FDI and WTO situation in Bhutan II

By Krishna Prapan Adhikari

In my first blog, I had only given an introduction on the situations that Bhutan was facing with regards to its WTO accession and prospect of bringing in FDI. In this paper I will try to point out the details and provide supplementary data to the subject matter.

Bhutan’s accession to the WTO has waited for 15 years since it got the observer status in 1999. It is still not clear whether Bhutan will seriously consider joining the WTO after its initial efforts were ignored in light of pursuing Gross National Happiness. So, what exactly caused this dilemma? What will Bhutan loose and gain from its accession to the WTO? I would like to relate this to the current global trade structure of Bhutan, the FDI scenario, its fears of the WTO and the possible result to the situation.

Bhutan’s Global Trade

A glance at the statistics on Bhutan’s trade shows that we cannot deny the importance India plays on the international trade front of Bhutan. It is evident that our exports to and imports from India account for more than 75% of our trade. However, Bhutan has been exploring its potential markets elsewhere and has also been importing goods and services from various other countries.  Video: http://www.youtube.com/watch?v=CXJwNSkdTH0


Bhutan faces a huge uphill task in broadening its trading prospects and partners. India has been a great financial supporter to most of its planned activities and joining the WTO for better trade deals could backfire on the country’s developmental activities. The India-Bhutan friendship and interdependence is quite significant for Bhutan’s economic growth and prosperity and no action could justify jeopardizing that relation. The trade itself, however, is not the reason Bhutan slowed its project to join the WTO.The trade, though, needs to be adequately scrutinized. Bhutan’s main export is hydropower and it imports almost everything including basic commodities. While Bhutan may be able to imports from other countries through the WTO, it will have to find other resources to be able to export adequately so as not to be over dependent on India.

FDI Situation

Bhutan’s reluctance to join the WTO also stems from the FDI scenario. Bhutan fears loosing its valuable small and cottage industry to the giants of the global market. The few FDIs have not had great success in Bhutan due to the lack of a sizeable market and stringent rules and regulations. Bhutan has made its best efforts to ensure that its young and small-scale productive population is not deprived of their contributions to the growth of the economy.

Bhutan will have to assess the conditions of the FDI. There are only a few small-scale industries operating on fewer economic areas. If Bhutan were to have a successful FDI policy, economic activities where neither the government nor the public has been able to enter could be given up for FDIs. On one hand, FDIs related to transport, education and health would improve the living standard of the people so should be encouraged. On the other hand, FDIs relating to retail business, construction, consultancy and medicinal plants production could kill the local businesses that are trying to gain a foothold in that area.

The FDI comes along with great economic benefits too. Job creation, economic growth and foreign reliability will take a turn for the better. It would, therefore, benefit Bhutan to evaluate its opportunities and negotiate its options as may be prevalent in the WTO members.

GNH in relation to FDI and WTO

 The main concern to Bhutanese leaders in regards to joining the WTO and allowing FDI in Bhutan is the Gross National Happiness (GNH). It is a concept acknowledging that, the prosperity and growth of a country should be measured in terms of happiness and not in terms of economy or income. While economy plays a very major role in the happiness of a person, materialistic wellbeing alone does not measure the success of a country. Emotional wellbeing, cultural security and promotion and preservation of the environment are equally important.  Video: http://www.youtube.com/watch?v=7Zqdqa4YNvI

The accession to WTO and entry of FDI into the country is seen as a big threat to the constitutionally protected ecology and its deeply rooted cultures and traditions. The mix of cultural difference is already becoming visible and Bhutan would be intended on preserving its identity at any cost. Environment has been given top priority and there is a growing fear of Bhutan being a dumping ground if free trade were pursued.

While most of the concerns Bhutan has may be dumped stupid, those are still scary for a small and poor but significantly happy country. The benefits of joining the WTO and allowing entry to the FDI would certainly depend on the negotiations that Bhutan can convey and convince on terms that are more relevant Bhutan’s reality rather than the benefits conveyed by the WTO.


  1. http://sonamcring.blogspot.com/2012/11/swot-analysis-on-should-bhutan-join-wto.html
  2. http://www.bangkokpost.com/business/tourism/392984/bhutan-s-wto-dilemma
  3. http://www.nsb.gov.bt/publication/download.php?id=70‎
  4. Bhutan’s Quadrilemma: To Join or Not To Join the WTO, That is the Question: MARK MANCALL


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