As of September 2024, inward remittance had already reached Nu 9.94 billion, surpassing the previous year’s Nu 9.56 billion

Thukten Zangpo

For many Bhutanese families, money sent by relatives abroad provides vital financial support, helping them overcome financial challenges. As more Bhutanese study and work overseas, the Royal Monetary Authority (RMA) projects that the country’s inward remittance will surpass Nu 10 billion by the end of 2024.

As of September 2024, inward remittance had already reached Nu 9.94 billion, surpassing the previous year’s total of Nu 9.56 billion. Since 2020, the average annual remittance inflow has been about Nu 8 billion.

In 2020 during the Covid-19 pandemic, the inward remittances increased to Nu 8.27 billion, representing 4.5 percent of the country’s GDP—a spike from Nu 3.03 billion in the previous year. However, in the following years, remittance inflows started to decline.

Among the largest contributors to the inward remittance is the Bhutanese diaspora in Australia, which sends an average of 50 percent of the total annual remittance. This is followed by the United States, contributing about 20 percent, while Kuwait accounts for 10 percent, with other countries filling the remaining 20 percent.

As of September 2023, remittances from Australia amounted to Nu 6.39 billion, more than the total remittance in 2022 (Nu 5.95 billion), representing 64.6 percent of the country’s total inward remittance.

Kuwait recorded an increasing trend in remittance on an average of Nu 780.7 million annually. Qatar and the United Arab Emirates also are also emerging as significant contributors.

A shift in remittance trends

In recent years, the nature of remittances has diversified beyond traditional family support to include loan repayments, real estate investments, education, and medical expenses. This shift reflects a growing trend toward using remittances for more productive purposes.

The proportion of remittances sent to support household needs has decreased from 96.5 percent to 36.2 percent.

Own-account transfers grew from 1.1 percent in 2021 to 40.2 percent last year while loan repayments for housing and construction purposes grew to 10 percent. This was followed by education purposes, with about Nu 200 million received between January and March last year.

Bhutanese living abroad remitted Nu 365.5 million for real estate investment in house construction, home renovation, farm maintenance, and land and vehicle purchases in the last four years. As gifts to family and friends and religious and social donations, annually, Nu 200 to Nu 300 million was wired into the country.

In addition, Nu 36.6 million was remitted for meeting utility and bills and trade payments while Nu 200 million for travel and vacation expenses for individuals and family members.

Outward remittance

With the majority of Indian workers in the housing and construction sectors in the country, 90 percent of the outward remittance destination was India.

In the fiscal year 2023-24, Bhutan employed 151,163 foreign workers, of which 90 percent were from India.

Construction sector accounted for the largest share, exceeding 85 percent, followed by manufacturing 10 percent, and services at 5 percent.

Figures show the outward remittance of Nu 2.9 billion as of September last year, which was two-fold less than the previous year’s Nu 6.5 billion.

For fiscal year 2023-24, the foreign currency outflows for education related expenses was recorded at Nu 23.05 billion. About Nu 22.63 billion was spent by private individuals and the remainder by the government.

Meanwhile, Nu 688.6 million was for medical expenses abroad, with 75.5 percent borne by the government and remaining by private individuals.

Initiatives to encourage inward remittance

With remittance inflow declining from 2020 onwards, the RMA launched a series of initiatives aimed at reversing this trend, including incentivising inward remittances and raising awareness abroad.

The RMA initiated an incentive scheme rate of 1 percent in 2021, which was increased to 2 percent in 2022 and further up to 10 percent in June 2023.

Following this, remittances rebounded sharply, growing by 60.8 percent in 2023. Between June and December 2023 alone, the 10 percent incentive accounted for 70 percent of the total remittance for the year, amounting to Nu 7.42 billion.

The 3 percent growth in remittance to Nu 9.92 billion from January to March last year was because of sensitisation on remittances and various products and deposit accounts facilitated by the banks and the RMA.

In addition, in January last year, the central bank updated the Foreign Exchange Rules and Regulations and the Inward Remittance Rules and Regulations to facilitate inward remittance.

In October 2023, financial institutions launched the Bhutanese Living Abroad Investment Initiative, offering exclusive investment opportunities and enhanced remittance channels. The initiative included the revamping of the RemitBhutan portal, the introduction of higher interest-bearing foreign currency accounts, and direct trading in the capital market through the Royal Securities Exchange of Bhutan’s MCams App.

This was followed by introduction of three specialised accounts for Bhutanese abroad—Bhutanese Living Abroad Foreign Currency Account, Bhutanese Living Abroad Ngultrum Account, and Bhutanese Living Abroad Investment Account.

As of September, 2, 498 foreign currency accounts were opened by the Bhutanese abroad.

Approximately 62,000 Bhutanese, especially youth, live across 112 countries. The largest community is in Australia with 35,000 and over 3, 500 in Kuwait.