Ranking: Bhutan has scored poorly in the competitiveness index coming 105th out of the 140 economies compared for the global index that compares how business friendly an economy is. This is a drop of two places from last year.

The global competitiveness index measured by the world economic forum assesses the competitiveness of economies, providing insight into the drivers of their productivity and prosperity. Similar to the ease of doing business index, the global competitiveness index also measures how easy it is to set up businesses in an economy.

Bhutan however fared better than Pakistan, Bangladesh and several African countries. Nepal jumped to 100th place from 102 last year after leaping 15 places from where it stood in 2013.

The country scored 90th position, in the basic requirement criteria like infrastructure, institution, macro economic environment and health and education. In the area of innovation, Bhutan was ranked 105 and 116 for efficiency.

The World Economic Forum has classified Bhutan as an economy in transition from factor driven to efficiency driven along with 15 other economies. Algeria, Vietnam, Iran, Kuwait, Mongolia, Philippines and Saudi Arabia are some countries in the group.


The factor driven category hinges on well functioning of public-private institutions, infrastructure and healthy work force among others. As economies get upgraded to efficiency driven, productivity and wages are supposed increase. The measure in this category will include higher education and training, efficient market, financial market and technology. The third and the last stage is innovation driven.

Officials from the economic affairs ministry said they are yet to go through the report and that comments at this stage would be inappropriate. However, a task force is formed to bring up Bhutan’s ranking on ease of doing business to top 100 this year. Better Business council was also instituted chaired by the Prime Minister to address the barriers to do business, achieve competitiveness and promote investment.

As per the report, some of the most problematic factors for doing business in Bhutan are access to finance, foreign currency regulation, restrictive labour rules, inadequate infrastructure and educated workforce and inefficient bureaucracy, among others.

No countries from the South Asian Association for Regional Cooperation (SAARC) features in the top 50. India is ranked 55th, followed by Sir Lank at 68th. Rest of the SAARC countries are placed below 100.

The report states that despite the region’s dynamism, it faces many challenges. Investment has not kept up with rapid growth leading to infrastructure deficit, for instance. Uptake of technology has been low across the region, while innovation capacity remained limited.

Among the 100 or so indicators classified under 12 pillars, Bhutan is ranked 27th when it comes to public trust in politician. This however is also a drop of three places from last year. Bhutan stands in top 15 in the area of wastefulness of government expenditure. However it is ranked 90th for strength of investors’ protection. Last year Bhutan ranked 117 for this indicator.

In at least seven of the 12 pillars, Bhutan’s rank was below 100. In terms of market size, Bhutan is placed 136. Of more than 100 indicators, Bhutan’s position is below 100 in at least 38 indicators.

The country fared relatively well in terms of labour market efficiency standing in 23rd place. Indicators under this pillar are country’s capacity to retain talent, where Bhutan ranked 37 and 58 to attract talent.

While measuring the impact of tuberculosis on business, the country ranked 109 but in terms of HIV prevalence as a percent of adult population, Bhutan comes in first position, meaning the least HIV prevalent country.

Technology, quality of scientific research institution, spending on research and design, value chain, university-industry collaboration are some of the areas where Bhutan performed poorly.

The country stands just one place above the rock bottom for trade tariffs and prevalence of foreign ownership.

In a high-level workshop on improving national competitiveness organised by the Asian Development Bank (ADB) last year, the former trade minister of South Korea, Taeho Bark, suggested that the country should diversify its sources by facilitating multi-lateral trade.  This was because he pointed that Bhutan’s economy is open yet closed because of its over dependence on India.

By doing so, he said, the country could gain much from the open market.  For instance, it might reduce tariff and other cost of imported goods and services, while exploring new market for domestic produce.

Another frail feature of Bhutan’s trade system, he pointed was the lack of infrastructure for trade and a weak trade policy.

Digitalisation, he said, was absolutely necessary to simplify the procedures and overcome red tapes.

Tshering Dorji


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