Bhutan’s government is optimistic about attracting Nu 500 billion in foreign direct investment (FDI) by 2029, driven by increasing investments in sectors like hydropower and the ambitious Gelephu Mindfulness City (GMC) project. While the government aims for an annual growth of 5% in FDI, achieving the target by 2029 will require continued efforts, especially in diversifying investments beyond hydropower.
In 2024 alone, the government approved 17 new FDI projects worth Nu 15.96 billion, bringing the total value of approved projects to Nu 60.84 billion. However, some projects have withdrawn, highlighting the challenges of sustaining investor confidence.
To address these challenges, the government established the Economic Development Board (EDB) last year, aiming to streamline the investment process by cutting through bureaucratic red tape. Finance Minister Lekey Dorji highlighted that hydropower remains the dominant source of FDI, with major projects like the 1,125 MW Dorjilung hydropower project attracting significant private investment interest. The project is expected to cost USD 1.4 billion, with the government in discussions with the World Bank for financing support.
Despite the focus on hydropower, the government is committed to expanding Bhutan’s economic base to include sectors such as manufacturing, technology, tourism, agribusiness, and financial services. Efforts to make the country more investment-friendly include reviewing the FDI policy, with potential reforms such as extending land lease periods from 30 to 60 years, and addressing key regulatory barriers.
Deregulation remains a top priority, with 100 out of 221 identified business policy issues already resolved. In addition, the government has undertaken promotional efforts in countries like Thailand, India, and Australia, with future plans to target markets in Singapore, Vietnam, and Malaysia.
Although FDI inflows have been modest, Bhutan’s government is focused on strategic reforms that can enhance the country’s investment climate and ensure long-term economic growth. The challenge remains to balance foreign investment with the protection of local businesses, while creating a competitive and diverse economy that attracts global investors without disrupting domestic industries.
By aligning fiscal and monetary policies with globally competitive markets, Bhutan is poised to emerge as a key investment hub in South Asia, aiming for a sustainable and inclusive economic future.
