Industries that do not meet the Certificate of Origin Requirements
Activities in the Prohibited List of the Royal Government
Apply Below To Set Up Your FDI in Bhutan With Us
Let FDI BHUTAN, and Basnet Attorneys and Law become your support partner in establishing your FDI in Bhutan