Bhutan the Emerging Economy of South Asia

  By Dr Srimal Fernando Asia Correspondent

16 July 2012

Bhutan is not just admired for its beauty but also know for its remarkable development story among the South Asian countries. People of Bhutan play a leading role in the engine of prosperity of their country and has been fueled by pragmatism, hard work and a flood of individual enterprises.

It is a land locked country located at the eastern end of the Himalayan Mountains. The country enjoys historic ties with her neighboring Asian countries and is a member of SAARC (South Asian Association for Regional Cooperation). The country’s sound economic policies maintained consistently during the past decades, have contributed to steady economic growth. This economic stability experienced a sharp decline in measured head count of poverty, inequality and unemployment. The concept of Gross National Happiness (GNH) with 72 indicators has its origin in Bhutan. The per capita income of the country had increased to USD 2000 in the year 2011. The “Ease of doing business index” created by the World Bank lists Bhutan at 142nd position. It is four positions above last year’s World Bank rankings.

The Bhutan Government implemented economic reforms, beginning in 1999 and took an active role in guiding the nation's economic development. It is one of the fastest-growing economies in the region with an average annual gross domestic product (GDP ) growth rate of 5 percent .The country's economy remains strong as a result of public- private partnership that played a significant role in economic stability of the country. At present sectors such as agriculture, live-stock, timber, tourism, telecommunication, banking, construction and hydro-electricity are expanding rapidly.

Agriculture in Bhutan has been recently growing in quality and quantity. Currently agriculture and allied sectors such as forestry and logging employs nearly 60 percent of the population but accounted for about 35 percent of GDP. The country’s main agricultural products are rice, maize and wheat. Other major food crops are barley, oil seeds, potato, fruits and vegetables.  In recent years area of cultivation has increased dramatically in all parts of the country especially in valleys  such as Paro, Punakha-Wangdi, Tashigang-Mongar, Chirang and in Geylegphug. They are the principal growing regions of the country. The agricultural sector of the country offers opportunities for significant expansion.

The private sector plays a vital role in the agro processing industry. To improve the quality and quantity of agriculture products and to expand production levels “Bhutan
Agro Industries Limited” (BAIL) was started in1993 with financial and technical assistance from the “Danish International Development Agency” (DANIDA). The company manufactures thirty five different types of products which include fruit juices, jams, marmalade, pickles and vegetables in cans. The company has processed more than 4000 metric tones (MT) of fruits and vegetables.  As one of the most dominant import and export trading institutions of Bhutan with a turnover of USD 25 million (Nu 1 billion) the State Trading Corporation of Bhutan Limited contributed immensely to the development of agriculture production of the country.

On the development side, the energy policy of Bhutan is steered towards increasing the production of hydro-electricity in the country. Bhutan’s principal source of electricity generation comes from hydro electricity generation. The Government of Bhutan has ambitious plans to develop 10,000 Mega Watts (MW )of hydro-power by
2020. Bhutan’s state owned energy giant Bhutan Power Corporation Limited (BPC) has been an enormous source of strength for the economy of the country.

Throughout its work in developing hydroelectric potential of the country, Bhutan Power Corporation Limited (BPC) remains the principal player in the field with a total of over 90,000 consumer accounts. The BPC in 2009 sold more than 1300 GWhs of energy to more than ninety thousand residential and rural consumers. In the same year BPC exported more than 500 GWhs of power to neighboring India.

Out of the five mega hydro-electricity generating plants, the Chukha Hydropower Project or Chukha Hydral was Bhutan's first mega hydro-electricity generating power project. The hydro-power related construction activities recorded an 11 percent growth in 2010.

The communication between people is the central pillar upon which community and understanding are based. In 2006 the media of the country was privatized. At present there are six news papers, two dailies and four weeklies. With the introduction of television in 1999, the “Bhutan Broadcasting Service” (BBS) is the main television service in the country .

The tradition of Bhutanese postal service can be traced back to 1962 when the first regular postal service was set up under the department of Post and Telegraph and

under the Ministry of Communications in Phuentsholing .Later in the same year the postal service of the country was linked to two other cities Paro and Thimpu. The
Bhutanese postal service was transformed into an efficient service in 1996 with the establishment of Bhutan Postal Corporation Limited. Since then Bhutan Postal
Corporation Limited with more than forty post officers and thirty community mail officers had been one of the success stories of the country. Nowadays the economic and social value of telecommunication is widely recognized as an individual commodity for industrial and domestic purposes. It is an important factor in the quality of life.

Bhutan Telecom Limited has played a major role in the country’s telecommunication sector development. As of February 2007, all twenty districts in Bhutan were connected with cellular mobiles. Today Bhutan Telecom Limited ensures its customers with cost effective and efficient service.

Tourism in Bhutan is experiencing sustainable growth for the last three decades due to the country’s natural and historical attractions, which appeal to visitors from all
parts of the world.  In 2011, tourism made a significant gain, with 65,000 highend foreign visitors coming to discover this beautiful country and its rich historical
heritage. According to the Tourism Council of Bhutan (TCB), the revenue earned from tourism last year was estimated to be around USD 105 million.

Bhutan is already showing the results of its trade reforms and other liberalization measures taken. It also shows efforts aimed at promoting the country’s untapped
resources for growth by International financing and donor organizations.  In view of the facts given above Bhutan is the most recent emerging economy of South Asia.