Bhutan could prosper as a developed country with this trade pathway

Bhutan, recognized for its happiness quotient, is graduating from the least developed country (LDC) status in December this year. It has also restarted the process of its accession to the World Trade Organization (WTO) after a hiatus of 15 years.

These developments offer opportunities and challenges. At the same time, the government of Bhutan has strongly emphasised trade and investment in its upcoming Five Year National Plan to become a developed country in the next ten years.

There’s much progress Bhutan has already made in creating inclusive and sustainable trade conditions. At the same time, measures are still needed to propel growth and sustain gains for human development.

Among Bhutan’s achievements is a project supported by the Enhanced Integrated Framework at Bhutan’s grading and auctioning centre in Phuentsholing, jointly implemented by the Bhutan Commodity Exchange and Food Corporation of Bhutan Ltd. The project aims to ensure swift grading and auctioning of potatoes, one of Bhutan’s major agricultural exports.

Thanks to machine grading and online auctioning of potatoes, which helps boil down entire transactions in an average of six hours, farmers – used to waiting up to five days for manual grading and physical auctioning – have made significant gains. They save up to $420 per truckload and money associated with being physically present, including hotel costs and time. They also now receive instant payment through a digital system.

The Department of Industry launched an e‑regulation portal for trade, investment and construction-related information and procedures. The single-site portal represented a serious effort to enhance the transparency of investment rules and procedures and is also on the websites of Bhutanese missions and embassies abroad.

Between the portal launch during the COVID-19 pandemic in November 2020 and August 2022, the Department could swiftly approve 104 domestic and foreign direct investment projects worth $365 million.

Encouraging savings and enhancing women’s access to finance have been major challenges to bolster women’s entrepreneurship in the country. However, adopting micro automatic teller machines (ATM) has resulted in a remarkable increase in savings for the beneficiaries, especially in communities with no banking facilities.

Implemented by the Bhutan Association of Women Entrepreneurs (BAOWE), the initiative resulted in increased savings of 145% in the last four years, according to a progress report submitted by the Government to the EIF. On the ground, BAOWE initiates opening individual savings accounts for women. The field representatives regularly perform collection activities to deposit and withdraw the savings using the micro ATMs, as requested by the beneficiaries.

Although the examples above have had a significant impact on beneficiaries, as the country is on the brink of graduation, it needs a transformative approach in the following areas:

Complacency is not an option and policy reform cannot be a one-off agenda, particularly in the context of Bhutan’s graduation and WTO accession. The country should build on its time-tested trade and development agenda that contributes to increasing exports and foreign investment in an inclusive, sustainable and human-centric manner.