Asia Dominates the Investment Landscape for FDI in the Country
In a significant boost to the country’s economic landscape, the Department of Industry (DoI) under the Ministry of Industry and Commerce (MoICE) has approved 17 new Foreign Direct Investment (FDI) projects worth approximately Nu. 15.9 billion (B) in 2024.
According to the department, this marks a notable increase in both the number and value of FDI projects, which are anticipated to enhance the nation’s manufacturing and service sectors.
The FDI Annual Report 2024 from the department indicates that a total of 121 FDI projects have been approved, reflecting substantial growth compared to 108 projects in 2023. The 2024 approvals include six projects in the manufacturing sector and 11 in services. However, the year also witnessed the withdrawal of four FDI projects, comprising one in services and three in production and manufacturing.
Meanwhile, Asia continues to be the predominant source of foreign investments in Bhutan, accounting for 58% of all approved projects. Investors from America contribute 23.5%, while those from Europe make up 12.9% of the total.
Among the Asian investors, India stands out as the leading source of foreign investment, holding a substantial 55% share. This is followed by Singapore and Thailand, with 15% and 11%, respectively.
According to the FDI Annual Report 2024, the hotel sector remains the top sector for FDI, with 42 projects, followed by IT and IT-enabled services (IT/ITES) with 28 projects, Agro/Dairy with 11 projects, Power-intensive Manufacturing with 9 projects, Others with 9 projects, Financial Services with 7 projects, Building Materials with 5 projects, Pharmaceuticals with 4 projects, TVET with 2 projects, and Gases and Hydropower-related with 2 projects each.
As of 2024, the FDI landscape continues to showcase resilience and evolving dynamics, with the hotel sector leading the charge. A recent report reveals that the hotel industry attracted 34.7% of the total FDI, translating to 42 projects, which marks a slight decline from 34.9% in 2023. The IT/ITES sector followed closely, accounting for 23.14%, with 28 projects, reflecting an increase from 21.7% in the previous year.
One notable trend is the decreasing share of power-intensive manufacturing within the FDI portfolio, which fell from 8.5% in 2023 to 7.4% in 2024. The service sector continues to dominate overall FDI, comprising 65.2% of the total, although this has seen a decrease of 2% compared to last year.
The total value of approved FDI projects stands at Nu 60.841B as of 2024. Approximately 80.33% of these projects are categorized within the priority sector, emphasizing a strong focus on essential industries. Geographically, Thimphu, Paro, and Chukha Dzongkhags are the primary locations for these investments.
During 2024, 16 FDI projects received Registration Certificates, with seven projects approved, including three in manufacturing and four in the service sector. An additional nine projects are currently navigating various stages of approval, according to the department.
For instance, a total of 4,366 Bhutanese were directly employed by the reported FDI projects as of December 2024. Of this workforce, 56% (2,460 individuals) are male, while 44% (1,906 individuals) are female.
As of 2024, the hotel services sector has generated the most jobs for Bhutanese, with a 34.6% share of total employment. Employment in the financial and IT/ITES sectors has slightly declined compared to 2023. However, the year saw an increase in employment in the hotel, other manufacturing, and services sectors in 2024.
Similarly, the department highlighted a tax contribution of about Nu 2B from reported FDI companies for the income year 2023. This contribution has increased by 37.38% from the contribution recorded for the income year 2022, which was about Nu 1B. The figure is compiled from the survey and includes taxes such as salary tax, customs duties, corporate tax, and more.
An industry expert observed that the upward trend in FDI approvals bodes well for accelerated economic development and diversification of Bhutan’s investment portfolio.
“The continued interest from Asian investors, especially from India, reflects Bhutan’s attractive investment climate,” said the expert.
Sherab Dorji from Thimphu
