MoICE says that the revised FDI rules and regulations 2024 will soon be adopted
With the government aiming to increase Foreign Direct Investment (FDI) from Nu 43 billion to Nu 500 billion in the next five years, the Ministry of Industry, Commerce and Employment (MoICE) has implemented various measures to promote FDI in the country.
An official from the Department of Industry (DoI) under MoICE stated, “The Ministry has reviewed the FDI Policy of 2019, wherein a number of provisions have been proposed to be relaxed, primarily to promote investments in the country. The Revised FDI Rules and Regulations 2024 will be adopted soon.”
Additionally, the official also highlighted that various strategies to attract FDI include the development of a dedicated web portal for one-stop information dissemination on investment opportunities, linking potential local and foreign investors.
The official also shared that the Ministry has streamlined the processes for the registration and approval of FDI in the country.
“We have also been targeting investment promotion through roadshows and the development of strategies,” the official said, adding that the government plans to organize a roadshow in India, inviting the private sector in key target sectors to participate on a cost-sharing basis.
Regarding technology, the official noted that the Ministry has improved access to capital in key sectors, promoting industrial growth through technology integration.
The official also highlighted the enhanced export basket, as FDIs are generally export-oriented, resulting in improved access to foreign markets and increased trade volume for Bhutan.
Furthermore, the Ministry has established an Economic Development Board (EDB), chaired by the Prime Minister (PM), primarily to attract FDI, and has joined the World Association of Investment Promotion Agencies (WAIPA) – the global reference point for FDI.
The official said, “FDI plays a crucial role in economic development by fostering growth, job creation, and technology transfer, ultimately elevating overall economic productivity in the private sector.”
FDI is categorized by company type (Private Limited Companies and Public Limited Companies) in the country. According to the Industry Census 2024, released by the Ministry and covering 50 licensed FDI companies, 90% (or 45 companies) are Private Limited Companies, while Public Limited Companies make up 10% (or 5 companies).
Even though there are about 115 FDI companies in the country as of November this year, the report indicated that some FDIs could not be enumerated because the owners were unavailable during the enumeration phase.
In terms of scale, 40% are large, 36% medium, and 24% small-scale FDIs. Service industries dominate the FDIs, accounting for 70% of the total, with the main concentration of activity in accommodation and food services at 46%.
The prevalence of large-scale FDIs (40%, or 20 FDIs) reflects strong confidence among major investors, suggesting that the market can support extensive and capital-intensive operations, according to the Ministry.
Similarly, there is a substantial presence of medium-scale FDIs (36%, or 18 FDIs), highlighting the market’s appeal to mid-sized companies seeking growth opportunities, followed by small-scale FDIs (24%, or 12 FDIs), which underscores the market’s inclusivity, supporting a variety of business sizes and fostering a dynamic economic environment.
Meanwhile, Thimphu Dzongkhag leads with 58% of FDIs, followed by Chhukha (14%). The market focus is predominantly domestic (72%), with 26% targeting both domestic and international markets. FDI companies spent Nu 1.12 billion on domestic raw materials and Nu 1.07 billion on imported raw materials.
Additionally, two companies received tax exemptions totaling Nu 31.79 million. Major challenges include access to skilled labor (32%), markets (26%), raw materials (22%), and finance (20%). Policy intervention is the top recommendation (68.18%), followed by addressing labor shortages (9.09%).
Sherab Dorji from Thimphu
