The Bhutanese Leading the way.
The government has reallocated Nu 1.5 billion (bn) initially earmarked under the Economic Stimulus Plan (ESP) for affordable housing and homeownership to urgent infrastructure priorities, with a particular focus on improving chiwog roads, according to the Minister of Infrastructure and Transport Lyonpo Chandra Bdr Gurung.
Speaking during the 26th Meet-the-Press session, Lyonpo Chandra Bdr Gurung said the decision was taken after careful consideration at the highest level and was guided by principles of equity, impact, and fiscal prudence.
Lyonpo said the initial allocation, while intended to support affordable housing and homeownership, would have had limited reach in addressing the country’s housing needs at scale.
“At the time of assessment, it was observed that the allocated amount would have had limited reach in addressing housing needs at scale, given the significantly higher overall demand and the relatively high unit cost of housing construction, particularly in rural areas,” Lyonpo Gurung said.
He added that the potential benefit of the fund would have been confined to a smaller segment of the population, raising concerns over inclusiveness and equitable distribution.
In contrast, the government identified the improvement of chiwog roads as an intervention with more immediate and widespread public benefits.
According to the minister, better road connectivity directly supports rural livelihoods, improves access to markets, health services, and education, and contributes to broader socio-economic development across communities.
Lyonpo also said that improved road access would strengthen the enabling environment for future housing development by reducing construction costs and enhancing the viability of rural settlements.
“As such, the reallocation was considered a strategic decision to maximize the broader public benefit of the ESP funds in the short term,” Lyonpo Gurung said.
He added that the move would also allow the government to further refine and strengthen the homeownership program, to ensure that it is implemented in a more inclusive, sustainable, and impactful manner.
Despite the reallocation, Lyonpo said the groundwork for the housing program is progressing.
The Department of Human Settlement is in the final stages of completing the National Housing Strategy (NHS), which is expected to operationalize the National Housing Policy 2020.
The strategy will align policy objectives with financing mechanisms, delivery systems, and institutional arrangements, translating the policy into eight coordinated strategic objectives covering public rental housing, access to land, private rental reforms, homeownership pathways, housing finance, institutional strengthening, private-sector participation, and urban planning.
Its stated goal is to close affordability gaps for low- and middle-income households while building a financially sustainable and socially inclusive housing system.
Initial fiscal support has also been earmarked, and preparatory work for pilot housing projects is already underway.
Lyonpo Chandra Bdr. Gurung said the rollout is expected to follow a phased approach, beginning with targeted pilot interventions, particularly for low- to middle-income households and civil servants, before scaling up based on performance and available fiscal space.
Implementation is expected to begin in the near term following the finalization of the strategy and approval of implementation modalities.
On the delivery front, the ministry is pursuing a balanced approach that combines demand-side support, such as concessional financing and savings-based schemes, with supply-side measures including the development of affordable housing through public agencies and incentives for private sector participation.
In addition, the initiative is receiving technical support from the Asian Development Bank (ADB) under the Green and Resilient Affordable Housing Sector Project (GRAHSP).
This includes assistance for the National Housing Strategy, development of a Housing Management Information System, strengthening of institutional capacity, and formulation of regulatory frameworks such as green building guidelines and fire-resilient building codes.
Under the project, the National Housing Development Corporation Limited (NHDCL) plans to develop around 2,500 housing units in phases, with 1,000 units in the first phase.
The first phase, estimated at USD 37 mn (mn), is financed through ADB support comprising a USD 24 mn loan and a USD 6 mn grant, approved in December 2021.
The government is also supporting the project through a USD 7 mn loan from the National Pension and Provident Fund, alongside a USD 1 mn ADB technical assistance grant.
