RGoB's revised FDI Policy
Bhutan came up with a Foreign Direct Investment (FDI) on 21 May 2010. It focuses on clean and green business areas based on Gross National Happiness (GNH) principles. These include the promotion of investment in services that promote Brand Bhutan, promotion of socially responsible, culturally and spiritually sensitive and ecologically sound industries and creation of a knowledge society. The revised FDI policy will help achieve objectives set out in the RGoB’s recently released Economic Development Policy (EDP) like economic self reliance by 2020 and full employment.
The policy outlines three schedules or lists showing the priority and non-priority areas of FDI investment for the government in both manufacturing and services. The priority sector services listed in schedule one and two will be fast tracked for approval while schedule three are areas where no FDI will be allowed. All other areas not mentioned in the three schedules will be open to a maximum FDI of 74% with a minimum project cost of Nu 50mn for manufacturing and Nu 25mn for services. High-end education, specialized health services, information technology, five star hotels, infrastructure, tunnels, highways, industrial estates, SEZ, dry port, land reclamation, knowledge cities, wellness centers, sports facilities, waste management and urban water supply and open to 100% FDI, and production and manufacturing areas of agro based industries like organic farming, dairy, food processing, water based products, forest based products, manufacturing of electronics, electrical, computer hardware and construction and building materials are open to 74% FDI.
Following are additional features of the FDI policy:
• FDI businesses will be allowed to own land and local partners will be allowed to use land as their equity contribution.
• An FDI company will be defined as one that has a minimum of 20% foreign equity.
• FDI Investment will have to be made in convertible currencies like dollars, pounds etc. However, in some cases exceptions can be made in case of bilateral agreements like an Indian company bringing in rupee currency into an FDI venture.
Bhutan has introduced Foreign Direct Investment Policy in 1997 opening up services and manufacturing sector to foreign investors. RGoB’s current FDI policy was drafted in 2002 and operationalised in 2005 but it was restrictive since Bhutan was just opening up and wanted to be cautious.
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