Thinley Namgay
To create a business-friendly environment in the country and improve the economy, reforms in laws, policies, and regulations are crucial.
One of the major concerns for relevant stakeholders in business is the wide range of laws and government regulations that pose obstacles rather than facilitate growth.
On December 17, during the National Day celebrations, His Majesty the King emphasised that laws are the foundation of order, security, prosperity, and social harmony.
“However, many countries face challenges due to an overabundance of laws, poor public understanding, and weak enforcement. This burdens the people and stifles innovation and enterprise,” His Majesty said.
His Majesty stated that in Bhutan, laws, particularly those affecting the economy, must be enacted swiftly and amended when necessary to create an agile, responsive legal system that fosters progress rather than impedes it. “Such a system will be essential to ensure the smooth convergence of the GMC with the rest of Bhutan. Our goal is to establish one of the best legal systems in the world within the next 10 years.”
The President of the Bhutan Chamber of Commerce and Industry (BCCI), Tandy Wangchuk, highlighted that there were thousands of regulatory policies in the country “The number has to be further reduced significantly,” he said.
He is optimistic about the revision of Foreign Direct Investment (FDI) policies by the government, which is expected to benefit the private sector.
Tandy Wangchuk said that the all nine ministries should understand how the private sector operates and frame appropriate rules and regulations to support it.
He also pointed out that although Parliament frames laws for the country, parliamentarians often leave the formulation of rules and regulations to civil servants, which causes numerous problems.
“Most civil servants don’t understand how the private sector functions and create rules and regulations at their convenience. Parliamentarians, civil servants, and the private sector should consult each other and frame rules and regulations to achieve a better impact,” Tandy Wangchuk said.
He added that civil servants should view the private sector positively, rather than as competitors to the government.
He said, by way of example, Bhutan imports charcoal worth Nu 5 billion from India annually, even though existing laws allow Bhutanese companies to produce charcoal domestically. “However, foresters are reluctant to issue the required clearances. Private sectors are asked to buy timber from NRDCL to produce charcoal, which is not profitable.”
He also emphasised the need for practical rules and regulations to encourage private sector participation in bulk rice cultivation to reduce rice imports. He suggested that more private sector entities should be allowed to venture into hydropower projects.
Representatives from startups and small businesses highlighted the need for good financial policies to improve the ease of doing business. They called for better access to finance, and reduced loan interest rates.
They noted that Bhutan’s loan interest rates are among the highest in the world, which benefits banks but makes it difficult for small businesses to survive.
Entrepreneurs also struggle with high collateral requirements, limited venture capital, lengthy bureaucratic processes, unclear policies, and high taxation.
“Evolving policies often lack the depth to support small and medium enterprises effectively,” an entrepreneur said.
Entrepreneurs also reported that foreign investors are interested in collaborating with local businesses, but unfriendly FDI policies discourage them.
Some entrepreneurs highlighted inconsistencies in the valuation of mortgages across different banks when individuals apply for loans, which creates confusion.
Obtaining small business licences remains a challenge, and Bhutanese products struggle to gain recognition in international markets.
Kinley Yonten, the founder of Entrepreneur Bhutan, noted that making payments for essential imports requires visits to four different agencies: the Royal Monetary Authority, the Department of Revenue and Customs, Department of Trade, and the bank, which is a lengthy process.
“Why can’t we pay directly through a single system?” he asked.
For investors and FDI companies, the primary challenge is the lack of a robust payment gateway, which hinders the seamless flow of money for imports and exports.
However, some foreign investors noted that Bhutan has favorable laws and policies in place.
The chief executive officer of Mountain Hazelnuts, Sean Watson (PhD), said Bhutan offers a stable investment climate characterised by a lack of corruption, low crime rates, clear land titling processes, and an absence of risks such as child labor and deforestation.
He added that Bhutan prioritises maintaining a clean and pristine environment. “Additionally, efforts to improve the private sector and the FDI framework have been bolstered by new regulations introduced by the Royal Monetary Authority, which have clarified rules around capital repatriation, ensuring smooth financial transactions for foreign investors.”
He also said that Bhutan’s commitment to being “open for business” is reflected in these reforms, making it an increasingly attractive destination for sustainable and ethical investments.
