Business Enabling Environment in Bhutan
Demystifying the ‘Low Image on Ease of Doing Business’
Abstract
This research paper assessed the business enabling environment in Bhutan mainly from the perspectives of the business operators using the ten parameters of Business Enabling Environment (BEE) as proposed by the World Bank. These parameters include: (i) business entry, (ii) business location, (iii) utility connections, (iv) labour, (v) financial services, (vi) international trade, (vii) taxation, (viii) dispute resolution, (ix) market competition, and (x) business insolvency. A quantitative method was used to carry out the study and get the responses from the business operators. Responses were obtained from 695 respondents which included 290 owners of small-scale businesses, 194 mediums.
The research highlights Bhutan’s competitive strengths in digital governance (1 day business registration for small businesses via G2B portal), utility reliability (77.1% satisfaction with electricity), and tax administration (ranked 15th globally). However, it also identifies critical challenges, including digital exclusion (93.5% of rural SMEs unaware of online services), labour market imbalances (19% youth unemployment despite 70.6% literacy rate), and infrastructure disparities between urban and rural regions.
The findings reveal three key tensions in Bhutan’s business landscape: (i) between rapid digitalization and rural inclusion, (ii) between environmental protection and economic scalability, and (iii) between regulatory quality and field-level awareness. To address these challenges, while preserving Bhutan’s unique Gross National Happiness framework, the study proposes: (i) digital empowerment programmes combining mobile training units with localized awareness campaigns, (ii) sector-specific skills development focusing on green technology and high-value tourism, (iii) enhanced trade facilitation through Bhutan TradeFin Net optimization and regional logistics partnerships, (iv) targeted rural infrastructure development prioritizing last-mile connectivity, (v) improving financial accessibility for the businesses, and (vi) brand development initiatives leveraging Bhutan’s carbonnegative status.
