As Bhutan embraces a new era marked by economic development, the announcement made by His Majesty on the 116th National Day, declaring the establishment of the Gelephu Special Administrative Region (SAR), is a testament to the nation’s commitment to charting a new destiny as a prosperous and developed nation. This visionary initiative aims to create a vibrant economic hub grounded in Bhutanese values, Gross National Happiness (GNH) principles, and spiritual ethos. 

The SAR’s commitment to mindfulness and sustainable business practices sets it apart, ensuring that economic growth benefits not only the city but also the entire nation. The economic benefits of the Gelephu Mindfulness City are manifold. Major investments in public infrastructure, coupled with the influx of foreign investments, will lead to the development, and generate opportunities for the private sector, creating jobs with international salary scales and access to advanced technology and skills. The positive ripple effect of economic growth will extend to all dzongkhags, benefiting farmers and providing niche markets for local products and talents. 

As His Majesty said “the SAR will have the autonomy to formulate laws and policies that are needed. It will have executive autonomy and legal independence.” Thus, Crafting the right legal framework is critical and necessary. 

The aim is to facilitate commerce, not frustrate it. Business-friendly commercial laws are vital. These include company, contract, investment, trust, intellectual property, trade, finance, insolvency, banking, and insurance laws modeled on international standards. Predictable enforcement of agreements and efficient winding up of failed enterprises will give investors’ confidence. Intellectual property protections will also help attract technology-focused businesses.

This autonomy is not only a reflection of Bhutan’s commitment to preserving its unique identity but also a strategic move to attract investors seeking stability, transparency, and a legal framework conducive to business growth. Further, this distinct legal framework will play a pivotal role in mitigating conflicts that may arise as billions of dollars will be invested by multiple investors from across the world. By establishing a self-contained legal structure, Gelephu aims to shield itself from external influences, ensuring the sanctity of its legal processes and the overall business environment.

Investors, both domestic and international, seek assurance that disputes will be resolved impartially and efficiently. A dedicated dispute resolution system within the Gelephu SAR will instill confidence in investors, encouraging them to contribute to the city’s growth without the fear of prolonged legal battles.

This also calls for our legal fraternity and legislatures to contribute towards setting this unique legal mechanism within the region including possible amendments to our current laws. While the project already has explored reputed international law firms to draw up contracts, transactions, trusts, and partnerships as well as to explore how to set up the system there, local expertise from the Bhutanese legal fraternity is equally important. There are already good examples of creating such special zones with unique legal systems around the world. 

This new legal framework, paired with the city’s dedicated commitment to mindfulness and sustainable development, emerges as a cornerstone not only for ensuring economic success but also for crafting a legacy that will benefit Bhutanese generations for centuries to come. As His Majesty personally invests in the project, his visionary leadership underscores the importance of legal innovation in driving the City towards unparalleled success, making it a testament to the enduring progress of Bhutan. As His Majesty said, the success of this city is a shared responsibility.

Sonam Tshering

Lawyer, Thimphu

Disclaimer: The views expressed in this article are author’s own.