The Royal Government of Bhutan (RGoB) is advancing its market diversification strategy beyond traditional trading countries, with recent and upcoming trade initiatives aimed at unlocking new opportunities in Asia and beyond, Vietnam being the newest in the league of the growing catalog of countries.
Officials from the Ministry of Industry, Commerce and Employment (MoICE) shared that Bhutan intends to pursue new bilateral Free Trade Agreements (FTAs) with Vietnam which would help ‘unlock new areas of economic opportunities and diversify the markets’.
Although Bhutan and Vietnam do not currently have a formal bilateral trade agreement, both countries engage under the framework of World Trade Organization (WTO) rules and regional arrangements. Trade volumes, though modest, have been steadily growing. Vietnam’s exports to Bhutan include copper wire, rubber tires, and machinery, while Bhutan exports items such as perfume plants.
While trade between Bhutan and Vietnam remains modest, its trajectory is steadily gaining momentum. In 2024, Vietnam ranked as Bhutan’s 24th largest import partner and 12th in exports. Bhutan’s high-value Cordyceps Sinensis continues to dominate outbound shipments, while imports from Vietnam are largely composed of agricultural machinery parts, power tillers, and harvesting equipment.
Although trade over the past decade has reflected a clear imbalance in Vietnam’s favor, Bhutan achieved a milestone in 2022 by recording its first-ever trade surplus with the country—and sustained it in 2023. In 2022, Bhutan’s exports to Vietnam totaled USD 1.558 million, exceeding imports worth USD 1.199 million. The following year, Bhutan again registered a surplus, albeit modest, of USD 30,915.
Observers note that these emerging trends point toward a gradual rebalancing of trade relations. Bhutanese entrepreneurs, meanwhile, are already gaining footholds in the Vietnamese market with premium products such as Cordyceps Sinensis and Matsutake mushrooms—signaling new opportunities for diversification and growth.
Both governments have expressed interest in deepening economic ties through high-level visits and sectoral cooperation, signaling potential for a stronger economic partnership in the years ahead.
Leaders of the two countries regularly exchange messages of congratulations on each other’s important celebrations. In recent years, the two countries have made efforts to strengthen economic and trade cooperation. Vietnam currently has two investment projects in Bhutan with a total registered capital of 937,000 USD.
Vietnam has consistently valued its relations with Bhutan, regarding it as a pioneer in pursuing green growth and maintaining high “happiness” indicators. Meanwhile, Bhutan considers Vietnam a priority partner for strengthening bilateral relations and is keen to learn from Vietnam’s development experience.
As part of its ongoing market expansion efforts, Bhutan has recently concluded a FTA with Thailand, marking a significant step in strengthening economic ties with Southeast Asia. “In the next phase, the Royal Government of Bhutan (RGoB) intends to renew its existing trade agreement with India,” said an official, while the country is also pursuing a new bilateral FTA with Nepal.
“These agreements are expected to open fresh avenues for Bhutanese exports and reduce reliance on a limited number of markets,” an official from the Ministry said.
At the regional level, Bhutan continues to actively participate in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) Free Trade Area negotiations, which will eventually provide preferential access to the markets of all seven member countries.
At the multilateral level, Bhutan is reviving its WTO accession bid, which would grant Bhutanese products access to more than 160 markets under a global rules-based trading system.
Tashi Namgyal from Thimphu
