Bhutan’s Capital Market remains underdeveloped with only 18 listed companies and low public participation
The Ministry of Industry, Commerce, and Employment (MoICE) is aiming to increase private sector investment from 40% to 60% of Bhutan’s Gross Domestic Product (GDP) within the next five years, with a significant shift towards becoming a high-income Gross National Happiness (GNH) economy by 2034.
According to the Ministry, the private sector in Bhutan faces numerous challenges that hinder its growth. MoICE has highlighted limited access to finance, particularly for small and medium-sized enterprises (SMEs) and start-ups, as a critical issue. The Ministry also acknowledged that Bhutan’s capital market remains underdeveloped, with only 18 listed companies and low public participation.
The Ministry further emphasized that regulations, administrative barriers, and a lack of skilled labor have restricted private sector expansion. Overlapping and, at times, contradictory policies and licensing processes have discouraged both domestic and foreign investments.
Additionally, the Ministry noted that business start-up procedures, licensing requirements, and compliance burdens are particularly cumbersome for new and small businesses. Bhutan’s small domestic market has limited economies of scale, while export potential is constrained by logistical bottlenecks, lack of trade facilitation infrastructure (such as dry ports and industrial parks), and non-tariff barriers, among other factors.
Namgyal Dorji, Minister for Industry, Commerce, and Employment, said, “The current financial ecosystem relies heavily on collateral, which discourages innovation and risk-taking.”
To address these challenges, the Ministry has outlined various strategies aligned with the country’s 13th Five Year Plan (FYP) and the 21st Century Economic Roadmap.
“Key initiatives include creating a world-class business environment through a one-stop service center, enhancing access to finance with tailored financial products, and developing an SME master plan within the next two years,” the Minister stated.
The Ministry also plans to strengthen market access and trade facilitation by developing logistics hubs and industrial parks, promoting ‘Brand Bhutan,’ and facilitating trade agreements.
The Minister further explained that the Ministry will review and streamline regulations across energy, mining, tourism, trade, and Foreign Direct Investment (FDI) policies. The use of regulatory sandboxes will help foster innovation and simplify licensing, among other measures.
Moreover, the Ministry intends to launch investment promotion campaigns aimed at attracting foreign direct investment (FDI) in crucial sectors like renewable energy, high-value tourism, technology services, and organic agribusiness.
To promote private sector growth, the Ministry plans to encourage more companies to list on the stock exchange, deepen the capital market, and promote alternative financing options such as venture capital and private equity.
The Ministry also aims to ensure that procurement policies favor local businesses, boosting demand for private sector goods and services, while promoting Public-Private Partnerships (PPPs) for large infrastructure projects. This will allow private investment in public services such as industrial parks and tourism infrastructure.
Additionally, the Ministry highlighted plans to provide training in leadership, management, and business innovation, especially for youth and women entrepreneurs.
“Through these targeted strategies, we aim to unlock the potential of our private sector, ultimately transforming it into the engine of economic growth,” the Minister said.
The MoICE’s goal is to unlock private sector dynamism and drive investment from 40% to 60% of GDP within the next five years. By creating a conducive policy environment, improving access to finance, opening new markets, and empowering entrepreneurship, the Ministry is positioning the private sector as Bhutan’s engine of economic transformation. This will enable the country to achieve its ambitious goal of a USD 5 billion economy by 2029.
Sherab Dorji from Thimphu
