THIMPHU, October 31, 2018—Bhutan’s ranking slipped to 81st from 75th in the just released 2019 edition of the World Bank’s Doing Business Report due to the slower pace of reforms compared to those undertaken in other countries. Bhutan now ranks second in the region after India and further reforms are needed to make it easier for businesses to open and grow.
Bhutan’s gains in previous years were not replicated this year: its Doing Business score of 66.08 out of a potential 100 remains almost unchanged from the previous year’s score of 65.88. Bhutan still has a gap between its regulatory environment and global best practices especially in terms of protecting minority investors and the process of starting a business.
“Bhutan is still one of the top two performing economies in South Asia in the latest edition of the Doing Business report. Over the last year, Bhutan made paying taxes easier by introducing an online platform for filing corporate personal income tax returns. However, the country will need to accelerate its reform momentum to further improve the environment for private sector development,” said Yoichiro Ishihara, the World Bank’s Bhutan Resident Representative and Senior Country Economist.
Bhutan has recently focused on legislative and institutional reforms to improve the investment environment through simplifying regulations that will take some time to be reflected in international rankings, including the Doing Business report. However, deeper and more substantial reforms will be necessary to show major improvements especially in the areas related to access to credit, access to market and access to skilled labor as identified in the 2016 Investment Climate Assessment.
Bhutan’s efforts to reform its business environment are supported by a World Bank Development Policy Credit series. The First Fiscal Management and Private Sector Employment Opportunities, approved by the World Bank Board in March 2018 is the first of three operations to support Bhutan’s current and future Five-Year Plans’ goals. Among other things, it strengthens policies to improve fiscal management and promotes private sector employment opportunities such as the amendment to Credit Information Bureau Rules and Regulations in 2017.