Thukten Zangpo

The service sector comprising 81 percent of establishments dominates the country’s industry, according to the Ministry of Industry, Commerce, and Employment’s annual report 2022-23.

There are 25,670 establishments in the service sector out of 31,707 industrial licences as of June this year.

The report stated that the total licences also include industries under construction and some renewed to keep the business active with the intention of starting or re-starting the business in the future.

The production and manufacturing sector accounts for 12 percent or 3,712 licences, followed by 7 percent or 2,325 in the construction sector.

As the country develops, reforms should be introduced to shift workers from low-income agriculture to the high-paying industry sector. Nearly half of the country’s population is currently employed in the agriculture sector.

The industry sector also has the potential for export-oriented growth to boost the economy.

However, the industry’s share of the gross domestic product (GDP) has been declining over the years. According to the National Accounts Statistics, its share of GDP decreased from 9.06 percent in 2021 to 7.51 percent in 2017 and 5.86 percent or Nu 11 billion in 2021.

By categorisation of the size of the industry, the country had 1,366 large and medium industries, 20,603 small industries, and 9,738 cottage-scale industries.

Large industries are companies that have investments of Nu 100 million and above with a minimum of 100 employees. Similarly, the medium industry has an investment size from Nu 10 million to Nu 100 million and employs 20 to 99 people, small-scale with investments between Nu 1 million and Nu 10 million with 5 to 19 employees. While the cottage industry has an investment of less than Nu 1 million with 1 to 4 employees. 

By dzongkhags, Thimphu, Chhukha, Sarpang, and Paro have the highest concentration in the industry.

Thimphu dzongkhag has the highest number of production and manufacturing industries with 950 licences in small scale and 41 on large and medium.

At the same time, Chhukha has the highest number of large and medium-scale production and manufacturing with 86 licences, and Samtse with 61. Gasa and Lhuentse have the least number of manufacturing industries compared to other dzongkhags.

Similarly, Thimphu has the highest number of service industries with 4,249 small-scale licences, 3,001 cottage-scale, and 266 medium and large-scale licences followed by Chhukha and Paro.

About 96 percent of the total active industries are owned by sole proprietors, 3 percent by incorporated companies, and 1 percent by partnerships.

According to the report, eight new projects – six in the service and two in production and manufacturing were approved for licensing between June last year and June this year.

During the same period, 42 new medium and large industries (24 in service and 18 in production and manufacturing) were approved for licensing.

The report also stated that 34 industries importing capital goods (machines and equipment) from India and third countries were recommended for exemption from sales tax and customs duty under the Fiscal Incentive Act of Bhutan 2021 in the fiscal year 2022-23.

At the same time, seven industries were recommended for availing investment allowance, and two companies for tax holidays.

The Department of Industry under the ministry develops and maintains two industrial estates in Bjemina and Pasakha, and four industrial parks in Dhamdum, Motanga, Jigmeling, and Changchey.

Bjemina Industrial Park in Thimphu has an area of 32.759 acres with 34 domestic industries, of which 33 are operational under forest and agro-based, service industry to bricks manufacturer, fabrication works, ceramic, among others.

Pasakha Industrial Estate spread across 146 acres has 37 domestic industries-17 under mineral and chemical-based, 4 under agro-based, one each under service and forest-based, and 14 under ferroalloys, steel, plastic, and pharmaceuticals.

Dhamdum Industrial Park with 166 acres has a capacity to accommodate 44 industries. Currently, 34 industries were allocated plots.

Similarly, Jigmeling Industrial Park with 733 acres has allocated the plot to 45 industries. Motanga Industrial Park across 155.9 acres has space to accommodate 30 industries. As of June this year, 30 plots were allocated, including 12 under mineral and chemical-based, four each under agro and wood-based, and forest and wood-based industry while nine were under another category.

To provide technical facilities to startups and cottage and small industries in the production and manufacturing sector, the Department of Industry has procured the machinery and equipment in 2.44 acres to establish Changchey Industrial Park in Tsirang.