The Bhutanese Leading the way.
On 29 January 2024, the Prime Minister issued a directive to the Ministry of Industry, Commerce and Employment (MoICE) to review the Foreign Direct Investment Policy and submit recommendations to the Government by March 1, 2024.
An official said, “Until now the FDI policy has undergone very incremental changes and there has been no major shift but thankfully now all the sectors seem to be acknowledging the importance of FDI investment.”
The official said that His Majesty’s Gelephu Mindfulness City has raised the bar and now everyone is thinking big and there is confidence and so he said big and bold measures would come in changing the FDI policy. He said the main focus would be to make Bhutan investment friendly.
He said that in priority sectors investments up to 100% would be allowed like in agriculture.
Currently in Agriculture the minimum investment size has to be Nu 20 mn but only a stake of 74% is there. Valued based agricultural processing of local products only allows 49% FDI.
There will be more relaxations in terms of repatriating dividends beyond the current ceiling.
There will also be relaxations when it comes to labour when it comes to limitations in employing foreign workers and skilled workers.
Currently a FDI company shall be entitled to five work permits for professional and non-professional expatriates during the business establishment phase. The Company currently has to employ five regular Bhutanese employees for every expatriate employed by the fifth year of commercial operations.
When it comes to land the official said it is a major factor for investors and currently the Land Act only allows a one-time lease of 30 years with two extensions that can be given.
The effort will be to see how using the Land Act an implicit assurance can be given of renewal up to 99 years.
When it comes to FDI there were minimum capital investments requirements and theses are being relooked at too.
Currently the minimum project cost shall be Nu. 50 million in the manufacturing sector and Nu. 25 million in the service sector
Currently if an FDI is doing well there are restrictions in investing in downstream businesses but this restriction will be removed too.
The FDI policy has been tinkered and made more liberal by past governments but there has been no significant increase in FDI investment.
It remains to be seen what the details of the new changes are what impact will they have on the ground.
