Business approval

  • Submit the FDI Registration Application form to the Department of Industry. You will receive a FDI Registration Certificate which is the approval in principle.
  • Submit two copies of the business plan to the Department. Depending on your business activity, you will be asked to submit the Initial Environmental Examination form (IEE) to the National Environment Commission through the Department of Industry. However, for some activities, the clearance is delegated to relevant sectors.
  • Incorporate your business with the Registrar of Companies (see documents listed under "Register your Company"). 
  • Open a foreign currency account under the company name.
  • Once the environmental and all relevant sectoral clearances have been issued, if the proposed activity falls in the priority list (see below), the Department will grant approval to the project within two working weeks. If the proposed activity doesn't fall in the priority list, nor in the negative list (see below), the project shall be evaluated by the Project Approval Committee which then shall grant final approval of the project.
  • Obtain an industrial license at the relevant Regional Trade and Industry Office.
  • Apply for a taxpayer identification number and register for income tax (see Tax tab). 
  • In the event, foreign investors are not able to find suitable local partner, you can contact the Bhutan Chamber of Commerce and Industry for onward network with business communities.

Documents to be submitted for approval of FDI in new industry

  • Duly filled up FDI Registration Application form (form available under relevant documents above)
  • Two copies of business plan after the Registration Certificate is granted.
  • Duly filled up IEE form available on National Environment Commission's website ( http://www.nec.gov.bt)

Gross National Happiness and the GNH Index

The all-encompassing guiding principle for policy formulation and the basis for the Government’s long-term development strategy, which also governs its approach to foreign direct investment, is the aim of maximizing Gross National Happiness (GNH). 


The spirit and intent of this concept as articulated in the Bhutan Vision 2020 is to “maximize the happiness of all Bhutanese and to enable them to achieve their full and innate potential as human beings”. Bhutan’s current development strategy summarizes that GNH does “not in any way exclude or deny the importance of economic growth but strongly advocates achieving a harmonious balance between the material and non-material dimensions of development”.


Propounded as an alternative development model based on Buddhist spiritual values by the fourth King Jigme Singye Wangchuck at the beginning of his reign in 1972, GNH has also been enshrined in the country’s constitution.


Bhutan’s current development strategy translates this concept into four pillars: sustainable and equitable socioeconomic development, environmental conservation, preservation and promotion of culture, and good governance. In an attempt to operationalize the concept and quantitatively measure development progress to this end, the Government developed a composite index. It is based on 33 measurable indicators grouped under nine principal domains: (1) living standard, (2) education, (3) health, (4) ecological diversity and resilience, (5) good governance, (6) community vitality, (7) cultural diversity and resilience, (8) psychological well-being, and (9) time use and balance.

Register your company

You will need to register your company at the Company Registry Office. The process takes 24 hours once all papers have been correctly submitted. The documents required are listed below. The Companies Act includes the necessary forms.

Documents required for company registration

Promoters or their representative with power of attorney shall submit the following documents in two sets as follows:


To be submitted as original copies

  1. Articles of Incorporation – Schedule I of the Act duly signed on all pages
  2. Consent of act as director – Schedule II of the Act signed on the legal stamp
  3. Declaration of compliance – Schedule III of the Act signed on the legal stamp
  4. List of names and address of first director and CEO of the company
  5. Registration fee as per Schedule IV of the Act, depending on the authorized share capital 
  6. Security (police) clearance for domestic partner along with CID photocopy


To be submitted as notarized copies

  1. CVs of all investors – notarized by a licensed public notary
  2. Passports of all investors – notarized by licensed public notary
  3. Joint venture agreement between investors/shareholders – exempt from notarization


In the case of institutional investors

Under the original copy requirements

The shareholders’ resolution of the parent company, expressing intent to invest in the proposed company, should also be submitted

Under notarized copy requirements

The following should be submitted in place of the CVs of investors: 

  1. Certificate of Incorporation of the foreign investor company – notarized by licensed public notary 
  2. Articles of Incorporation of the foreign investor company – notarized by licensed public notary 

Foreign Ownership

Foreign Ownership

Degree of foreign ownership allowed Sectors
100 percent Education services (except technical and vocational institutions), health, five-star hotels, infrastructure,research and development, head office services, IT and IT-enabled services inside SEZs.
Up to 51 percent Financial services
Upto 74 percent All other activities except those in the Negative List (Negative list available in the FDI policy 2010)

The Government as an investment partner

Druk Holding and Investments (DHI) is the Government's investment company, operating at arm's length, with US$2.3 billion in assets (as of 2013) spread across the sectors of real estate, energy production, manufacturing, financial services, trading, communications and transport.


With a mandate to promote a sustainable economy, it can act as a local joint venture  partner for foreign investors, either where required by foreign ownership rules (see above) or where a local partnership would be beneficial to the project.


Criteria used by DHI to assess whether to enter into a partnership with a foreign investor include whether the investment project would bring new technologies, lead to economic diversification, or support a new type of business activity. 


DHI’s stake can range from 26 to 74 percent depending on the project. Its contribution also manifests itself in know-how of local conditions and ready access to Bhutanese management expertise.

What investors think

While investors did not report encountering significant difficulties with the general business licensing procedure, some described the process of applying for sector clearances as time consuming and not fully transparent. 

Given Bhutan’s strong record of conservation, a comprehensive environmental clearance is required for those investment projects which are not exempted. While understanding the need for such clearances, it was felt that these need not be as time-consuming as they can be.

Population

Bhutan's population is estimated at 776,000 with a growth rate of 1.3 percent and a population density of 20.2 persons per square km. 38.6 percent of the population lives in urban areas, an increase of 2.0 percent over the previous year. 71 percent of the population is over 15 years old.

Life expectancy at birth is 68 years for men and 69 years for women.

34 percent of population aged 25 and above has at least some secondary education, and a child starting school today can expect 12 years of schooling.

As per the Labour Market Information Bulletin 2013, 65.3 percent of the population participates in the labour force. Overall unemployment rate stands at 2.9 percent with youth unemployment rate at 9.6 percent.

Skills

Graduates

English is widely spoken and used in the country as the medium of education starting from pre-primary and as the means of communication at work. In addition to the university courses provided by both public and private institutions, there are a number of vocational institutes to develop skills in different fields.

There are two universities in Bhutan, the Royal University of Bhutan (RUB) and Khesar Gyalpo University of Medical Sciences of Bhutan (UMSB). Under the RUB, eight public colleges are there with 7,965 students enrolled as of 2013. A private college is also affiliated to the university with 1104 students (894 regular and 210 under the Continuing education programmes). 

The UMSB has been established as a overarching university for existing Institutions engaged in medical and health care education and training programs in the country. Two colleges are under the university as of date. 

Providing equitable and inclusive quality education is considered highly critical. In addition, with the aim of providing employable graduates, the Government has allocated 18 percent of the national budget for education sector. 

Employment and Contracts

Contracts can either be for fixed duration or open-ended. 

Termination can occur where either employer or employee is unable to fulfil the terms of the contract for reasons beyond their control or by mutual agreement. Termination notice must be provided as agreed between employer and employee and not less than the minimum below. Payment may be made in lieu. 

In cases of economic redundancy, the employer must inform the Department of Labour and consult with workers' representatives. Additional notice period applies, as below. If procedures are not followed correctly, the Department of Labour can intervene.

Termination indemnities

Category Indemnity
Minimum notice period in case of termination 30 days
Additional notice period in case of redundancy 7 days per year of continuous service up to a maximum of 42 days

Find out more...

Relevant documents Labour and Employment Act 2007
Relevant institutions Department of Labour, Ministry of Labour and Human Resources

Wages

The table below shows indicative monthly wages paid by foreign investors.

The Department of Labour prescribes a minimum wage of Nu. 125 per day. However, reference employers pay significantly more.

The work week is set at six days of 8 hours each. Two further hours can be worked each day as overtime with employees's consent. If overtime is in between 10 pm to 8 am of the following morning and during holidays, the employee should be paid 1.5 times the normal wage rate.

Prices

UnitValueYearComment
Senior managerUSD560-9602015per month
Middle managerUSD320-4802015per month
Graduate entryUSD200-3002015per month
Office assistantUSD120-1502015per month
Highly-skilled technicianUSD160-3202015per month
Security guardUSD100-1202015per month
Unskilled labourerUSD100-1202015per month

Find out more...

Relevant institutions Department of Labour, Ministry of Labour and Human Resources

Non-wage benefits

In addition to the wages specified above, the following additional benefits are required by the Labour and Employment Act, 2007 (see below in relevant documents).


Non-wage benefits to be paid to employees

Benefit Amount
Annual leave 18 days
Casual leave 5 days
Sick leave 5 days
Maternity leave 8 weeks
Paternity leave 5 days

Find out more...

Relevant documents Labour and Employment Act 2007
Relevant institutions Department of Labour, Ministry of Labour and Human Resources

Retirement benefits

Retiring employees are entitled to provident fund and gratuity depending on the number of years of continuous employment.

Retirement after 5 years of continuous employment: Provident Fund

Retirement after 10 years of continuous employment: Provident Fund and Gratuity

Retirement benefits

Benefit Amount
Gratuity (applies to employees with at least 10 years of continuous service) Last month salary times number of years worked
Provident fund - employer contribution Minimum 5%
Provident fund - employee contribution Minimum 5%

Expatriate Employees

The overall procedure to recruit foreign workers is based on the Immigration Act, 2007 and the Labour and Employment Act, 2007. The Department of Labour in the Ministry of Labour and Human Resources is the contact point.

An investor, upon receipt of an FDIRC, is entitled to a minimum of five work permits for professional, managerial and technical expatriate staff during the business establishment phase. The permits are allocated to the business entity and are annually renewable. Multiple-entry visas are issued to the foreign investor, the board of directors, all expatriate staff, and their immediate family members. In addition, the Department of Labour can approve additional expatriate workers if the business cannot meet its labour market needs by recruiting Bhutanese professionals. This is usually demonstrated by twice advertising for a position and not finding suitable candidates locally. The Department of Labour will also approve additional short-term permits for professionals, technicians and consultants.

During the establishment phase of the FDI project, investors can recruit an unrestricted number of unskilled and semi-skilled expatriate workers. During the business operation phase, the number of unskilled and semi-skilled expatriate workers will be regulated more closely by the Department of Labour.

Investors are required to progressively train and employ Bhutanese workers and professionals after the venture has been established in order to attain a ratio of one expatriate permit for every five Bhutanese workers, by the fifth year of commercial operation. Exceptions, however, may be granted for specific sectors such as research and development, health or education or for specific labour market requirements.

Approval for additional expatriate workers depends on satisfying a labour market test that a suitable Bhutanese candidate is not available. In order to do this, a company needs to have documented two attempts to advertize and recruit such a person locally.

Companies apply for an approval to recruit foreign workers with the Department of Labour through its online platform LabourNet. Applications are supposed to be approved within approximately one week. For workers with Indian citizenship, businesses are required to sign an agreement with their respective Regional Immigration Office. Other foreign workers need to apply for a visa with the Department of Immigration. The Department will then issue a clearance that can be used to enter the country and apply to the nearest Regional Immigration Office for a full work permit within seven days of arrival. 

Procedure for applying for a work permit

- Companies apply for an approval to recruit foreign workers with the Department of Labour through its online platform LabourNet (www.molhr.gov.bt/JobPortal/). Applications are supposed to be approved within approximately one week. 

- For workers with Indian citizenship, businesses are required to sign an agreement with their respective Regional Immigration Office. The Department will then issue a clearance that can be used to enter the country and apply to the nearest Regional Immigration Office for a full work permit within seven days of arrival.

What investors think

Investors generally reported that the existing labour force was well-educated and English-speaking. However, there was a mismatch between educational qualifications on the one hand and a lack of relevant job-market qualifications on the other hand.

A mixed picture was provided with regards to expatriate permits, with a feeling among a number of investors that the Government was overly restrictive in its interpretation of the policy and should be more aware of local skill shortages. Concerns were also raised that non-resident managers, who came for extended periods, could only obtain single-entry visas, making it difficult to make visits at short notice to their home country headquarters.

Investors raised concerns with the requirement to have to obtain a route permit to travel to other districts of the country than those in which they were based. This was seen as an unnecessary restriction.

Electricity

Bhutan Power Corporation Limited is responsible for distributing electricity throughout the country and also providing transmission access for generating stations for domestic supply as well as export. 

Electricity tariffs in Bhutan, being low, make it an ideal investment destination for high energy consumption services such as data storage. 

97 percent of the population has access to electricity. 72 percent of power supplies heavy industry.

As per the Electricity Act 2001, power tariff is arrived at by taking into account the actual cost of supply and not the market or opportunity cost.

Price

UnitValueYearComment
Low VoltageUSD/Kwh0.02 to 0.05w.e.f. July, 2015Exchange rate: 1 USD= 64 Nu. Tariff ranges depending on the usage. For 0-100 KWh: 0.02 USD, For 100-300 kWh: USD 0.04, Above 300 kWh : USD 0.05
Low Voltage BulkUSD/Kwh0.06w.e.f July, 2015
Medium Voltage ( 300 Kw to 15 Mw)USD/Kwh0.04w.e.f July, 2015Additional demand charge of USD 3.67/kWh/month
High Voltage ( Above 15 Mw)USD/Kwh0.03w.e.f July, 2015Additional demand charge of USD 2.81/kwh/month

Find out more...

Relevant documents Electricity Act 2001
Relevant institutions Bhutan Power Corporation Limited

Water

Water is provided by the respective City Corporation offices. The rates for industrial usage of water in Thimphu city are given below. 

Prices

UnitValueYearComment
Water USD/m30.0452015For the first 20 m3
WaterUSD/m30.09201521 m3 to 40 m3
WaterUSD/m30.182015Above 41 m3

Find out more...

Relevant documents The Water Act of Bhutan 2011

Telecommunications

The Government continues to promote the development of ICT as a platform for sustainable development and economic diversification. It aims at delivering ICT infrastructure to all 205 gewogs (village blocks). 

Find out more...

Relevant institutions Bhutan Telecom Limited

Telephone

Mobile coverage extends through out the country and has covered all 205 Gewogs (Blocks). Mobile tele-density stood in 2013 at 76.8 per cent of the population. There are two mobile network operators and one fixed line operator in the country. The State-owned Bhutan Telecom Limited is the only operator of fixed-line communication and the dominant player in mobile communication with 74% market share as of 2013. 

Cost of telephone

UnitValueYearComment
Mobile/Fixed line call to IndiaUSD0.062015Per minute International Call during Peak Hours
Mobile/Fixed line Call to ThailandUSD0.292015Per minute International call during Peak Hours
Mobile/Fixed Line Calls to other countriesUSD0.29 to 0.822015Per minute international call. Tariff depends on the country called
Mobile Call USD0.032015Per minute national call
Fixed Line CallUSD0.012015Per minute fixed line call local

Find out more...

Relevant institutions Bhutan Telecom Limited

Internet

3G services have been expanded to different parts of the country. Bhutan Telecom Limited has also introduced 4G services in the capital city Thimphu and surrounding areas.  “The Frequency Band Plan for 850 MHz for use by third Generation (3G) Mobile Communication System in Bhutan” was also adopted in 2013. 

Cost of internet

UnitValueYearComment
Home useUSD6.532015Circuit Bandwidth upto 2 Mbps. Monthly Tariff with data limit of 3.8 GB
Office UseUSD24.532015Circuit Bandwidth upto 2 Mbps. Monthly tariff with data limit of 15.2 GB
Enterprise useUSD40.912015Circuit Bandwidth upto 2 Mbps. Monthly tariff with data limit of 25.65 GB

Find out more...

Relevant institutions Bhutan Telecom Limited

Transport infrastructure

Infrastructure development is recognized as a priority by the Government to enable private sector development. Complementary to the Government's efforts, multilateral and bilateral development partners continue to provide techincail assistance and funding. 

Road network

As of June 2013, there are over 10, 578.26 km of roads of different categories comprising of Expressway, Primary National Highways, Secondary National Highways,  Dzongkhag Roads etc. About 30 per cent of the road is black-topped with the remaining (farm road, forest road, power tiller track) mostly graveled and earth. 

Access to the sea is principally via the port of Kolkata (694.2 km from Phuentsholing municipality, the commercial hub of Bhutan). Time taken for goods to reach Phuenstholing from Kolkata is around 14 hours drive. Other ports that are are accessible is the Mongla port and Chittagong port in Bangladesh. 

The Government is planning to establish a dry port near Pasakha Industrial Estate within Phuentsholing municipality. Work for setting up a mini-dry port within the municipality has also been initiated. 


Air transport

Bhutan has one international airport (Paro International Airport) and three domestic airports of which only one (Bumthang Airport) is under use at the moment. There are two air operators, the Druk Air and Bhutan Airlines. Druk Air currently operates direct connections to destinations in Bangladesh, India, Nepal, Singapore and Thailand. Bhutan Airlines operates flights to India, Bangladesh, Nepal and Thailand. 

Transport costs

The cost below is for a container shipment from kolkata to Phuentsholing. 

Prices

UnitValueYearComment
Freight TransportUSD1560- 1800201540 feet container
Freight TransportUSD1010- 1200201520 Feet container

Other Costs

For indicative purposes, a basket of goods and services that investors may face in Bhutan are included below.

Prices

UnitValueYearComment
PetrolUSD1.0320151 litre
DieselUSD0.8520151 litre
Coca-ColaUSD0.46201550 cl plastic bottle
Imported BeerUSD2.40201550 cl
Bottled waterUSD0.2320151 litre
RiceUSD0.50- 0.642015per kg
Wheat FlourUSD0.482015per kg
Maize flourUSD0.802015per kg
Whole ChickenUSD2.752015per kg
Minced beefUSD4.372015per kg
Cylinder gasUSD7.7201529 kg (when filled) not including the cost of cylinder
Taxi rideUSD0.62520155 km journey within Thimphu
Hotel 3 Star (in Thimphu)USD45- 582015Standard room (single) including breakfast
Hotel 4 Star (in Thimphu)USD55 -652015Standard room (single) including breakfast
Hotel 5 Star (in Thimphu)USD550 - 13002015Deluxe room including breakfast

What investors think

While there have been significant improvements in infrastructure in recent years, investors did raise some concerns.


With regards to electricity, the low cost was appreciated. However, power shortages were noted during the dry season, which could hinder production

Internet data capacity and reach was also raised, although it was noted that Bhutan Telecom was cooperative in this regard.

Acquiring land

You can own or lease land based on the provisions of the Land Act, 2007. The National Land Commission (NLC) processes land transfers, manages cadastral surveys and keeps the national land record called Lag Thram.

However, you will need to work through the local government or municipal authorities to apply for the transaction. In case of land acquisitions around Thimphu, this would be the Thimphu Thromde.

To initiate the transfer, you will need to complete the land transfer form that is available through the local authorities. The local authority verifies the submission and transmits it to the NLC for decision. 

Find out more...

Relevant documents Land Act of Bhutan 2007
Relevant institutions National Land Commission

Land costs

Indicative land costs are displayed below.

Prices

UnitValueYearComment
Office spaceUSD162015in main commercial city, per m2 per month
Commercial shopfrontUSD162015in main commercial city, per m2 per month
Furnished expatriate houseUSD60020153-bedroom with garden, in main commercial city, per month
Unfurnished expatriate houseUSD35020153-bedroom with garden, in main commercial city, per month

Find out more...

Relevant institutions Gyelsa-Tewa Real Estate Developers Pvt. Ltd (GRED)

Construction permit procedures

The Bhutan Building Rules, 2002 sets out the procedures, fees, and permits, as well as general provisions on architectural requirements. The Traditional Architecture Guidelines provide further details on what the Government sees as appropriate building design principles.

You need to first request an official site plan and, if needed, a plot demarcation. This can be done by submitting a simple form together with the relevant land ownership certificate to the local authority.

You can then apply for a building permit by submitting the relevant form along with architectural drawings and plans to the local authority. 

After the building permit has been obtained, you can request and receive pre-construction and construction work inspections, and will ultimately be issued an occupancy permit by the local authorities.

Special economic zones

There are currently no special economic zones, although these are being considered.

What investors think

Acquiring land or construction permits was reported by investors to be a relatively straightforward.

Overview

All taxes are administered by the Department of Revenue and Customs. The tax year runs from 1 January to 31 December. Firms must file their tax returns (using form CIT-2 for entities incorporated under the Companies Act) to their regional revenue and customs office on or before 31 March following the tax year. 

Companies must first register for a taxpayer number, either online or at their regional tax office (see Department of Revenue and Customs below for more information). Personal income taxes can be filed online.

Find out more...

Relevant institutions Department of Revenue and Customs

Corporate Income Tax

A corporate income tax rate of 30 percent is levied on the net profit of all entities registered under the Companies Act. Losses sustained in an income year can be carried forward and adjusted in the subsequent 3 income years. 

Businesses can either pay an advance tax of 30 percent based on half yearly profit and loss account, or where half yearly accounts cannot be submitted on reasonable grounds, 50 percent of the corporate income tax paid in the previous year. The advance tax is due by 31st of August. The advance tax paid will be subsequently adjusted at the time of filing the return against the provisional tax payable.


Sales tax

Goods and services may be subject to a sales tax. This is either collected at point of entry to Bhutan or point of sale:

  • At the point of entry, the tax is levied on FoB price. 
  • At the point of sales, the tax is levied on the price of goods or services sold. 

The rates are below.


Sales taxes

Item Tax rate
Plant and machinery by manufacturing unit Exempt
Raw materials for manufacturing assembly where a minimum of 40 percent value addition Exempt
Hotel and restaurant services 10 %
Entertainment services 30 %
Cement 5 %
Beer 100 %

Custom duties

A selection of customs duties applied by Bhutan are listed below. Duties are applied on CIF (customs, insurance and freight).

Under the terms of the India-Bhutan free trade agreement, goods originating in India are exempt of customs duties.


Custom duties

Item Rate of duty
Goods originating from India Exempt
Plant and machinery by manufacturing units Exempt
Raw materials for manufacturing assembly where a minimum of 40 percent value addition Exempt

Find out more...

Relevant institutions Department of Revenue and Customs

Personal income tax

Personal income is taxed progressively according to the rates below.

Where accommodation is provided by an employer, the rental value should be included in the declared income for taxable purposes.


Personal income tax

Net taxable income (BTN) Tax rates
First 100,000 0 %
Between 100,000 and 250,000 10 %
Between 250,000 and 500,000 15 %
Between 500,000 and 1,000,000 20 %
Above 1,000,000 25 %

Find out more...

Relevant institutions Department of Revenue and Customs

Other taxes

A list of other revelant taxes is presented below.


Other taxes

Tax Rate
Property transfer 5 % of property sale value
Rural land tax 0.2 to 2.5 % of land value
Green tax 20 % for Passenger vehicles with 1800 cc and above & 5 % for below 1800 cc
Witholding tax 2 % for nationals holding license, 5 % for those without license & 3 % for non-nationals

Find out more...

Relevant documents Tax Act 2012

Double taxation agreements

The country signed double taxation agreement with India.

What investors think

Registration and filing of taxes were reported to be clear and straightforward.


Concerns were raised with regards to importing goods deemed duty free. In reality, investors reported that each shipment of the same good could be subject to different customs treatment.

Investment Protection

Certain legal and treaty measures exist to provide protection to your investments.

Expropriation

The FDI Policy 2010 states that any nationalization, expropriation or any other measure taken which has the effect of nationalization and expropriation will be carried out in a non-discriminatory manner. The policy also provides that in such cases compensation will be prompt, adequate, effective and fair. 

Foreign investments are subject to the same laws, rules, and regulations as any domestic venture. 

Find out more...

Relevant documents FDI Policy 2010
Relevant institutions FDI Division, Department of Industry Bhutan Chamber of Commerce and Industry

Dispute settlement

Bhutan is a member of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention)meaning that arbitral awards relating to foreign investments are legally binding and enforceable.The country has also obtained membership to the Multilateral Investment Guarantee Agency (MIGA). This membership in MIGA allows direct foreign investment into the country to be eligible for the Agency’s investment guarantees. Investors from Bhutan going into MIGA’s other developing member countries may also receive coverage for their investments.

Bhutan has also signed and ratified the 2005 Agreement on the Establishment of SAARC Arbitration Council, which is currently being implemented by the SAARC member States.

The FDI Policy 2010 provides investors the option of ad-hoc dispute settlement using good office, mediation, conciliation and arbitration, or as per the mutually agreed framework between the parties. The Alternative Dispute Resolution Act of Bhutan 2013 covers dispute resolutions both domestic and international commercial arbitration.

Repatriation of funds

Repatriation of Capital

As per the FDI Policy 2010, you are allowed to repatriate your invested capital and any capital gains in the currency of investment. 

Repatriation of Dividend

Repatriation of dividends are allowed in the currency of earnings of the business. However, for investments in the the priority service sector, where the investment is made in convertible currency and the earnings are in non convertible currency, you will be allowed to purchase from the Royal Monetary Authority US$ 5 million per annum to repatriate your dividends. 

Where the investment was made in convertible currency and earnings are in Indian Rupee, you are permitted to repatriate dividends in convertible currency with prior approval from the RMA

Find out more...

Relevant documents FDI Policy 2010
Relevant institutions FDI Division, Department of Industry Royal Monetary Authority

International investment agreements

Bhutan has not signed any international investment agreements.

Intellectual property

Intellectual property rights legislation in Bhutan covers copyrights, patents, industrial designs, trademarks, traditional knowledge and plant variety protection.

Copyrights are governed by the 2001 Copyright Act, which sets out the conditions to receive domestic copyright protection. Patents, industrial designs and trademarks are governed by the 2001 Industrial Property Act. Plant variety protection and traditional knowledge related to biological resources are governed by the 2003 Biodiversity Act.

International commitments

Bhutan is signatory to the following intellectual property agreements.

The Paris Convention for the Protection of Industrial Property (1883) establishes industrial property protection rules regarding patents, marks, industrial designs, trade names, geographical indications and the repression of unfair competition. Its provisions include regulations regarding the national treatment, the right of priority and a number of common rules.

Link to WIPO website

Find out more...

Relevant documents WIPO Paris Convention
Madrid Agreement Concerning the International Registration of Marks (1891)

Find out more...

Relevant documents WIPO Madrid Agreement (Marks)
Berne Convention for the Protection of Literary and Artistic Works (1886) establishes minimum standards regarding the national protection of copyrights in signatory countries, and guarantees the application in these countries of the national copyright law to artistic works originating from another signatory country.

Find out more...

Relevant documents WIPO Berne Convention
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989)

Find out more...

Relevant documents WIPO Madrid Protocol

Convention Establishing the World Intellectual Property Organization (1967)

Link to WIPO website

Find out more...

Relevant documents WIPO Convention

Implementation of intellectual property rights

The Intellectual Property Division of the Ministry of Economic Affairs is responsible for the implementation of the Copyright Act and the Industrial Property Act, and efforts are underway to ensure that these laws are operationalized. In this regard, registries now exist for copyrights, trademarks and industrial designs. The 2003 Biodiversity Act is administered by the Ministry of Agriculture. 

A gene bank has been established and efforts are currently underway to establish a national access and benefit sharing policy under which traditional knowledge will be documented in order to implement the provisions of the 1992 Convention on Biological Diversity, to which Bhutan is a party.

Find out more...

Relevant institutions Department of Intellectual Property

Competition law

The Ministry of Economic Affairs is in the process of coming up with a comprehensive competition policy by the end of 2015

The current basis for government anti-trust interventions derives from Article 9 paragraph 10 of the Constitution: “The State shall encourage and foster private-sector development through fair market competition and prevent the growth of commercial monopolies”.

Issues of bid rigging and public procurement have been handled by the Anti-Corruption Commission, created under the 2006 Anti-corruption Act. The Commission established a committee comprising all relevant stakeholders to put in place guidelines for public procurement policies that will ensure transparency, prevent bid rigging or illegal practices. In order to prevent corruption in the construction sector, the Commission, in conjunction with the Royal Audit Authority and the Ministry of Finance, revised the procurement manual and bidding documents. 

The Consumer Protection Act 2012 covers the rights and responsibilities of consumers, misleading advertising and false representations, safety standards for goods and services and guarantees with respect to title, quality and matters such as manufacturers’ guarantees. The law also set up an institutional framework for enforcement at the national and the local levels.

In the absence of a formalized competition policy it can be assumed that the Government scrutinizes potential investment projects in terms of their impact on domestic competition during the formal FDI approval procedure.

What investors think

Investors appreciated the high degree of political stability and absence of corruption. 

While private-sector representatives generally described the Government as a reliable partner, some cited the Government’s inexperience with FDI and lack of technical understanding as an issue. They also cited delays in some approval processes due to lack of government capacity. 

At the same time, the Government was characterized as keen to understand investor’s concerns. Access to high-ranking government officials and line ministers does not appear to be a challenge.

Concerns were raised with regards to repatriating dividends for businesses with earnings in local currency. Currency restrictions due to limited foreign exchange reserves mean that priority sector businesses may only purchase US$ 5 million a year to repatriate. By its nature, this caps the size of such foreign investments.

Economy and production

With a population of about 762 thousand people, Bhutan itself has a small domestic market. Nonetheless, there are varied opportunities for small and medium-sized investors as well as larger transnational corporations (TNCs), such as in the tourism sector and related up- and downstream services. Construction is booming due to rapid urbanization, particularly around Thimphu, as well as due to hydropower projects, which are the most important driver of economic growth. Public–private partnerships (PPPs) are encouraged for infrastructure projects.

Domestic consumption is largely dependent on imports, potentially opening up opportunities in import substitution.

The country has an estimated population of 762,412 and a GPD per capita of US $ 2,440.41, one the highest in South Asia. 

Economic composition

Bhutan's GDP was recorded at US$ 1.78 billion in 2013 with GDP per capita of US $ 2,440.41, one the highest in South Asia. 

The share of agriculture to GDP was recorded as 16.2 percent in 2013 compared to 18.7 percent in 2007 and 24 % in 2004. Bhutan’s secondary sector which is composed of manufacturing, electricity and water, construction, mining and quarrying accounted for 42.3 per cent share of GDP in 2013 as against 41.6 percent in 2012. The share of tertiary sector to GDP was recorded with 41.5 percent during the year.

In terms of contribution to GDP during 2013, the secondary sector contributed the highest with 1.5 percentage points followed by primary sector with 0.4 percentage point and tertiary sector with 0.1 point. 

Imports and exports

India is Bhutan’s major trading partner both in terms of exports and imports. The list of top imports of the country includes oils and preparations (diesel), ferrous products, motor spirit, coke and semi coke, husked (brown) rice etc. In the export basket, commodities such electricity, ferro-silicon, semi-finished products of iron, Portland pozzolana cement, gypsum, silicon of carbides, cardamoms, potatoes etc tops the list.

Market access

While Bhutan's domestic market is small in size, the country's special relationship with India offers duty free access to the largest market in South Asia (US$ 1.88 trillion GDP averaging 11.7 percent annual growth over ten years) and preferential access to the sub-continent through SAFTA. Duty free and preferential access also exists on certain goods to the EU, US and certain countries in the region.

Access to the Chinese market is limited as Bhutan does not have trade agreement with the country. Nevertheless, trading is prevalent between the two countries. 

Regional and international markets

The country is member of the following regional organizations and trade agreements

SAFTA comprises Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. It represents a market of US$ 2.29 trillion and a population of 1.70 billion.

A key feature is the Trade Liberalization Programme under which non-LDC members commit to reduce important tarriffs for products from member countries to 20 percent by 2013. LDC members have until 2016. This currently applies to trade in goods only and does not include items that members assign to their sensitive list.

BIMSTEC comprises Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand and bridges SAARC and ASEAN. In 2004, the members agreed on a Free-trade Area Framework and set up a Trade Negotiating Committee and working groups to help negotiate the agreement. The free-trade area is expected to come into effect by 2017.

Under this agreement, Bhutanese and Indian products benefit from duty free access to each other's markets. In addition, goods transiting to Bhutan from a third country via India are free of Indian duties. Furthermore, provisions are made for each government to provide appropriate refund on excise duties on goods of its origin exported to the other.

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Relevant documents Text of the agreement

Under this agreement, Bangladesh provides import tax and duty free access to 18 exportable products from Bhutan to Bangladesh. Bhutan gives duty free access to 90 exportable products from Bangladesh to Bhutan.

The first Trade Agreement between Bhutan and Bangladesh was signed in 1980 and the Protocol to the Trade Agreement signed in 1984. The Trade Agreement was subsequently renewed in 2003, 2009 and 06 December 2014.

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Relevant documents Text of the agreement

Under European Union's Everything But Arms Initiative (EBA), least developed countries (LDCs) enjoy duty-free access to the EU market for all products except arms and ammunition. Sugar and other processed foods are permitted.

Developing countries benefit from preferential duty-free access to the United States for up to 5,000 products, under its Generalized system of preferences (GSP). Eligible include: most manufactured items; many types of chemicals, minerals and building stone; jewelry; many types of carpets; and certain agricultural and fishery products. Among the products that are not eligible are: most textiles and apparel; watches; and most footwear, handbags, and luggage products.

Tourism

Dochula Pass

Bhutan’s tourism potential lies in its unique value propositions of pristine and untouched nature, rich and living culture, and mental and spiritual wellness. The country’s all-embracing GNH philosophy is a tourist attraction in itself and the guiding principle for the Government’s “high value, low impact” tourism strategy, which positions Bhutan as an exclusive destination while preserving the country’s natural and cultural heritage. A central feature of this approach is a price floor that requires every tourist to pay a minimum daily all-inclusive package rate of US$ 200 to 250 per day per person. (Package cost varies according to season and includes: accommodation in a minimum three star category accommodation, meals, transport, guides and equipment for trekking.)

All aspects of tourism policy and regulation are coordinated by the country’s central tourism authority, the Tourism Council of Bhutan (TCB).

The number of visitor arrivals climbed to 133,000 visitors in 2014, a 15 percent increase on the previous year of which 68,000 were from outside the region. This brought in US$ 73.2 million in earnings. The table below shows breakdown of arrivals by country. However, given their longer stays in Bhutan, tourists from the United States brought most income per head, followed by the United Kingdom and Germany. Overall, fast growth of the tourism sector gives rise to numerous other opportunities in complementary services such as transport, telecommunications, banking, insurance and other business services.

Table: Breakdown of arrivals by country

Country Number
India 62,129
Thailand 12,105
China 8,111
United States 7,291
Germany 2,971

Source: Tourism Council of Bhutan

Arrivals are subject to strong seasonal variation driven by weather and the occurrence of cultural festivities, with the majority of tourists arriving in spring (March to May) and autumn (September to November).

Currently, most of Bhutan’s hotel capacities are located in the western circuit around Paro, Thimphu, and Punakha. The region is home to several cultural festivals (Tsechus) and numerous religious sites, including the prominent “Tiger’s Nest” temple complex. It is also the region that is easiest to access for international tourists. In addition, there are several hiking and cross-country cycling trails. Accordingly, international luxury hotel chains have successfully established high-end properties in this region. 

The Government sees foreign investors as key to development of the sector and promotes investments into four- and five-star hotels and resorts throughout the country. 

Tourism is encouraged focusing on nature-based activities, including adventure tourism (rafting, trekking, mountain biking, ballooning) and safari-like ecotourism (camping, wildlife, bird and butterfly watching). Based on the country’s strong Buddhist heritage, the TCB also promotes spiritual wellness and spa offerings. Moreover, there is scope for development of hospitality services for meetings, incentives, conferencing, and exhibitions.

In terms of regions, the Government aims to promote a more diversified tourist offering in Bhutan’s central, south and eastern regions. 

Bhutan’s current FDI policy allows up to 100 per cent ownership of projects establishing luxury hotels and resorts (five stars and above) and up to 74 per cent ownership of projects establishing four-star hotels. The Government also allows full foreign ownership for the development of outdoor sports and recreational facilities.

Beyond the general provisions for foreign investors, the Government provides sector-specific fiscal and non-fiscal incentives, including:

  • Ten-year income tax holiday for high-end hotels and resorts established by end 2015;
  • Exemption of customs duty and sales tax on imports of outdoor equipment, kitchen equipment, hotel furniture, fixtures and selected goods;
  • Full repatriation of dividends in the currency of earnings;
  • Up to 500 acres (approximately 202.3 hectares) of earmarked land for tourism development, available for a renewable lease period of up to 30 years; and
  • Fast-tracked, single-window clearance process for tourism-related projects through the Tourism Council of Bhutan, including for the leasing of new land.

Power generation

Bhutan has a vast capacity for hydropower generation. Its deep valleys and swift rivers allow run-of-the-river type hydropower projects. Since 1974, when the first major project was undertaken in cooperation with the Government of India, hydropower has become the primary source of energy for meeting domestic energy demand.

Most importantly, export revenues from water-generated electricity have become an important engine of growth for Bhutan’s economy, which exports 75 percent of production to India, a country that also acts as financier for many hydropower projects. Meanwhile 72 percent of domestic consumption is by heavy industries at the Indian border. 

The installed capacity of the existing hydropower plants stands at 1,606 megawatts, which accounts for about 5 per cent of the total hydropower potential of the country. Actual generation, however, is strongly dependent on seasonal water flows. In Bhutan’s dry winter season from November to February, when river flows decrease sharply, generation capacity drops to about 300 megawatts, close to domestic demand. 

Infrastructure

Bhutan’s rapid socioeconomic development and urbanization has put pressure on the country’s physical infrastructure, requiring expansion and upgrading of the transport network and the construction of numerous industrial facilities as well as residential and non-residential buildings. 

Given the lack of both technical capacity as well as skilled labour in domestic construction companies, numerous opportunities open up for foreign investors in the design, construction and operation of large-scale infrastructure and general building projects. Significant demand exists for projects in the areas of airport infrastructure, highways, bridges, viaducts, elevated highways, tunnels, ropeways/cable cars, logistics facilities such as dry ports, land reclamation, geotechnical and hydraulic engineering, sewerage infrastructure, water management, residential buildings, and recreational facilities. Bhutan’s rugged topography, widespread surface erosion, and extreme weather conditions pose significant construction challenges and open opportunities for specialized international contractors.

In 2010, the Government formalized a framework for the implementation of infrastructure projects through PPP models. The framework provides for a transparent and competitive procurement process following internationally accepted practice. In addition, the framework allows the Government to choose PPP investors as strategic partners without selection process for ventures with up to 26 per cent foreign ownership. It also prescribes that government-owned companies such as DHI, the sovereign development and holding company, have to follow fair and transparent bidding procedures similar to the provisions set out in the framework. The framework provides flexibility with regards to the contractual design and partnership model (including but not limited to build-operate-transfer, build-own-operate-transfer, build-operate-lease-transfer). The Government is also working on development of a specific PPP policy.

Agriculture and related industries

There is scope for a variety of foreign direct investments in the commercial agricultural sector and related industries, including in organic farming, biotech, poultry and dairy farming, floriculture, apiculture, horticulture, and premium food and beverage projects (see box below).

While the country’s physical infrastructure and a lack of skilled labour are still concerns for larger-scale commercial operations, a significant number of farmers already engage in the production of cash crops such as fruits (mainly mandarin oranges and apples) and potatoes.

The commercialization of agriculture is one of Bhutan’s primary development goals and investors can expect the Government to be very supportive of relevant FDI project proposals. 

The Government is also undertaking institutional reforms to facilitate investments, including an improved framework for agricultural financing and a comprehensive overhaul of the country’s land use policy that would enable investors to gain easier access to large parcels of arable land.

As one of the Government’s priority sectors, investments in the agricultural sector are eligible for sector-specific fiscal incentives. These include an exemption from sales tax and import duties for all farm machinery and any other agricultural inputs as well as a 10-year income tax holiday for commercial farming and related processing of its products units established before end 2015. FDI projects engaging in commercial farming of organic crops are eligible for a 15-year income tax holiday.

Veen mineral water

Originally established in Finland and currently Indian-owned, Veen supplies glass-bottle mineral water to high-end hotels and restaurants. While active in European markets, it had for some time been seeking a South Asian base to supply the Indian market. 


Bhutan was chosen based on its mountainous location, access to a good mineral water source, the image of Bhutan as high-end and pristine, duty-free access to the Indian market and easy access to government.


Production started in September 2014, with glass bottles, caps and labels brought in from India (due to lack of local manufacturing capacity) and boxes made locally by a solidarity project run by the army. As of June 2015, Veen was exporting 28 metric tonnes a month to India, supplying  Bangalore, Delhi, Mumbai, Culcutta and Guwahati. Veen also supplies hotels in Bhutan.


The firm is optimistic about the future and foresees expansion into PET bottles, flavoured water with Himalayan botanicals, and flavoured tonics.

Mountain Hazlenut Venture

The Mountain Hazelnut Venture, incorporated in 2010, works with out growers in rural areas to grow and harvest hazelnuts for processing and export. The company aims to invest about US$ 30 million, planting around 10 million hazelnut trees in Bhutan’s remote eastern districts.


When the project reaches maturity around 2018, it could produce and export between 20,000 to 40,000 tons of hazelnuts annually. This would represent between 3 to 5 per cent of the global market, currently dominated by Turkey and Italy. By 2020, hazelnuts could account for a significant share of Bhutan’s exports.


The company has contracted over 8,000 orchards to grow and harvest its hazelnut saplings with a guaranteed buy-back price for the nuts; the saplings are provided from a company-owned facility in Yunnan province, China. Orchards averaging about 1.5 acres, are run by families, nunneries, monasteries, schools and community groups. They are supported by a vast network of extension workers using motorbikes and mobile technology. The company directly employs 600 Bhutanese nationals, with a further 1,200 Bhutanese working as service providers.


The company is currently building a factory to process the nuts.


Aside from generating a profit, one of the goals of the company is to stem rural–urban migration by enabling farmers to generate a reliable and sustainable income without having to leave their traditional communities. The project also hopes to reduce soil degradation and improve rural market access. Information gathered by extension workers using mobile applications will also provide a rich database of agricultural information for further scientific analysis. It is estimated that a further 1,200 Bhutanese benefit from the project as service providers.

Information and communications technology

Thimphu Tech Park

In addition to mainstreaming ICT as a tool to improve public service delivery and governance, IT and IT-enabled services (IT/ITES) feature prominently in the Government’s private-sector development initiatives. The sector can effectively capitalize on Bhutan’s strengths of high political stability, abundant and sustainable electricity, low unit labour costs and an English-speaking population.

Opportunities for investors include outsourcing of data centres, software development, business process outsourcing in the areas of back office operations, transaction processing, content development, design and animation, geographic information system services, and related sectors, both for export as well as for domestic consumption. Further opportunities might arise in up- or downstream services.

As part of the Government’s efforts to create a favourable environment for foreign IT investors, the Thimphu TechPark was developed as a flagship ICT project near the country’s capital (see box below).

Parallel to the development of physhical ICT infrastructure, the Government seeks to build a strong local talent base. It aims to increase IT literacy across schools by mainstreaming ICT related elements into secondary and tertiary curricula, training teachers and setting up computer labs in schools. 

The Government has fast tracked the business licensing process and put in place numerous incentives to attract international investors. IT/ ITES ventures established in context of the tech park are granted full foreign ownership, ventures outside the park are granted a maximum foreign ownership of 74 per cent. Beyond the facilities granted in the 2010 Economic Development Policy and the 2010 FDI Policy, the Government provides sector-specific fiscal and non-fiscal incentives for ICT projects established before the end of 2015, including:

  • Ten-year tax holiday for the operation of IT/ITES businesses within the tech park and exporting 80 per cent of their products or services;
  • Exemption of customs duty and sales tax on imports of computers, related hardware and
  • software;
  • Repatriation of dividends in the currency of earnings.

These are further described in Fiscal Incentives 2010.

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Relevant documents Fiscal Incentives 2010

Thimphu TechPark

Thimphu TechPark is the flagship IT development in Bhutan. It is the country’s first IT Park - promoted by the Department of Information Technology & Telecom, Ministry of Information & Communications, supported by the World Bank and developed jointly by Assetz Property Group of Singapore, a leading development management corporation focused on South Asia, and Druk Holding & Investments.


The first development phase, providing 50,000 square feet of office and data centre space across a five-acre campus, was completed in 2011 and is now 45 percent occupied. 10,000 square feet of the space has already been absorbed by the Royal Government of Bhutan to house Bhutan Innovation and Technology Centre, which is an initiative to promote innovation and entrepreneurship in the country. Further expansion in the future is foreseen as the project spreads over 18 acres.


The park’s infrastructure includes fully serviced offices and warm shell space with power and mains redundancy, a variety of business facilities such as a shared conference centre, video conferencing facilities, and a centralized online platform for printing, postal and transport services. To support smooth operation of the tech park, the Government continues to improve the country’s general telecommunication infrastructure, including through the opening of a second international telecom gateway in the South of the country. In the longer term, the Government considering further technology parks.

Scan Café - restoring old photos

Scan Café is the world's largest photo editing company. Started in California, it has a strong customer base in the US and an expanding presence in Europe, Canada and Latin America. It allows its customers to send old photos for scanning, and if necessary, restoration and printing.


Photos are scanned in Bangalore, India. Those requiring restoration are sent to Scan Café's operation at Thimphu TechPark where they are edited by Bhutanese staff, burned onto a CD and returned to the customer. The same operation also undertakes desktop publishing to produce photo books of customers' photos, which are then printed back in the US.


From an original staff of 20 in June 2012, the operation employed 400 Bhutanese staff at the start of 2015, all trained in-house under a partnership with a local training institute.


Scan Café has cited the abundance of Bhutanese school leavers with artistic talent as a pull factor for the company, as well as low rental and electricity costs. It believes that increase in data transmission capacity and IT skills of school leavers could further improve Bhutan's potential in this field.

What investors think

Overall, private-sector representatives interviewed by UNCTAD are positive about the business environment in Bhutan. Most importantly, managers and investors consistently cited the Government’s open, flexible, and forthcoming approach throughout all phases of the business establishment process and day-to-day operations. Bhutan is a virgin land in terms of FDI and it was often emphasized that the authorities are working proactively with potential investors to overcome hurdles that might result from the young regulatory framework. 

Investors emphasized the Government’s readiness to entertain innovative ideas that are in line with the country’s development philosophy, giving investors the chance to define and shape entire sectors with numerous opportunities for investment.

Why invest in Bhutan?

Taksang- The Tiger Nest
  • Investment opportunities in high-end tourism, power generation, infrastructure, agriculture and information and communication technologies.
  • Opportunities for public–private partnerships in infrastructure, property development, hotels and ICTs.
  • Free trade agreement with India, providing duty-free access to the US$1.88 trillion Indian market, and member of the South Asia Free-trade Agreement.
  • An educated work force with youth literacy rate of 86.1 percent and English as the medium of education.
  • A stable economic and political environment and a safe place to live and do business.
  • A premium brand.

Find out more...

Relevant institutions FDI Division, Department of Industry

Country Data

Official name Bhutan
Country area 38,394 km2
Capital city Thimphu
Population 762,412
Administrative regions 20 Dzongkhags
Local currency Bhutanese Ngultrum (BTN)
Exchange rate (2014 average) US$ 1=Nu. 61.09
Official language(s) Dzongkha ( English is widely used)
Other national language(s) Sharchopkha, Lhotshamkha etc
GDP per capita US$ 2440.41 (2013)
Time Zone UTC + 6

Country Map

Map of Bhutan

last update on: 1/10/2015