SDF waiver for certain visitors in the pipeline

MoICE minister stressed the need for clear definitions of non-tourist categories related to SDF, such as officials and diplomatic guests

In response to a recent proposal by the private sector to consider waiving the sustainable development fee (SDF) for prospective foreign direct investment (FDI) investors’ feasibility tours, Lyonpo (minister) Karma Dorji, Ministry of Industry, Commerce, and Employment (MoICE) said the proposal is under consideration. However, the minister stressed that there are other issues related to SDF that need to be addressed, including the need for clear definitions of non-tourist categories, such as officials and diplomatic guests. Multi-stakeholder meetings are currently ongoing, involving other ministries and agencies, to discuss the various issues surrounding SDF.

“While MoICE is focused on refining the SDF for established FDI international partners’ spouses and dependents, as well as prospective FDI investors, other agencies are facing challenges related to the SDF for official diplomats, business guests, and others,” Lyonpo Karma said.  The minister stressed that there is a need to categorize and make clear all aspects of SDF to avoid future confusion. “While making the SDF list before, many were left out and not included clearly,” Lyonpo said.

Meanwhile, the Department of Immigration (DoI) released a list of applications for SDF of all categories of foreigners, other than tourists, after the endorsement of the Tourism Levy Act 2022 in October 2022.

According to the list, SDF will be waived for certain foreign worker categories approved by Labour and Immigration, foreigners married to Bhutanese with legitimate children, foreign students (including monks and nuns) enrolled in regular study programs, direct dependents of promoters and investors of established Foreign Direct Investment (FDI) in the country, diplomats and officials of resident missions, Embassies/consulates, uniformed personnel of IMTRAT and DANTAK posted in Bhutan, and their direct dependents, expatriate traders holding valid business and trader cards, their direct dependents, officials of international organizations based in Bhutan, and their direct dependents, and day workers and process workers in the factories and industries in the border towns.

However, the list also states that there will be no waivers of SDF for investors on feasibility visits, participants in meetings, incentives, conferences, and exhibitions (MICE), and official guests of any agency, and Civil Society Organizations (CSO).

Additionally, some concessions exist for exemptions of SDF, such as nationals of Thailand and Switzerland with diplomatic and official passports, nationals of Member States of SAARC issued with SAARC visa exemption stickers, established FDI promoters, casual visitors in the border towns, journalists and media personnel (only if they are invited by the Royal government of Bhutan and on official visits), pilgrims to Gomkora and Hindu pilgrims to Jayanti Mahakal temple near Phuentsholing, volunteers of international organizations based in Bhutan and interns working for licensed agencies in Bhutan, and sports professionals participating in sporting events or on contract with licensed clubs and trainers, etc

However, Lyonpo Karma stated that the Tourism Levy Act of 2022, which increased the SDF to USD 200, is an established act which cannot be changed, reduced or increased.

“We cannot touch the rate, nobody has the right to touch the rate of USD 200 which has been passed by the parliament. However, there is one clause that DoT can use in the SDF,” Lyonpo said.

MOICE is considering the use of certain clauses to refine it. The department of tourism cannot touch the rate of USD 200, but discounts and other factors, such as child tourist definitions, can be discussed and decided upon. This indicates that the SDF for non-tourist guests such as FDI investors, government officials, and diplomats mentioned in the previous list are likely to be waived off or adjusted using the clause.

Additionally, the minister emphasized the importance of FDIs, especially as Bhutan is set to graduate from a least developed country (LDC) to a middle-income country (MIC). Attracting more FDIs is crucial for the country’s economic growth, and the move to MIC status will increase its potential for FDI. Investors are more likely to invest in a developed country, and Bhutan’s free trade agreement with India will be a significant advantage in this regard.

Lyonpo also added that the ongoing multi-stakeholder meetings are crucial in addressing all issues related to SDF in one comprehensive effort, instead of tackling each issue piecemeal.

“The goal is to create a clear and inclusive categorization of all aspects of SDF, including those related to non-tourist categories, to avoid confusion and ensure that the issue does not have to be revisited in the future,” he said.

Lyonpo reiterated that while the government is considering the proposal to waive the SDF for prospective FDI investors’ feasibility tours, he stressed the need for clear definitions of all aspects of SDF, including those related to non-tourist categories. The minister emphasized the importance of FDI, especially as Bhutan is set to graduate from LDC to MIC status, and how attracting more FDIs will be essential for the country’s economic growth. The ongoing multi-stakeholder meetings will be critical in creating a comprehensive and inclusive categorization of all aspects of SDF.

Tshering Pelden from Thimphu