Red tape and Bhutan

2026-03-09 - 09:04

Bhutan has developed a habit over the years. We copy and paste systems from outside the country with great enthusiasm. These systems are often borrowed from larger economies with far more complex markets and institutions. However, once they arrive here, they are implemented with a rigidity that even the countries that created them would find surprising. The problem is not that Bhutan is learning from international practices. In fact, that is necessary in a globalized world. The real issue is that we often fail to adapt these systems to Bhutan’s own realities. Our institutions tend to treat imported frameworks as if they are sacred templates rather than starting points that must be adjusted for local conditions. Bhutan is a small economy with a limited private sector, a narrow market, and businesses that are often run by families or small groups of entrepreneurs. Yet many of the regulatory systems in place seem designed for far larger economies where companies have compliance departments, legal teams, and administrative staff dedicated solely to navigating rules. For state-owned enterprises and large players, navigating these systems is still manageable. They have the manpower, the institutional knowledge, and the resources to deal with layers of paperwork and procedures. For small and medium businesses, however, the story is very different. The compliance burden can be overwhelming. Businesses face multiple forms, approvals, inspections, and changing rules that require time and resources that small operators simply do not have. What should be a straightforward process of running a business can sometimes feel like an obstacle course. This is where the issue of ease of doing business becomes critical. Ease of doing business is not just a slogan used in policy documents or conferences. It is about whether an ordinary Bhutanese entrepreneur can start and run a business without being buried under layers of bureaucracy. It is about whether regulations facilitate economic activity or unintentionally discourage it. Unfortunately, the bureaucratic mindset in some parts of the system still leans more toward control than facilitation. The instinct is often to stop, question, and delay rather than guide and assist. Instead of helping businesses comply with rules, the system sometimes ends up making compliance unnecessarily difficult. Another weakness is the absence of strong feedback mechanisms. Once policies are introduced, there are limited channels for systematically listening to the businesses that must live with them every day. When problems arise, the tendency is to assume that the private sector simply needs to ‘follow the rules better,’ rather than asking whether the rules themselves need improvement. In a small country like Bhutan, policy flexibility should be our strength. Regulators should have the confidence and mandate to interpret rules with common sense and adapt them when they clearly do not fit the local context. If Bhutan is serious about building a vibrant private sector, then improving ease of doing business must go beyond policy statements. It requires something simpler but more important which is systems designed for Bhutan, not systems imported wholesale and enforced without adjustment. “Red tape never strangles bad ideas, only good ones.” — Gillian Anderson