Bhutan turns to Public-Private Partnerships (PPP) to overcome health sector challenges, as Asian Development Bank (ADB) says private sector could hold the key to Bhutan’s healthcare future
In light of growing concerns over healthcare workforce shortages and limited public funding, the Asian Development Bank (ADB) has committed to supporting the Royal Government of Bhutan in exploring Public-Private Partnership (PPP) opportunities in the country’s health sector. This initiative falls under the broader Bhutan Country Partnership Strategy (2024–2028), which also includes PPP prospects in power and waste management sectors.
An official from ADB emphasized that PPPs could serve as a viable tool to bridge critical gaps in Bhutan’s healthcare system, particularly the acute shortage of trained healthcare professionals. Through regulated participation of the private sector, PPPs can facilitate the recruitment of expatriate medical personnel and help establish training institutions to build local capacity.
“Globally, PPPs in the health sector have improved efficiency and expanded access to healthcare services. By combining public oversight with private innovation and investment, these partnerships can help Bhutan make fuller use of human resources, especially where public systems fall short,” the official explained.
Beyond human resource development, PPPs can introduce advanced technologies and modern management practices to enhance the quality and efficiency of healthcare delivery. This model has been successful in many countries where governments face similar constraints in delivering health services amid rising expectations and fiscal limitations.
Bhutan currently allocates around 3.5% to 4% of its GDP to healthcare, almost entirely funded through government revenue. ADB suggests that leveraging private investment through PPPs could help diversify funding sources, reduce the financial burden on the state, and ensure more sustainable development financing.
While Bhutan has made significant strides by establishing a national PPP policy, creating a PPP Agency, and initiating institutional capacity-building programs, the country still faces several challenges. Chief among them are limited technical expertise and practical experience in developing, structuring, and managing PPP projects.
“Bhutan is on the right path, but additional efforts are needed to build institutional strength and technical capacity. Continued engagement with international experts and targeted training will be essential,” the ADB official noted.
ADB emphasized that successful PPPs require more than policy intent, they demand strong institutions, robust legal frameworks, and investor confidence built on transparency and fairness. To that end, Bhutan is encouraged to prioritize value-for-money criteria in project selection and ensure transparent procurement processes to mitigate fiscal risks and build public trust.
PPP project selection should focus not merely on cost, but on long-term value, sustainability, and public impact. According to ADB, governments must consider financial and social returns, choosing PPPs that maximize societal value, even if initial costs are higher than conventional models.
However, the official also highlighted potential risks, like fiscal risks from guarantees or subsidies for non-profitable but socially valuable projects, contractual and design issues due to lack of technical knowledge, stakeholder misunderstandings resulting from low awareness of PPP mechanisms and, legal and regulatory gaps, which may raise transaction costs or increase uncertainty.
To mitigate these, Bhutan’s PPP policy emphasizes fiscal responsibility, transparency, stakeholder safeguards, and support for essential services that may not attract private investment on commercial terms.
The government has identified energy and waste management as other priority sectors where PPPs could be impactful. For instance, PPPs can facilitate waste-to-energy projects or improve urban waste handling systems through private sector expertise and investment.
ADB noted that Bhutan’s efforts align with global best practices in infrastructure development, especially in emerging economies. “PPP is not just a funding tool, it’s a long-term partnership between public and private actors to deliver socio-economic goods and services efficiently,” said the official. “In Bhutan’s case, it offers a practical and strategic avenue for transforming service delivery while ensuring financial sustainability.”
Meanwhile, as Bhutan cautiously embraces PPPs, ADB continues to play a pivotal role in helping the country build strong foundations for their success. With a combination of policy support, technical assistance, and international collaboration, PPPs may soon become a central pillar in Bhutan’s evolving development strategy, especially in sectors where urgency, innovation, and investment intersect.
Nidup Lhamo from Thimphu
