𝐂𝐨𝐦𝐩𝐫𝐞𝐡𝐞𝐧𝐬𝐢𝐯𝐞 𝐅𝐃𝐈 𝐑𝐞𝐟𝐨𝐫𝐦 𝐓𝐚𝐫𝐠𝐞𝐭𝐬 𝐇𝐢𝐠𝐡-𝐈𝐧𝐜𝐨𝐦𝐞 𝐄𝐜𝐨𝐧𝐨𝐦𝐲 𝐁𝐲 𝟐𝟎𝟑𝟒

…𝒑𝒓𝒊𝒐𝒓𝒊𝒕𝒚 𝒔𝒆𝒄𝒕𝒐𝒓𝒔, 𝒔𝒊𝒎𝒑𝒍𝒊𝒇𝒊𝒆𝒅 𝒑𝒓𝒐𝒄𝒆𝒅𝒖𝒓𝒆𝒔 𝒂𝒏𝒅 𝒆𝒏𝒉𝒂𝒏𝒄𝒆𝒅 𝒔𝒂𝒇𝒆𝒈𝒖𝒂𝒓𝒅𝒔 𝒇𝒐𝒓𝒎 𝒕𝒉𝒆 𝒄𝒐𝒓𝒆 𝒐𝒇 𝒕𝒉𝒆 2025 𝒊𝒏𝒗𝒆𝒔𝒕𝒎𝒆𝒏𝒕 𝒓𝒆𝒈𝒊𝒎𝒆

By Yeshi Dolma

In a move aimed at positioning Bhutan as a competitive investment destination in the region, the government has launched the Foreign Direct Investment (FDI) Rules and Regulations 2025. The reforms, effective from July 18, 2025, mark a shift towards a more transparent, efficient, and investor-oriented environment.

“The FDI Rules and Regulations 2025 mark a major step in attracting strategic and responsible foreign investment. By streamlining procedures, expanding priority sectors, and allowing up to 100 percent foreign equity in select areas, we aim to create a transparent and investor-friendly environment. These reforms, developed through wide consultations, are aligned with our vision of becoming a High-Income GNH Economy by 2034. We are confident this new framework will boost investor confidence, generate quality jobs, and strengthen Bhutan’s position as a reliable investment destination,” said Lyonpo Namgyal Dorji, Minister of the Ministry of Industry, Commerce and Employment (MOICE).

Replacing the 2019 rules, the 2025 framework combines policy and regulation in a single document. It is designed to attract quality foreign investors while ensuring a predictable and fair investment climate that aligns with Bhutan’s national priorities. The previous framework had been criticized for being bureaucratically heavy and difficult to navigate. The new rules introduce mechanisms for greater clarity and accountability.

FDI is now permitted in all sectors except those listed in a publicly available Negative List. Priority sectors include renewable energy, high-end tourism, information and communication technology, and education. These are defined alongside general sectors, with specific minimum investment thresholds and foreign equity caps based on project cost and impact.

In agriculture and manufacturing, activities such as floriculture, animal husbandry, aquaculture, and plantation crops allow 100 percent foreign ownership with a minimum investment of Nu. 20 million. Food processing, forestry, and renewable energy require varying levels of investment and permit up to 74 percent equity. Manufacturing of products including animal feed, pharmaceuticals, and electronics requires a minimum of Nu. 40 million and allows up to 74 percent ownership. In the services sector, education requires Nu. 30-200 million with up to 74 percent equity, while multispecialty hospitals allow full ownership with an investment of Nu. 400 million. Luxury hotels, aviation, and infrastructure projects may permit 100 percent ownership depending on project size and category. Information technology services are fully open to foreign investors with minimal capital requirements.

Foreign investment remains prohibited in sectors such as media, retail trade, standalone mining, low-rated hotels, and general health services, as listed in Schedule III of the FDI rules.

The reforms simplify entry and approval processes. Investors can now apply online for FDI registration and receive a Registration Certificate within three working days if documentation is complete. Projects in priority sectors are fast-tracked, with approvals processed within three to five working days through the Invest Bhutan Division.

The rules guarantee strong foreign exchange and repatriation rights. FDI companies can access foreign currency for capital goods, raw materials, and profit repatriation. Capital, capital gains, and dividends can be repatriated in the currency of investment. In the event of nationalization or expropriation, compensation will be based on fair market value in convertible currency with applicable interest.

Visa and residency provisions have also been revised. Investors bringing in over Nu. 15 million in capital will be granted three-year Investor Cards, which provide residency and tax exemptions, including exemption from Bhutan’s Sustainable Development Fee (SDF). These cards allow easier access to education and employment for family members. Business visas will be issued within three working days.

FDI companies can enter into marketing, franchising, and intellectual property sharing agreements with prior approval, processed within five working days. Indian investors may invest in either Indian Rupees or convertible currency.

Legal protections have been strengthened, granting FDI the same treatment as domestic investment. The rules prohibit discrimination and ensure no nationalization without compensation. Intellectual property rights enforcement has been reinforced to improve investor confidence.

Land access provisions have been revised to allow leasing or contribution as equity by local partners. State-owned land can be leased for up to 30 years, with the option for renewal.

The regulations define timelines for each stage of the investment process, from registration to licensing and amendments. Investors will not be penalized for delays caused by administrative lapses.

Institutional support will be provided through the Economic Development Board (EDB), chaired by the Prime Minister, and the Invest Bhutan Division, which will act as a single-window agency. FDI focal points have been appointed in all relevant agencies.

All investment-related services, licenses, and permits will now be delivered through online platforms. A service charter defines turnaround times for agencies, with accountability for delays.

Exit procedures are also defined, including repatriation of earnings and capital once tax clearances and liabilities are settled. Disputes may be resolved through mutual agreement, Bhutanese courts, or international arbitration.
Compliance monitoring will be carried out by the Royal Monetary Authority, National Environment Commission, and Ministry of Labour. Penalties for non-compliance start at Nu. 20,000 and are applied for repeated or intentional violations.

Investors have the right to appeal departmental decisions to the Minister, with the possibility of an independent review. The rules also permit downstream investment and venture capital participation in startups and innovation-based enterprises.

The government has committed to regularly reviewing and updating the FDI rules to align with national development goals and global best practices. The success of the reforms will depend on effective implementation and adherence to defined timelines.

The 2025 FDI Rules and Regulations aim to balance economic openness with national priorities, providing a framework that offers legal security, procedural clarity, and defined opportunities for responsible investment in Bhutan.