The Department of Trade, Ministry of Economic Affairs (MoEA), Royal Government of Bhutan in collaboration with the United Nations Development Programme (UNDP) and Enhanced Integrated Framework (EIF),  launched the Diagnostic Trade Integration Study 2020 on 6 July 2021  in Thimphu, Bhutan.

The Minster for Economic Affairs, Loknath Sharma and UNDP Bhutan Resident Representative Azusa Kubota launched the study with the Executive Director of the Enhanced Integrated Framework (EIF), Dr. Ratnakar Adhikari, joining the event virtually from Geneva, Switzerland.

The EIF National Implementation Unit under the Department of Trade, MoEA in partnership with UNDP Bhutan who supported as the main Implementing Entity, undertook the Diagnostic Trade Integration Study Update (DTISU) in 2020 with financial and technical support from EIF. Bhutan published its first Diagnostic Trade Integration Study (DTIS) in 2012. It has since proved to be an important guiding document for trade policy and other trade-related interventions.

The DTISU 2020 reviews Bhutan’s economic progress since the first DTIS. It assesses the implementation of earlier recommendations, identifies challenges encountered since the last study, and considers the new economic landscape. The DTISU also builds on plans and strategies adopted by the Royal Government in recent years and takes into account Bhutan’s transition from the LDC category by 2023. It provides a clear analysis of the new priorities and challenges ahead for the revival and growth of the Bhutanese economy in the face of COVID-19 crisis.

The report highlights the instrumental role of trade facilitation and trade agreements in creating favorable trading environment, with clear insights into Bhutan’s trade competitiveness factors.  It also examines implications of the country’s impending transition to a middle-income country and the impacts of the pandemic on the economy.

 “Bhutan’s economy has grown steadily since the launch of the first DTIS. However, the economy has been severely disrupted by the COVID-19 pandemic and is likely to take time before it recovers fully. Without timely and appropriate interventions, the disruption will not only derail the economic trajectory, but also impact Bhutan's smooth transition from the least developed to developing country category,” said Minister for Economic Affairs, Loknath Sharma.

“Therefore, the DTISU is a timely intervention as this will not only help and supplement the government’s efforts for economic recovery and smooth graduation from the Least Developed Country (LDC) category but also help in guiding Bhutan’s long-term economic plans geared towards realization of economic self-reliance”

UNDP Resident Representative Azusa Kubota said UNDP sincerely hopes that this study, its recommendations, and its monitoring framework will support Bhutan as it recovers from the COVID-19 pandemic and defines new approaches to the economy and trade.

“The DTISU lays out a comprehensive agenda for action that is relevant to Bhutan’s challenges and opportunities in the wake of the current COVID-19 pandemic, its recovery efforts and long-term economic growth,” she said. 

“This includes specific suggestions for developing the green economy, strengthening youth skills development for the 21st century, enhancing trade-related infrastructure and logistics, developing cottage and small industry (CSI) and increasing their competitiveness, promoting Bhutanese exports and foreign investment into Bhutan, and leveraging digitalization and e-commerce to support inclusive business and trade. These are all fundamental steps for attaining the 2030 Agenda for Sustainable Development.”

EIF Executive Director, Dr. Ratnakar Adhikari said DTISs enable the LDCs to identify trade-related constraints, opportunities and to develop institutional and productive sector capacity-building projects to address them. “Bhutan's export concentration remains high, and hence diversification beyond hydropower in areas such as the services sector and tourism has been highlighted as essential in this DTISU,” he said,

“Constraints on productive capacity and productivity in the domestic market as well as critical skill shortages are particularly highlighted. As a landlocked LDC, improving trade facilitation and infrastructure support in Bhutan will help reduce trade costs. Additional key areas spotlighted by this DTISU include improvements to the business climate and access to finance, the importance of standards and quality infrastructure, and the significance of investment promotion and tourism support services.”

The study covers a wide range of sectors. It reviews trade performance, LDC graduation and accession to World Trade Centre; skills gap, upskilling and women’s and youth employment, trade facilitation, transport and logistics; business climate, CSI development and access to finance; quality infrastructure system; trade diversification; Brand Bhutan, export and investment promotion; tourism support services; and digitalization, e-commerce and industry. The study provides recommendations that can be implemented in the short, medium and long term, and are aligned with Bhutan's 12th Five-Year Plan for each sector.

In addition, it highlights policy considerations in the areas of integration into both regional and multi-lateral trading system.

For media enquiries, please contact:

Mr. Pema Thinley, Senior Trade Officer, Trade Negotiation Division, Department of Trade, Ministry of Economic Affairs, Email: pthinley@moea.gov.bt

Ms. Dechen Wangmo, Communications Analyst, UNDP Bhutan, Mobile: +975 1734 3086, Email: dechen.wangmo@undp.org

Ms. Marie-France Boucher, Communications Officer, Enhanced Integrated Framework (EIF), Email: marie-france.boucher@wto.org.

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