FDIs rake in Nu 1 bn last year

Business Bhutan - - Front Page - Lucky Wangmo from Thim­phu

For­eign Di­rect In­vest­ment (FDI) in the coun­try con­trib­uted Nu 1bn to the do­mes­tic rev­enue in the in­come year 2016, as per the lat­est an­nual bud­get re­port pre­sented in par­lia­ment.

The rev­enue con­sti­tuted Nu 903mn in cor­po­rate in­come tax and Nu 99mn in sales tax and cus­toms tax from FDI com­pa­nies.

FDI com­pa­nies’ con­tri­bu­tion to the for­eign ex­change re­serve was recorded at US$ 48.9mn dur­ing the last four years (2013-16).

How­ever, an out­flow of for­eign re­serve also took place as FDI com­pa­nies need to im­port goods and ser­vices such as

tech­nol­ogy, equip­ment, con­struc­tion and other raw ma­te­ri­als, patents in some cases, and profit repa­tri­a­tion and fees.

There­fore, these FDI-driven im­ports off­set the sur­plus of the cap­i­tal and fi­nan­cial ac­count in the form of trade deficits which re­sults in min­i­mum change on the level of for­eign re­serves.

“While the con­tri­bu­tion of FDI to in­ter­na­tional re­serves may be mar­ginal, it brings other ben­e­fits such as employment and tech­nol­ogy trans­fer,” states the re­port.

In 2016, 4,879 peo­ple were em­ployed in 37 FDI projects that have com­menced op­er­a­tion. FDI projects un­der con­struc­tion have also em­ployed a to­tal of 51 em­ploy­ees dur­ing the year. This is an in­crease of more than 100% in employment gen­er­a­tion since 2011 where FDIs em­ployed only 2,341 peo­ple.

As of to­day, there are 52 ac­tive FDI projects in Bhutan, 37 are fully op­er­a­tional while 15 are in the con­struc­tion stage.

These FDIs are in var­i­ous sec­tors of the econ­omy such as ho­tels, fi­nan­cial ser­vices, dairy, agro, wa­ter bot­tling and bev­er­age projects and other man­u­fac­tur­ing sec­tors. The high­est num­ber of FDI is in the ho­tel in­dus­try with a to­tal of 21 ho­tels across the coun­try.

Ac­cord­ing to the bud­get re­port, 63% of FDIs are from Asia fol­lowed by Europe with 23%, 10% from North Amer­ica and 4% from Ocea­nia.

“Bhutan has al­ways re­ceived more in­vest­ments from Asia and in par­tic­u­lar from In­dia,” states the re­port.

FDIs in Bhutan are en­cour­aged in ar­eas that con­trib­ute to the devel­op­ment of green and sus­tain­able econ­omy, pro­mo­tion of so­cially re­spon­si­ble and eco­log­i­cally sound in­dus­tries, pro­mo­tion of cul­tur­ally and spir­i­tu­ally sen­si­tive in­dus­tries, in­vest­ments in ser­vice that pro­mote Brand Bhutan, and the cre­ation of a knowl­edge so­ci­ety.

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