Thursday, 21 August 2008

Bhutan : Attracting foreign investors with incentives

21 August, 2008 - The Ministry of Economic Affairs is drafting an economic policy and reviewing the foreign direct investment (FDI) with an aim to attract foreign investors to the country.

An economic policy is a government regulation or law that encourages or discourages foreign investment in the local economy.

Under it, foreign investments in service and knowledge based industries like information technology, health, and education would be encouraged, said the ministry’s secretary Dasho Sonam Tshering. Hydropower would also be a major area.

“We want to promote our incentives, like tax concession, to attract foreign investors,” said Dasho Sonam Tshering. “Our aim is to employ Bhutanese. So incentives are focused around that.”

The secretary said that industries, which are not covered by the economic policy, could come in, but there would be no incentives for them.

Bhutan did not have an economic policy before. There was a policy, which dealt in areas under the then ministry of trade and industry like tourism, geology and mines, energy, and trade and industry. Foreign investment was, however, not the design. But since its change in name in October 2006, the ministry decided to pave a “new direction” for the Bhutanese economy.

“The policy is forward looking, holistic, and practical,” said Dasho Sonam Tshering.

Dasho Sonam said that the ministry was reviewing the FDI policy because it had failed to attract foreign investors, the main ones being only Aman and Uma, and recently, Saint-Gobain in the silicon carbide industry in Pasakha.

“We’re looking at the incentives, whether to increase them and, if so, by how much, to attract good foreign investors,” said Dasho Sonam.

FDI, he said, was important to Bhutan. It would generate employment and prop up private businesses. Bhutanese economy today was driven mainly by government expenditure. The leading revenue contributors and employment agency was the government. This had to change, said Dasho Sonam, and a dynamic FDI policy would be instrumental.

By Kencho Wangdi

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