Bhutan ‘Open For Business’ As Voters Choose Former PM Tobgay To Rebuild Economy – Analysis

By Tenzin Pema 

“Bhutan is open for business,” wrote Prime Minister-elect Tshering Tobgay on X, after the people of the tiny Himalayan kingdom returned him to power in parliamentary elections this month.

Analysts say Tobgay’s two-thirds majority win indicates the 800,000 people of Bhutan are pinning their hopes on an experienced hand to rebuild the economy, reverse an ongoing migration crisis, and strengthen ties with the landlocked nation’s two neighbors, India and Tibet, amidst ongoing border negotiations with China. 

The victory by Harvard-educated conservation advocate Tobgay, 58 – who served as Bhutan’s second democratically elected prime minister between 2013 and 2018 – comes as the country faces “unprecedented challenges” that are prompting it to tailor its famed “Gross National Happiness”(GNH) policy to one that takes into account its economic needs. 

Tobgay’s People’s Democratic Party (PDP) – which promised to leverage GNH in its efforts to turn Bhutan into a developed nation – won 30 of the 47 National Assembly seats, while its rival Bhutan Tendrel Party (BTP) won the remaining 17 seats in Bhutan’s fourth general elections since its 2008 transition from an from an absolute to a constitutional monarchy, with a bicameral elected parliament.

Bhutan’s GNH index was first conceptualized in 1972 by the King Jigme Singye Wangchuk as a “holistic approach” to sustainable development and a more important measure of growth than gross domestic product. Since then, the country’s leaders have promoted and the model — which emphasizes good governance, sustainable development, cultural preservation and promotion, and environmental conservation — widely regarded as Bhutan’s soft power export to the world. 

However, concerns about the economy and record high youth unemployment levels of 28.6%, which have forced young Bhutanese to emigrate in large numbers for better job opportunities, have weighed on this election, with both parties citing economic growth as a key priority.

The PDP has said it believes that “…GNH should continue to be the springboard to enhance peace, prosperity, and happiness for all Bhutanese in our collective journey to become a developed nation.” 

“The PDP has the experience of having worked as the opposition in the first democratic government and as the ruling party in the second. So, it has exposure to different aspects of governance,” said Dasho Kunzang Wangdi, Bhutan’s former chief election commissioner, who set up and ran the country’s first democratic elections in 2008.

 “We are hopeful their efforts will be geared towards not only reviving but also giving an added fillip to economic growth and balancing that with the need to ensure the general well-being of the people of Bhutan,” he added.

Balancing happiness and growth

Tobgay – who detailed an ambitious 12-point economic transformation plan to turn Bhutan into a developed nation by 2047 – is expected to lead the implementation of a 15 billion ngultrum (US$181 million)economic stimulus plan and drive initiatives to attract foreign direct investment, improve ease of doing business, and boost export and tourism levels.  

“Our nation’s economy is teetering on the brink of collapse. With an average growth rate of just 1.7% in the past five years, our economy is at its worst in our recent history,” said Tobgay in his party’s manifesto, titled ‘A Contract with Bhutan.’

“The next five years are crucial for us to rebuild – get our economy back on track, enable private businesses to thrive, increase job opportunities, revitalize our education and healthcare systems, uplift the poor, empower our public servants, transform agriculture, and boost national revenue generation,” Tobgay added.

He also plans to accelerate Bhutan’s hydropower and renewable energy generation, while bolstering the country’s private sector through the establishment of special economic zones and the privatization and divestmens of state-owned enterprises to boost capital markets. 

Tobgay’s office did not immediately respond to Radio Free Asia’s request for comment on his program.

Tobgay’s approach represents “a pragmatic tailoring of the GNH concept to what the world needs today,” Aditya Gowdara Shivamurthy, an associate fellow at the Observer Research Foundation, a Washington, D.C. think tank.

“Bhutan knows that it cannot be isolated from the rest of the world and the rest of the economy, and that’s why this whole special economic zone has been proposed. And I think that is a classic example of how Bhutan tailors its GNH concept with its economic growth and economic need,” he told Radio Free Asia.

Bhutan has been gradually boosting the communications and information technology sector since the early 2010s, and the move to set up the SEZs intends to draw investment and sustainable development through service-intensive projects such as resorts and IT parks, rather than industrial projects, Shivamurthy said.

“There’s a massive expectation from the new government. I think people have voted for this new government for the very reason that they know this party… and expect that this experienced party will offer them solutions rather than a new party coming in and trying to start from scratch,” he added. 

Namgay Pem, a Bhutanese citizen who cast her vote at the Lingmu-Toedwang Constituency in Punakha District, one of the 20 dzongkhags or districts comprising Bhutan, echoed that sentiment.

“The interventions that the government brings in should not compromise the happiness and well-being of the citizens, and that GNH, which is the main philosophy, should guide all the developmental and economic developments in the country,” she said.

Relations with India and China

The election was closely watched by India, against the backdrop of Bhutan’s ongoing border negotiations with China – an issue of strategic concern for India, which has faced border disputes and skirmishes with its northern neighbor. 

In October, Bhutanese Foreign Minister Dr Tandi Dorji visited Beijing and met with Chinese Vice President Han Zheng, after which the two sides expressed their determination to accelerate the boundary demarcation process. 

Border talks between the two countries have been focused on two key areas of dispute: the strategic Doklam plateau and other areas in western Bhutan, which lie near the India-Bhutan-China border; and the Jakarlung and Pasamlung valleys that lie near Tibet.

“Given India’s special relationship with Bhutan, it is important for India to make sure that (any border) agreement (with China) does not strategically damage India’s interest,” said Manoj Kewalramani, chairperson of the Indo-Pacific Studies Programme at the Takshshila Institute in India.

 “That’s largely what India’s priority should be and one part of that is obviously highlighting to the Bhutanese public the threats the Chinese encroachment presents and we have seen some of that take place,” he added.

A report by UK-based Chatham House, released in December, showed China had continued its “unsanctioned programme of settlement construction” across the contested border in the north of Bhutan, based on analysis of satellite imagery from September. 

“The new outposts in Bhutan’s remote Jakarlung Valley, part of the Beyul Khenpajong region, may become permanent Chinese territory after an announcement on a border deal between the two countries expected soon,” wrote John Pollock and Damien Symon of Chatham House. “It is thought that Bhutan, in a major concession, will give up the land that China has seized in both Jakarlung and the neighboring Menchuma Valley,” they added. 

Kewalramani said Bhutan-China’s three-step roadmap will require first understanding where the border lies on paper and then visiting the places on the ground, before finally demarcating the actual boundary. 

“So this is not a small, easy short-term process and I think Bhutan is discussing these changes with India… Bhutan does take into account India’s interest because of the special nature of that relationship,” he added.

“I think with Tshering Tobgay coming in, there is some relief that these border negotiations with China will happen with even more sensitivity towards India and with even more open conversations with India and that is something that is expected,” said Shivamurthy.