FDI in Bhutan (2021-2022)

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FDI is received mostly from Asia with 64 percent. India remains the major source of investment in Bhutan within Asia with 47 percent followed by Singapore (19 percent) and Thailand (11 percent).As of 31st December 2020, there are 92 FDI projects worth Nu. 37,134.600 million
including 10 new projects worth Nu. 3,527.420 million approved during the year 2020. Unlike the previous years, the year 2020 saw only one project in the Hotel Industry.The Manufacturing of Ferro Alloys and IT are the most attractive sectors for FDI in 2020 with three projects each in the sectors. With the inclusion of these 10 new projects, share of hotel to the overall FDI projects has dropped from 42 percent in 2019 to 39 percent in 2020 and that of IT/ITES has increased from 19 percent in 2019 to 21 percent in 2020. On an overall, service sector dominates FDI in Bhutan with 70 percent share.About 66 percent of FDI projects approved are located in Thimphu, Paro, and Chukha with the highest number (38 percent) in Thimphu. Further, 44 percent of the FDI projects in the manufacturing sector are located within the industrial estates/parks with the highest (42 percent) being in Pasakha Industrial Estate followed by Jigmeling Industrial Park (25 percent).
FDI is expected to transfer technological knowhow within the economy, which is expected to enhance productivity and generate gainful employment in the long run. As per the FDI Annual Report 2020, the FDI companies employed a total of 5,752 employees (local & expatriate) in 2019 up from 5,307 employees in 2018, an increase of about 8 percent from the previous year. FDI companies employed a total of 183 regular foreign workers, which is 3.9 percent of total regular employees in the companies. For every single expat working in the country, there are 25 locals employed.
As per the report, capital inflow from foreign investors was mostly received in convertible currency during the year 2019. An amount of USD 22.980 million was received which is almost the same amount received during the previous year. However, Indian investors’ inflow was recorded at INR 766.380 million, three times the inflow received in the year 2018.While FDI in the service sector particularly in the hotels contribute immensely in building the foreign exchange reserve, FDI in the manufacturing sector also contributes a significant share toward the goods export basket. In total, 10 FDI
projects in the manufacturing sector have exported goods worth Nu. 3,700 million of which Nu. 3,600 million is to India and the remaining to other countries. Exports during the year 2019 have declined as compared to the previous year. The decline is the drop in the number of manufacturing projects with the conversion of 2 FDI projects to domestic projects. This export figure also excludes the export of electricity by Dagachhu Hydropower Corporation Limited, an FDI project.