The Bhutanese Leading the way.
While all five-year plans have been instrumental in the development of Bhutan, once the basics like water, road, electricity, education and health were achieved the plans seemed to be more of the above and lacked an ability to address the growing economic stagnancy.
This may have perhaps been why the 12th Five Year Plan (FYP) period saw a huge migration of youths and professionals to Australia looking for a better economic future.
The 13th FYP is not only gigantic in size at Nu 512.28 billion (bn) but it is more cognizant of our current challenges and makes a lot of strategic forays and investments in key sectors.
It is also not just about money but a promise to bring in far reaching changes in the economy, governance, education and healthcare all geared to achieve a more prosperous society.
Bhutan had a tough few years in terms of the economy and migration after the pandemic and this realization is reflected in the plan.
This is why the heart and focus of the 13th plan is essentially the economy.
The introduction itself says, “Bhutan is currently confronted with one of the most critical challenges in its development journey, with a significant number of its prime-age workforce emigrating in search of better economic opportunities abroad. Despite broad-based success, the economy struggles to generate sufficient productive jobs, leading to high youth unemployment and limited financial security for many of its people.”
It says that Bhutan’s journey with GNH has seen uneven progress, with economic development lagging behind advancements in social, cultural, environmental and governance dimensions.
“The 13th FYP offers a chance to re-balance GNH by placing a renewed emphasis on economic transformation through innovative strategies and robust partnerships aimed at generating enhanced opportunities for its people.”
The strategic objectives of the 13th FYP are, by 2029, Bhutan will be a high income country driven by innovation and sustainability (with a GDP of USD five billion); have a healthy and productive society founded on equitable and high quality health, education and social protection; safeguard and strengthen its sovereignty, territorial integrity, security, unity, wellbeing, resilience and economic prosperity; and have a transformed and trusted governance ecosystem that drives accelerated economic growth and improves people’s lives.
Economic challenges, goals and ETP
The plan highlights key economic challenges like low productivity, limited market access, weak private sector and limited access to finance.
The plan promises to bring about an improved business ecosystem, quality infrastructure, connectivity and energy, a skilled labour force and increased sustainable contributions of strategic sectors (agriculture, mining, manufacturing, hydro, construction and services) to the GDP.
To achieve the above three national programmes will be implemented i.e. Economic Transformation, Twenty-first Century Skilling, and Ecological Diversity and Resilience.
The Economic Transformation Programme (ETP) will be largely driven by the Economic Cluster comprising the Ministry of Industries, Commerce and Employment (MoICE), the Ministry of Energy and Natural Resources (MoENR), the Ministry of Infrastructure and Transport (MoIT), the Ministry of Agriculture and Livestock (MoAL), and related agencies and stakeholders. A total outlay of Nu 80 billion (bn) is allocated to this programme to implement close to 76 projects.
This programme aims to foster sustainable and inclusive economic growth by employing three key strategies of facilitating private sector development and participation, investing in strategic infrastructure, and investing in traditional growth drivers as well as new sources of growth.
Private Sector
The government will encourage gradual privatisation of those SOEs that can be operated more efficiently by the private sector.
Government will inject liquidity in the financial institutions to enhance private sector access to credit where appropriate, while also encouraging alternative means of lending beyond collateral-based lending. Efforts will be made to improve access to finance particularly for smaller businesses
The listing of companies will be encouraged to help deepen the capital market, and to provide an alternative investment avenue for the general public.
Wherever feasible, government services will be outsourced to the private sector, including constructions and operation of facilities such as dry ports and industrial parks. Public Private Partnerships (PPPs) will be pursued to enable the utilisation of private sector resources, expertise and innovation towards the provision of critical public infrastructure and services, with shared risks.
A business-friendly policy and regulatory climate, where innovation and privatisation will thrive, will be ensured. The government will identify a few infrastructural projects to pursue through the PPP model, with government handholding to make it a success and for future replication
To support entrepreneurship and job creation, the government will establish new – and improve existing – start-up centres to incubate and nurture innovators and special talents.
Manufacturing industries including cottage and small industries will be promoted with the development of dry ports and industrial parks. Reforms in business licensing and tax framework will be undertaken, to allow specialisation.
Government will also create a dedicated ‘one stop service delivery point’ for all public services and businesses.
An Economic Development Board (EDB) chaired by the Prime Minister established since 29th January 2024 will carry out necessary reforms in the economic and public sectors to debottleneck investment constraints, address policy conflicts pertaining to businesses, coordinate stakeholders, and monitor the delivery and performance of key players.
Regulations will be streamlined, simplified and eliminated based on a comprehensive review of existing policies
Among others, policies for energy, mining, environment, trade, competition, tourism and FDI will be amended to make them more business friendly.
Strategic Infrastructure
Investments will be made on the consolidation and improvement of roads, bridges and airports and railway links along the southern belt – primarily to enhance connectivity, logistics and trade.
The government will also establish and operationalise dry ports at Pasakha, Gelephu and Nganglam. The ongoing development of industrial parks at Samtse, Thimphu, Samdrup Jongkhar and Phuentsholing will be expedited.
The liveability, safety and sustainability of human settlements will be enhanced by the creation of the National Capital Region (NCR) spanning across Thimphu and Paro, several Linked Urban Centres (LUC) spanning across the Phuentsholing-Samtse, Trongsa-Bumthang, Mongar-Trashigang and Samdrup Jongkhar-Nganglam regions, and the implementation of the Punakha-Wangduephodrang Regional Plan.
Infrastructure development will also take place in areas falling outside the NCR and LUCs in the Dzongkhag Urban Centres.
Investing in traditional and new sources of growth
Investments will be made in Agriculture and livestock (see story on pg 5) and Digital and creative economy (see story on pg 4), mining (see pg 5) and also a 21st century skilling program (see story on pg 4).
In tourism, special attention will be given to promoting tourism in Dzongkhags with fewer or no tourist arrivals, and to promote yearlong tourist arrival in the country.
Efforts shall be doubled to professionalise tourism services by improving quality and efficiency of visa, accommodation, transport, information and roadside amenities services.
The aim is increasing the tourism sector’s GDP contribution from Nu. 2.2 billion to Nu. 13 billion by 2029.
Multiple Investments will be made into large and small hydro projects along with renewable energy (see story on pg 1).
Manufacturing will be helped by ensuring supply of necessary inputs by making the required raw material accessible and available, and by undertaking measures to ensure availability of skills and expertise. Production will be enhanced by attracting FDI, revamping and upscaling the Start-Up Centre, and through PPPs.
Market expansion will be undertaken through improved market linkages and establishment, and improved logistics infrastructure including the exploration and development of new modes of transportation. Financing support will be given.
FDI in construction
The construction sector will be modernised to improve its overall efficiency and attractiveness as a viable employment sector for the national workforce.
The sector will be professionalised to improve construction quality, with incorporation of international best practices and technological innovations suitable to Bhutan’s landscape and environment. Use of available local raw materials such as timber, cement, sand and boulders will be prioritised, both in raw form as well as in value-added form.
Efficiency of the sector will be enhanced through FDI engagements including joint ventures/PPPs, adoption of new/green technology, and policy reforms pertaining to standards and practices. To support Bhutanese construction firms in availing work abroad, market linkages will be strengthened and established.
Financing support will be geared towards incentivising new efficient and green technology, and will include concessional credit for the use of new technology in construction.
International campuses in Bhutan
The country’s potential in herbal-based natural remedies and medicines, zorig chusum arts and craft products, among others will be explored as niche products. Bhutan will be promoted as a destination for holistic education, training and health services.
This will involve establishment of international campuses in the country, provision of spiritual education and training, and courses focusing on conservation and climate change.
It will also include the provision of health services that integrate traditional medicine, astrology services, and mental health services. Promoting the country as a destination for niche services requires not only service sector related regulatory reforms and infrastructure development, but also reforms in other sectors such as immigration and labour to facilitate the movement of people.
Livelihood from forests
To generate national revenue and secure rural livelihoods, forest areas under Sustainable Forest Management Programmes will be increased, and commercial plantations will be created and maintained. Community-based enterprises for wood, non-wood and ecotourism products will be established, along with a Wood Innovation and Technology Hub to promote proper utilisation of available timber resources.
There will be revision of water-related legislation and policies, royalty rates for timber and non-wood forest products, and the development of online environmental clearance applications in sync with the Integrated Business Licensing System.
Stand-alone sawmills will be upgraded to integrated wood-based industries.
Carbon Market
Bhutan will establish the Carbon Market and the Bhutan Climate Fund, which were launched at COP28 in December 2023. With an initial focus on hydropower and forestry sector, the Bhutan Climate Fund will build on “the country’s Kyoto Protocol experience, robust and transparent infrastructure systems, and strong political commitment, including the Carbon Market Rules approved in 2023.
This entails the aggregation of climate data, development of a natural capital accounting system, and the digitisation of Bhutan’s National Carbon Registry.
Ecotourism
The will be introduction of innovative eco-tourism and nature recreation products, and services charges in protected areas for the utilisation of recreational facilities.
The development and management of ecotourism products/sites, and nature based enterprise will be outsourced to local communities or the private sector.
Investments in ecotourism products and infrastructure will be promoted through the lease of land in protected areas beyond bona fide residents.
Monitoring weather and GLOF
A 24X7 National Weather and Flood Warning Centre (NWFWC) and Scientific and Communication Facilities will be constructed.
Key systems and services will be strengthened, which include the National Hydromet Observation Network and Infrastructure, aviation meteorological services, weather and climate services, and hydrological and Glacial Lake Outburst Flood (GLOF) early warning services.
The public and particularly farmers will be made aware of climate services including weather forecasts, to help avoid losses with crop production and harvesting.
