..To boost business expansion and development
In response to an executive order issued by the government on January 29, 2024, the Ministry of Industry, Commerce, and Employment (MoICE) has undertaken a comprehensive review of Bhutan’s business regulatory processes. This initiative aims to streamline the entry and exit procedures for businesses, fostering a more conducive environment for business expansion and development.
The review involved collaboration between government and private sector stakeholders, ensuring a thorough understanding and identification of practical solutions to the challenges faced by businesses in Bhutan.
Three main areas were identified for review during the consultations with the private sector: General Economic Development Policies, Business Regulatory Process, and Policy Process and Private Sector Development.
Under General Economic Development Policies, topics such as the Economic Development Policy (EDP) 2016, Foreign Direct Investment (FDI) Policy 2019, Public-Private Partnership (PPP) Policy 2016, National Competition Policy (NCP) 2020, Privatization of State-Owned Enterprises (SOEs), and Cottage and Small Industry (CSI) Policy of 2019 were examined.
The EDP 2016, which guides Bhutan’s economic diversification and prioritizes sectors for growth, highlighted constraints like limited market access, infrastructure challenges, and bureaucratic hurdles. The Ministry emphasized the need for policy recommendations to address these issues, including improving access to finances, streamlining bureaucratic procedures, and strengthening skill development.
The review of the FDI Policy 2019 suggested that the government revise FDI policies to simplify approvals, automate processes for smaller investments, and harmonize tourism policies, among other recommendations aimed at enhancing the investment climate.
For the PPP Policy 2016, recommendations focused on streamlining processes, enhancing financial mechanisms, and expanding markets to overcome challenges such as lengthy processes and difficulty in attracting investors.
The review of the NCP 2020 and SOE privatization acknowledged the challenges posed by the dominance of SOEs and recommended formulating a comprehensive privatization strategy and drafting legislation to ensure transparency in privatization efforts.
In examining the CSI Policy of 2019, the committee recommended enhancing access to finance, promoting economies of scale through cluster-based development, and modernizing technology infrastructure to support small industries.
The review also covered diverse aspects of Bhutan’s business regulatory landscape, including licensing and permit regulations, labor regulations, tax regimes, and contracts and procurement. Recommendations included enacting an Enterprise Registration Act, streamlining tax systems, and simplifying foreign hiring procedures to improve the business environment and promote economic growth.
Throughout the consultations, collaborative efforts between government agencies and the private sector resolved several issues, demonstrating a commitment to fostering constructive dialogue and sustainable development.
The MoICE and other government agencies will monitor and evaluate the implementation of recommendations, with a structured approach that includes an initial baseline assessment, bi-weekly progress reports, stakeholder engagement, and comprehensive impact assessments.
This review marks a significant step towards enhancing Bhutan’s business regulatory framework, aiming to stimulate economic growth and private sector development by identifying existing barriers and proposing actionable recommendations.
By Sherab Dorji, Thimphu
