AGP Executive Report

Community Infrastructure: India-backed projects worth noting were inaugurated in Mongar, including 65 km of roads, 10 km of irrigation canals and two bridges, with improved market access and services among the expected benefits. Economic Support: The ADB approved $17.42 million to help Bhutan shield vulnerable households and sustain public services as imported food and fuel costs rise; the funding supports a wider $267.88 million anti-crisis plan. Border Trade: Gelephu’s new biometric terminal aims to speed up crossings for eligible Bhutanese and Indian travellers as the gateway grows in importance. Business: BFAL returned to profit, reporting Nu 58.23 million in first-half earnings. Energy Investment: Voith Hydro won a contract for Bhutan’s 90MW Jomori hydropower project. Economic Outlook: Growth prospects remain strong, but rising inflation and a widening external deficit point to mounting pressure.

Economic Support: The ADB approved US$17.42 million to help Bhutan cushion families and essential services from rising food and fuel costs. The funding backs a Nu 267.88 billion anti-crisis plan as imported costs pressure households and public finances. Border Trade: Gelephu’s new biometric immigration terminal adds automated gates for eligible Bhutanese and Indian travellers, aiming to speed crossings and support the area’s growth as a gateway. Company Results: Bhutan Ferro Alloys returned to profit, earning Nu 58.23 million in the first half of 2026 after a loss a year earlier, as income rose 17.2 percent. Energy Investment: Voith Hydro won a contract for Bhutan’s 90MW Jomori hydropower project, adding to the country’s pipeline of power-sector investment. Economic Outlook: Bhutan’s growth prospects remain strong, but rising inflation and a widening external deficit are clouding the picture; the government is also reviewing bank lending margins amid concerns over borrowing costs.

Economic Support: The ADB approved $17.42 million for Bhutan, backing a Nu 267.88 billion anti-crisis plan to protect households, jobs and public services from rising import costs. Company Results: Bhutan Ferro Alloys returned to profit, posting Nu 58.23 million in first-half earnings as income grew faster than expenses. Digital Skills: The RCSC and RIM launched programmes in digital skills, responsible AI and construction management to strengthen the civil service and infrastructure delivery. Women in Business: Women founders described financing, customer confidence and expansion as continuing hurdles across sectors including software, landscaping and food processing. Energy Investment: Voith Hydro won a contract for Bhutan’s 90MW Jomori hydropower project. Natural Resources: Timber supply rose 36.8 percent in 2025, while several mineral reserves continued to decline, highlighting competing pressures from construction and industry.

Economic Support: The ADB approved $17.42 million for Bhutan to cushion households and public services from rising fuel and commodity costs. The funding is part of the government’s $267.88 million anti-crisis plan. Industry: Bhutan Ferro Alloys returned to profit, posting Nu 58.23 million in net earnings for the first half of 2026, as income rose 17.2 percent. Natural Resources: Timber supply increased 36.8 percent in 2025, but several mineral reserves continue to decline, raising questions about the sustainability of resources used by construction and industry. Investment: The government received Nu 2.90 billion from India for 13th Five-Year Plan projects, while Voith Hydro won a contract for the 90MW Jomori hydropower project. Business Conditions: Bhutan’s growth outlook remains strong, though inflation and the external deficit are widening; the government is also reviewing banks’ lending margins amid borrowing-cost concerns.

Corporate Results: Bhutan Ferro Alloys Limited returned to profit, earning Nu 58.23 million in the first half of 2026 after a Nu 12.69 million loss a year earlier. Income rose 17.2 percent to Nu 1.586 billion. Natural Resources: Timber supply climbed 36.8 percent in 2025, while reserves of several minerals continued to fall, underscoring pressure to balance construction demand with long-term resource management. Economic Outlook: Bhutan’s growth prospects remain strong, but inflation and the external deficit are widening. Banking: The government plans to review banks’ lending margins as borrowing costs remain a concern. Hydropower: Voith Hydro won the contract for Bhutan’s 90-megawatt Jomori project. Tourism: Arrivals increased 28.6 percent, but questions remain over how much of that growth is reaching Bhutanese businesses.

Jobs & Productivity: The World Bank says South Asia faces an acute job-creation challenge. Agriculture employs over 40% of the region’s workforce, including in Bhutan, but many jobs are low-productivity and informal. Hydropower: Druk Hydro Energy awarded Voith Hydro the equipment contract for the 90MW Jomori project in Samdrup Jongkhar, financed by a concessional JICA loan. Economic Outlook: Bhutan’s growth outlook remains strong, though inflation and the external deficit are widening. Public Investment: India handed over Nu 2.90 billion for Bhutan’s 13th Five-Year Plan projects. Business & Finance: Bhutan is looking to strengthen its manufacturing base, while the government reviews banks’ lending margins amid borrowing-cost concerns; entrepreneurs are also being urged to explore financing beyond bank loans. Tourism: Arrivals are up 28.6%, but questions remain about whether local businesses are sharing in the gains.

Jobs and Productivity: The World Bank says South Asia must create jobs for tens of millions of young people each year, while private-sector employment is lagging. Agriculture employs more than 40% of the region’s workforce, including nearly half in Bhutan, highlighting the need for more productive work. Small Business: A Thimphu festival brought entrepreneurs, policymakers and investors together to discuss opportunities for small businesses and Bhutan’s manufacturing future. Hydropower: Druk Hydro Energy has awarded Voith Hydro the equipment contract for the 90MW Jomori project in Samdrup Jongkhar. Financed by a concessional JICA loan, it will have two 45MW units. Economic Outlook: The IMF projects Bhutan’s growth at 7% in 2026 and 6.9% in 2027, but warns inflation could rise to 6.5% and the current-account deficit widen to 17.7% of GDP by 2027.

Manufacturing: A new push to build Bhutan’s manufacturing sector highlights the need for policies that help businesses invest, innovate and reach wider markets. Hydropower: Druk Hydro Energy has awarded Voith Hydro the equipment contract for the 90MW Jomori project in Samdrup Jongkhar, financed by a concessional JICA loan. Economic outlook: The IMF forecasts growth of 7% in 2026, but inflation is set to rise to 5.6% and the current account deficit to widen to 16.3% of GDP. Business finance: The government will work with the Royal Monetary Authority to review banks’ lending margins, aiming to make credit more affordable for SMEs without imposing a blanket rate cap. Energy: Electricity supply and exports are rising, but so are petrol and diesel imports, underscoring Bhutan’s continued reliance on fossil fuels. Consumer concerns: More Bhutanese say they lost money to a US employment scheme, with some reporting delays and partial refunds; they are calling for an investigation.

Hydropower: Druk Hydro Energy has awarded Voith Hydro the equipment contract for the 90MW Jomori project in Samdrup Jongkhar. The JICA-financed scheme will have two 45MW units. Economic Outlook: The IMF projects Bhutan’s growth at 7% in 2026 and 6.9% in 2027, but inflation is forecast to reach 6.5% and the current-account deficit 17.7% of GDP by 2027. Credit Costs: The government and Royal Monetary Authority will review banks’ lending margins rather than impose a blanket rate cap, aiming to ease borrowing costs for businesses. Energy Transition: Electricity supply and exports are rising, but petrol imports jumped 38.7% and diesel imports 27.5% in 2025, underscoring Bhutan’s continued dependence on imported fuel. Development Funding: India handed over Nu 2.90 billion for Bhutan’s 13th Five-Year Plan projects across sectors including education, agriculture, infrastructure and renewable energy. Private Sector: BCCI has allocated Nu 38.59 million for 2026–27 programmes, with trade fairs receiving the largest share; Nu 4.43 million remains unfunded.

Economic Outlook: Bhutan is projected to grow 7% in 2026 and 6.9% in 2027, but inflation is forecast to climb to 5.6% this year and the current account deficit to widen to 16.3% of GDP. Business Finance: The government will work with the Royal Monetary Authority to review banks’ lending margins, aiming to ease borrowing costs for SMEs without imposing a blanket rate cap. Energy: Electricity supply rose 32.8% in 2025, but petrol imports increased 38.7% and diesel imports 27.5%, underscoring Bhutan’s continued exposure to imported fuel. Trade Promotion: The Bhutan Chamber of Commerce and Industry has set aside Nu 16.3 million for trade fairs and exhibitions in 2026-27, but Nu 4.43 million of its total Nu 38.59 million workplan remains unfunded. Development Funding: India handed over Nu 2.9 billion for Bhutan’s 13th Five-Year Plan projects, including investments in education, agriculture, infrastructure and renewable energy. Tourism: Monggar is targeting more than 5,000 visitors next year, up from over 2,000 last year, with new food events and outdoor activities planned.

Investor Climate: Investors cite energy, banking and law-and-order concerns. Credit: The government will work with the RMA to review banks’ extra lending margins rather than impose a rate cap; average lending rates stood at 9.38% in December 2025. Business Funding: BCCI has set a Nu 38.59 million workplan, directing Nu 16.3 million to trade fairs, but Nu 4.43 million remains unfunded. Entrepreneurs are also being urged to explore equity financing beyond bank loans. Public Investment: India has handed over Nu 2.9 billion for Bhutan’s 13th Five-Year Plan, including funding for education, skills, agriculture and infrastructure. Energy: Electricity supply rose 32.8% in 2025, but petrol and diesel imports also climbed, highlighting Bhutan’s continued fuel dependence. Tourism: Arrivals rose 28.6%, though questions remain over how much local businesses are gaining; Monggar aims to attract more than 5,000 visitors next year, up from over 2,000 last year. Natural Resources: Only 73 kilograms of cordyceps were sold at auction, while 227 kilograms were withdrawn after collectors rejected bids. Known quartzite reserves have fallen nearly 40% since 2015.

Mountain Livelihoods: Yak herders from Bhutan, India and Nepal will launch a regional network at Bhutan’s Royal Highland Festival on October 23, with Bhutan hosting its secretariat to support cooperation and market access. Cordyceps Market: Only 73 kilograms of this year’s harvest was auctioned; collectors withdrew 227 kilograms—75.7 percent of the reported total—after bids fell short of expectations. Business Finance: Entrepreneurs are being urged to look beyond bank loans to equity investment, while stressing that businesses need to show commercial viability to attract capital. Women-led ventures also highlighted financing and growth challenges at a Thimphu discussion. Mineral Resources: Bhutan’s recorded quartzite reserves have fallen nearly 40 percent since 2015 to 2.9 million tonnes; at last year’s extraction rate, they would last about 11 years. Private Sector: BCCI’s Nu 38.59 million workplan for 2026–27 has a Nu 4.43 million funding gap. Farm Access: Road upgrades in Samdrup Jongkhar are expected to ease transport of milk, oranges and cardamom to market.

Cordyceps Market: Only 73 kilograms of the 300 kilograms reported for this year’s auction were sold; collectors withdrew 75.7 percent after rejecting low bids, the largest withdrawal in five years. Mineral Reserves: Bhutan’s recorded quartzite reserves have fallen nearly 40 percent since 2015 to 2.9 million tonnes. At current extraction rates, they could last about 11 years. Business Finance: Entrepreneurs at Druk Tshongrig Gatoen were urged to look beyond bank loans to equity financing, while showing investors their businesses can generate returns. Private Sector: The Bhutan Chamber of Commerce and Industry proposed a Nu 38.59 million workplan for 2026–27, but Nu 4.43 million remains unfunded. Farm Access: Work is underway to improve the 22-kilometre road to Gomdar, making it easier to transport milk, oranges and cardamom to market.

Private Sector: The Bhutan Chamber of Commerce and Industry has proposed a Nu 38.59 million workplan for 2026–27, but Nu 4.43 million remains unfunded. Entrepreneurs say firms need to prove they can turn a profit and look beyond bank loans; women business owners also highlighted financing hurdles. Hydropower: Druk Green Power Corporation has hired Entura to prepare feasibility studies for two projects totalling 954MW, with World Bank financing and strategic partners identified. Climate Finance: Bhutan joined five countries in backing a proposed US$500 million fund for rapid support to economies hit by climate shocks. Market Access: Road upgrades in Samdrup Jongkhar are expected to ease transport of milk, oranges and cardamom to market. Digital Assets: A report says Bhutan mined 13,000 bitcoin, with nearly all of it now gone.

Climate Finance: Bhutan’s central bank governor joined five countries in endorsing a proposed US$500 million fund for rapid balance-of-payments support after climate shocks. The facility could grow to US$1.6 billion. Private Sector: Entrepreneurs say businesses need to prove commercial viability and look beyond bank loans to attract investment. Women-led founders also highlighted financing and growth challenges. The BCCI’s Nu 38.59 million workplan for 2026–27 has Nu 4.43 million in funding unsecured. Vehicle Trade: Toyota Tsusho says its India sales arrangements generally do not allow cross-border sales, raising questions about trade permits for Bhutanese consumers importing vehicles. Hydropower: DGPC has hired Entura to study the 954MW Chamkharchhu II and IV projects. World Bank financing will cover the feasibility work, due in 18–24 months.

Rural Connectivity: Work on the 22-kilometre Narphung–Gomdar road is 40% complete. The upgrade and a new culvert are expected to make it easier for residents to get milk, oranges and cardamom to market. Business Leadership: Dr Trashi Wangyel has been elected president of the Bhutan Chamber of Commerce and Industry, taking the helm of the country’s main business association. Hydropower Investment: Druk Green Power Corporation has commissioned feasibility studies for the 954MW Chamkharchhu II and IV projects. World Bank-funded reports are due in 18–24 months, with project planning to proceed in parallel. Market Expansion: Indian wearable brand boAt has entered Bhutan, as the company reports its international revenue more than doubled in FY26. Regional Trade: Bhutan and Northeast India are exploring stronger trade links, including possible use of Brahmaputra waterways and the Jogighopa terminal. Market Activity: September trading turnover on the Royal Securities Exchange of Bhutan fell 60%, pointing to a marked slowdown in activity.