The Bhutanese Leading the way.
Nationwide review proposes reforms to import rules, online trade, public procurement, taxation, licensing, and investment procedures
Bhutan has launched a nationwide Business Regulatory Process Review for 2026 to simplify regulations, reduce compliance burdens, and create a more business-friendly environment. The initiative is being led by the Ministry of Industry, Commerce and Employment (MoICE), the Bhutan Chamber of Commerce and Industry (BCCI), and the Cabinet Secretariat. It seeks to review and modernize 955 regulatory instruments governing businesses across the country.
The review comes as Bhutan’s private sector continues to face regulatory and systemic challenges. A comprehensive assessment has identified 111 regulatory issues affecting business operations, investment, and private sector growth. The government expects the review to streamline regulatory processes, improve the ease of doing business, and strengthen the role of the private sector in driving economic development.
Under the Food Rules and Regulations of Bhutan 2017, Chapter V, Import Permit, Rule 84 requires an import permit before food is presented for import inspection. However, importers face practical difficulties because they are required to provide separate Certificates of Origin (COO) and Certificates of Analysis (COA) for every product in a mixed consignment. The report proposes that the Bhutan Food and Drug Authority (BFDA) clearly state that consolidated COOs and COAs at the batch or consignment level are acceptable and that existing documents remain valid for repeated imports.
Under the Trade and Industry Regulatory Framework and the E Commerce Regulation 2019, licensed businesses face unfair competition, and the government loses revenue because many online sellers on Facebook, Instagram, and TikTok operate without licenses. The proposed solutions include creating consumer reporting mechanisms through mobile applications, hotlines, or online portals, conducting awareness campaigns, and enforcing GST, customs duties, and licensing requirements equally.
The report also highlights concerns with public procurement. Chapter 3, Clause 34 and Clause 75 of the Procurement Rules and Regulations 2025 require annual framework contracting for imported equipment. Since foreign manufacturers generally guarantee price quotations for only short periods, such as one week, suppliers face significant financial risks from exchange rate fluctuations and freight cost changes when prices are fixed for a full year. This also increases public procurement costs and leaves performance securities tied up even when no purchases are made.
The report recommends that the Ministry of Finance discontinue annual framework contracting for imported technological items, adopt shorter procurement cycles, and revise performance security requirements. It also notes that Chapter 3, Rule 18 allows foreign bidders to participate when goods or services are unavailable domestically, placing local firms at a disadvantage in an import driven economy. It proposes establishing clearer criteria for determining non availability and giving priority to local bidders.
The review also identifies taxation and advance payment regulations as major operational challenges. Chapter 17, Rules 185 to 187 of the Goods and Services Tax Rules 2026 limit eligibility for input tax credits when tax invoices do not meet strict formatting requirements. This creates compliance difficulties for small vendors who operate on credit. The report recommends introducing a special compliance framework with simplified and consolidated invoicing for small vendors.
In addition, Chapter 7, Rule 127 of the Procurement Rules sets a 10 percent ceiling on advance payments for goods, which does not cover substantial upfront costs. The report recommends treating advance payments as a guaranteed entitlement and increasing the ceiling to 50 percent under unconditional bank guarantees. It also notes that Chapter 3, Clause 28, Section 3 requires OEM or MAF certification, limiting participation to suppliers controlled by foreign manufacturers. The report proposes replacing mandatory OEM or MAF requirements with objective and credibility-based evaluations.
The review further identifies regulatory burdens in licensing and investor invitation procedures. Chapter III, Rules 18 and 39 of the Trade and Industry Rules 2023 require multi-brand businesses to obtain separate wholesale licenses and pay an annual renewal fee of Nu. 15,000 for each principal company. The report recommends allowing a single consolidated wholesale license with listed endorsements and pro rata fees.
It also highlights that under Section 4 of the Department of Trade and Section 3.2 of the Department of Industry in the Standard Operating Procedure for Facilitation of Business Guests in the Trading Sector under the Non-Tourist Category (Amended), May 2025, trading companies are denied approval to invite foreign investors from the production and manufacturing sectors for feasibility studies. The report recommends amending the SOP to explicitly allow trading license holders to invite potential production and manufacturing investors to support investment exploration and business development.
