The Bhutanese Leading the way.
A wide range of Bhutanese products are set to benefit from zero customs duty under the Free Trade Agreement (FTA) between Bhutan and Thailand.
Among the key exports expected to benefit are essential oils and yathra, which currently face a 5% tariff, juices, areca nut, apples, cordyceps, and cement, which currently face a 10% tariff. Spices such as ginger, turmeric, and cardamom, which currently face a 20% tariff, along with honey, pickles, and jams that face 30% tariff. Higher tariff goods such as oranges, matsutake mushrooms, and coffee, currently facing 40% tariffs, and potatoes, tea, and alcoholic beverages, which are subject to a 60% tariff, will likewise be eligible for zero customs duty under the agreement.
However, other taxes, such as Goods and Services Tax and Value-Added Tax, will continue to be imposed on goods in both countries according to the respective national regulations.
As per the Customs Duty Act of Bhutan 2021, most goods imported from third countries, including Thailand into Bhutan, are levied 10% customs duty.
According to the Ministry of Industry, Commerce and Employment (MoICE), the FTA is aimed at enhancing our exports and liberalizing and facilitating trade in goods between the two countries, enhancing economic and technical cooperation, improving economic efficiency and competitiveness, and promoting transparency in trade-related laws and regulations.
Bhutan’s exports to Thailand recorded a significant rise in 2024, reaching Nu 84 million (mn), up from Nu 11.25 mn in 2023. Bhutan imported goods worth Nu 2.67 billion (bn) from Thailand in 2024, resulting in a trade deficit of Nu 2.58 bn.
MoICE stated that the FTA also seeks to address the significant trade imbalance between Bhutan and Thailand. At present, 98 percent of trade between the two countries consists of imports from Thailand, while Bhutan’s exports account for only about 2%.
Imports from Thailand included a wide variety of goods, such as automatic data processing units, ovens, cookers, smartphones, and medical equipment.
Consumer products made up a substantial portion of the imports, with Bhutan bringing in Nu 70.59 mn worth of aerated beverages, Nu 25.5 mn in baked goods, Nu 18.79 mn in chips, Nu 6.75 mn in sauces, Nu 3.89 mn in toilet paper, and Nu 4.62 mn in books.
Thailand now accounts for 13.44% of Bhutan’s total imports, excluding those from India.
With the implementation of the FTA, the private sector will gain direct market access to Thailand at zero customs duty, giving a major boost to exports. On the import side, goods coming from Thailand will also be exempt from customs duties.
The agreement covers a comprehensive list of products from both countries. Once ratified and notified by the parliament, the zero-tariff provisions will take effect, according to MoICE.
