The government has introduced a series of policy, financial and regulatory reforms aimed at increasing private sector investment, as it works towards its pledge of raising private sector participation in the economy from 40 percent to 60 percent over five years.
More than two years into its tenure, the Ministry of Industry, Commerce and Employment (MoICE) says the government has focused on removing regulatory barriers, improving access to finance, attracting foreign investors and creating markets for domestic businesses.
During the recent Meet the Press, Ministry Secretary Tashi Wangmo highlighted several initiatives undertaken to strengthen the private sector.
A major reform was the introduction of the Foreign Direct Investment (FDI) Rules and Regulations 2025 on August 8, 2025, which eased foreign-currency access, removed the lock-in period, lowered minimum foreign ownership requirements and simplified investment in existing and downstream businesses, as well as visa and work permit procedures. Defined turnaround times for project approvals were also introduced to make the process more predictable.
The government also revoked the 2004 hard-currency approval rules in March 2026, removing the annual USD 50,000 foreign-currency limit for CSIs and the requirement for medium and large domestic industries to earn foreign currency through exports.
Meanwhile, the Integrated Business Licensing Service (IBLS) has been fully implemented, enabling businesses to complete licensing and registration services online. Authority over industrial-park leases has also been delegated back to the Department of Industry to reduce administrative delays.
On the financial front, approximately Nu 3.3 billion has been disbursed as concessional loans under the Economic Stimulus Programme (ESP) to support businesses, start-ups and cottage and small industries. The government has also introduced contractor liquidity support through bill discounting. Through the Economic Development Board, contracting firms can discount receivables from government agencies to access immediate bank financing and address cash-flow challenges.
The government has further reformed the Environment Restoration Bond requirements for the mining sector. Cash deposits required for environmental restoration can now be submitted through bank guarantees, a move intended to release liquidity into the market.
The government has intensified efforts to connect Bhutanese businesses and investment-ready projects with international investors. The Invest Bhutan Summit 2026 in Thimphu attracted more than 250 participants, including 71 foreign investors, and showcased 26 projects seeking about Nu. 55 billion. The summit resulted in 10 MoUs and two projects securing foreign investment.
Investment roadshows in India, Thailand and Vietnam also attracted investors and promoted Bhutanese projects, while the Invest Bhutan portal was enhanced with integrated business licensing and post-licensing services to make investment facilitation more seamless.
The government has also sought to create markets for domestic producers by restricting nationwide procurement of chain-link fencing to local manufacturers and requiring budgetary agencies to use certified locally produced concrete bricks in public infrastructure projects, helping domestic industries compete with imports.
Industrial infrastructure has also expanded. Dhamdum Industrial Park increased its allotted industries from 44 to 68, reaching 77.5 percent occupancy. Core infrastructure at Norbugang Industrial Park has been completed, while Dantak-funded roads, gabion walls and staff quarters at Phuntshorabtenling Industrial Park are also in place. The government has further identified 148.72 acres at Bokajuli, Samdrup Jongkhar, for a new industrial park, with feasibility studies completed.
The government has also expanded direct support to informal businesses and CSIs.
Revised guidelines introduced in 2024 enabled direct government grants to informal sector businesses. Under the programme, 14 beneficiaries received core machinery and equipment worth up to Nu. 300,000 each in FY 2024–25, followed by 20 beneficiaries in FY 2025–26.
The initiative is aimed at helping informal businesses transition into licensed and formal enterprises.
Meanwhile, the Industrial Development Grant Scheme was revised in August 2025, increasing the cost-sharing equipment procurement ceiling from Nu. 0.3 million to Nu. 0.5 million. During FY 2025–26, 10 manufacturing CSIs received support for equipment upgrades.
Two new aggregated retail outlets, established through public-private partnerships in Samdrup Jongkhar in December 2024 and Bumthang in May 2026, are also intended to improve market access for small producers and help them reach domestic and international markets.
Meanwhile, the reforms and investment initiatives indicate a broad push to improve the business environment, but the key measure of progress towards the PDP government’s 60 percent target will ultimately be the actual increase in private sector investment and the number and scale of investments generated by these interventions.
Sangay Rabten, Thimphu
