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PRESS RELEASE September 22, 2017

Bhutan’s Private Sector Can Create More and Better Jobs—World Bank Report

Thimphu, September 22, 2017 –Reforms that encourage Bhutanese firms to enter new markets and develop premium products can accelerate economic development, according to a new study released by the World Bank Group today.

The 2017 Investment Climate Assessment (ICA), which surveys 130 hundred Bhutanese firms, reveals that employment remains concentrated in agriculture and the public sector, and that many firms are struggling to grow due to obstacles that hinder investment, productivity, and international trade.

Bhutan has achieved rapid economic growth and poverty reduction through sound macroeconomic policies and investments in hydropower” said Qimiao Fan, World Bank Country Director for Bhutan. “However, youth unemployment remains high, especially in urban areas. To create jobs, the Royal Government of Bhutan, with support from its development partners, can help the private sector take advantage of opportunities to develop new products and services,” said Fan.

The ICA concludes that export of services and marketing of specialized products can play an important role in Bhutan, given that it is a landlocked country with a small domestic market. Bhutan’s fledgling ICT industry is one example of a sector that is starting to attract investors and has potential to create high-value exports and high-wage employment. Agribusiness is another sector with untapped potential where producers could benefit from Bhutan’s unique reputation to command a premium in high-value export markets.

“The 2017 Investment Climate Assessment provides a strong basis for us to undertake the next level of reforms to further strengthen competitiveness of the private sector and ensure the sustainable and equitable development of the economy,” said His Excellency Lyonpo Lekey Dorji, the Royal Government of Bhutan’s Minister for Economic Affairs.

While the report notes the success of recent reforms in improving Bhutan’s investment climate, it also finds that firms have limited access to finance and the lack of skilled labor undermines efforts to increase productivity and attract investment. It also finds that the access of firms to domestic and international markets is further limited by deficiencies in transport, logistics, customs procedures, marketing, and policies to encourage competition. 

The ICA recommends a series of reforms to improve private sector’s competitiveness and spur the development of high-value products and services. Specific reforms prioritized by the report include modifications to financial sector regulations to improve access to credit, relaxation of barriers to high-skilled migration, reducing the compensation gap between the private and public sectors, coupled with improvements to border processing, transport infrastructure, while encouraging Foreign Direct Investment (FDI) and scaling up ‘Brand Bhutan’ promotions.


Yoichiro Ishihara
Joe Qian