Bhutan is stepping up reforms to create a more predictable, investor-friendly business environment, with the Ministry of Industry, Commerce and Employment (MoICE) announcing a series of policy, regulatory, and institutional measures.
In order to ensure long-term regulatory stability, and to give both domestic and foreign investors greater confidence and predictability, the government is moving forward with a three-pronged approach.
“The upcoming Draft Trade and Investment Bill will reinforce stability and predictability in Bhutan’s investment landscape with its comprehensive legal framework,” the Ministry said.
“While the Foreign Direct Investment (FDI) Rules & Regulations 2025 liberalizes the investment regime by opening more sectors to 100% foreign equity, easing foreign exchange access, removing lock-in periods, and streamlining approval processes; the Industrial Development Roadmap (IDR)-a long-term strategy for 10 priority sectors-will cover policy reforms, infrastructure, skills, markets, and fiscal incentives.”
In streamlining bureaucratic procedures, one of the most significant steps the government has taken is the revision of the FDI Policy 2019 and FDI Regulations 2019, consolidating it into the FDI Rules and Regulations 2025. “The new framework simplifies procedures for foreign investors, making them more transparent and accessible,” said an official from MoICE.
To further ease bureaucratic processes, the Department of Industry (DoI) is working with key sectoral agencies to introduce service charters, which will serve as practical guides for investors navigating approvals and clearances.
A DoI official said, “In parallel, the government is developing an integrated licensing system that will cut down multiple document submissions, enable inter-agency data sharing, and reduce the need for physical office visits—thereby significantly lowering administrative costs for investors.”
Moving beyond rankings and focusing on real reforms, instead of targeting numerical rankings, MoICE has shifted focus to tangible reforms that address real bottlenecks for businesses.
In February 2024, MoICE, in collaboration with the Bhutan Chamber of Commerce and Industry (BCCI) and with support from the European Union’s (EU) Voice for Green Change Partnership (V4GCP) initiative, undertook a comprehensive business regulatory process review. According to MoICE, the review identified challenges faced by businesses and led to concrete actions by government agencies.
“Updates on resolved issues have already been shared with the private sector, while unresolved matters are under continued review. A dedicated monitoring mechanism is in place to ensure accountability and track the impact of reforms,” said the Ministry.
Further, towards tackling the skills gap in the service sector which is ailing with 52% of the workforce lacking the required skills, the government is prioritizing targeted workforce development. “MoICE is working with the Ministry of Education and Skills Development (MoESD), particularly the Department of Workforce Planning and Skills Development and the Bhutan Qualifications and Professional Certification Authority, to address critical mismatches—especially in the tourism and hospitality industry.”
Key initiatives include tourism & hospitality taskforce chaired by MoICE Secretary to design long-term solutions; Youth Engagement and Livelihood Program (YELP) to improve employability through internships, on-job training, and placement support; Overseas Employment Program (OEP) to provide Bhutanese youth with international exposure; and, entrepreneurship ecosystem development, including accelerators, seed funding, bootcamps, and entrepreneurship education in schools.
“While MoICE is spearheading private sector–focused initiatives, skills development programs remain primarily under MoESD, underscoring the importance of inter-ministerial collaboration,” the Ministry stated.
Meanwhile, on the issue of non-tariff barriers (NTBs), although there are not many NTBs that Bhutanese exports are constrained with, MoICE officials clarified that while Bhutanese exporters do face certain technical requirements in overseas markets, these measures are standard regulatory practices applied globally.
“Our major trading partners have been accommodating, and while making concessions takes time, Bhutan’s small export volume and strong diplomatic relations help us negotiate solutions,” an official noted. “In the long run, Bhutan is seeking bilateral agreements for mutual recognition of certifications, harmonization of standards, and customs cooperation to reduce the impact of NTBs.”
“It must be understood that the trade rules of the importing country need to be adhered to and sometimes that includes technical requirements which can be seen as a NTB. But yes, negotiations are consistently being pursued to address some of the NTBs that are being faced by Bhutanese exports in key markets,” said the official.
“Our major trading partners have been very accommodating in this regard and we must take cognizance that the non tariff barriers that are imposed are not just for Bhutan but for the entire world to protect their domestic market and stakeholders interests.”
Officials reiterated that while making concessions for Bhutan takes time, the country manages to address them as the exports of Bhutan are small in addition to having excellent relations with major trading partners.
“In corresponding and as a more long term strategy, we are also pursuing various bilateral agreements to help harmonize standards, streamline customs procedures and for mutual recognition of certifications with our major trading partners. These initiatives will help address some of the non tariff barrier issues that we are currently facing,” the official concluded.
Tashi Namgyal from Thimphu
