The manufacturing sector is back in focus as the government plans to more than double its contribution to the gross domestic product by 2029.
The sector’s share of gross domestic product (GDP) has been declining from 8.93 percent or Nu 6.32 billion (B) in 2010 to 5.86 percent or Nu 11B in 2021.
As Bhutan aims to double the country’s GDP from USD 2.5B to 5B by 2029, the government plans to increase the GDP share from the manufacturing sector from about 6 percent to 15 percent by 2029.
Minister of Industry, Commerce and Employment, Karma Dorji said that the government has been supporting the development of the industrial parks.
Five industrial parks are being developed. Pasakha industrial park is being developed in an area of 161 acres, 32 acres in Jemina, 349 acres in Dhamdum, 33 acres in Jigmeling, and 155 acres in Motanga.
Lyonpo said that some industrial parks are not able to start as they require huge costs for the development of large industries and 10 big ferrosilicon industries are on hold in Jigmeling, Gelephu, because of the city project to start soon.
He added that the government will also start 226 acres and 300 acres of industrial park development in Samtse.
Lyonpo said that the country’s manufacturing sector is mostly export-oriented which requires multi-model transport including transit routes and waterways.
“We have trade agreements with India and Bangladesh and will sign soon with Nepal and Thailand.
He added that accession to the World Trade Organisation will open up trade with 164 countries from already with 105 countries.
To meet the standards of the exported goods to the international level, Lyonpo said that the government has earmarked Nu 100 million in 13th Plan.
For ease of doing business, Lyonpo said that the government has come up with an integrated business licensing system which will be implemented in June this year. “With the system, all licensing, clearances among others will be brought under one window.”
He added that the earlier many rules and guidelines to do business are also merged under one trade and industry rules and regulations.
The government has come up with a platform for online business processing including payments and documentation which could be accessible from bhutan.eregulations.org, Lyonpo said.
Once the country joins the WTO, more FDIs are expected, he said, adding that the government is reviewing the FDI policy and developing the FDI strategy.
Since the opening of the FDI in the country’s implementation of FDI policy in 2005, Bhutan registered 101 FDI projects worth Nu 43.62B as of 2022.
However, the government plans to more than double the FDI inflows to Nu 100B by 2029.
As a transformative initiative, the Department of Industry is exploring ways to come up with the silicon chips industry in the country, Lyonpo said.
“The upcoming railway link and international airport in Gelephu, and new Drukair cargo flights will help the industry in supply chain and logistics,” he said, adding that the government is also providing fiscal incentives to the manufacturing and industry.
Prime Minister Dr Lotay Tshering said that one of the hurdles for the private sector growth in the country is because of the country’s sparse population and low economies of scale.
He added that easily available cheap goods across the border are an unavoidable threat to the future growth of the private sector. “Borrowing rates are also one of the highest in the country.”
On state-owned enterprises (SOEs) competing with the private sector, Lyonchhen said that the government has asked the SOEs to meet their recurrent expenditure from the profits.
He added that the government will provide only credit facilities including a sovereign guarantee to all SOEs but not subsidies.
According to the Asian Development Bank, the government needs to attract the private sector as a partner and investor in economic development, diversify the economy beyond hydropower, and reduce the oversized role played by the public sector.