The country records higher FDI investment value in 2025

2026-01-26 - 05:40

Foreign Direct Investment (FDI) activity in Bhutan showed mixed trends in 2025, with a slight decline in the number of approved projects, but a substantial increase in overall investment value. During the year, the Department of Industry approved 14 FDI projects with a total investment value of Nu 73.76 billion (bn). Of these, four projects were in the manufacturing sector, while ten were in the services sector. Although the number of approved projects declined marginally compared to 2024, the total project size increased significantly compared to previous years, largely driven by Tata Power Company Limited’s investment of Nu 68.9 bn in the Khorlochhu Hydropower project. In addition to projects formally approved during the year, 18 FDI projects with a combined value of Nu 201.91 bn were issued FDI Registration Certificates in 2025. This included foreign investment in two major hydropower projects, namely Dorjilung Hydropower in mainly Mongar and Wangchu Hydroelectric Power Limited in Chukha. As of 31st December 2025, the total number of FDI projects in the country stood at 135, following the inclusion of the 14 newly approved projects during the year. This represents an increase from 121 projects recorded in 2024. Of the total projects, 64 were under operation, while 71 were at various stages of construction. Asia continued to be the dominant source of foreign investment, accounting for 63 percent of the total approved FDI projects, or 85 projects. Europe followed with 20.7 percent, equivalent to 28 projects, while America accounted for 11.1 percent with 15 projects. Investments from Oceania represented 3.7 percent, amounting to five projects, while Africa and multinational corporations each contributed one project, representing 0.7 percent of the total FDI portfolio. Within Asia, India remained the leading source of foreign investment, contributing 47 projects, which accounted for 55.3 percent of the Asian total. Singapore followed with 13 projects, representing 15.3 percent, while Thailand accounted for eight projects, equivalent to 9.4 percent. Vietnam and Bangladesh each contributed four projects, representing 4.7 percent apiece. Nepal and other Asian countries accounted for three projects each, or 3.5 percent, while South Korea and Japan contributed two and one project respectively. In terms of sectoral distribution, the hotel and resort sector accounted for the largest share of FDI with 41 projects, representing 30.4 percent of the total. This was followed by the IT and IT-enabled services sector with 36 projects, or 26.7 percent. The others category contributed 13 projects, accounting for 10 percent, while the dairy and agro sector recorded 10 projects, or 8 percent. Power-intensive manufacturing accounted for 12 projects, representing 9 percent, and financial services recorded seven projects, or 5 percent. Building materials manufacturing accounted for five projects, or 4 percent, while pharmaceutical industries contributed four projects, representing 3 percent. The technical and vocational education and training sector recorded three projects, accounting for 2 percent, while both the hydropower and gases sectors recorded two projects each, also representing 2 percent. FDI trends during the period reflected broader global developments. According to the World Investment Report 2025, global FDI flows weakened further in 2024, with an 11 percent decline indicating a sustained slowdown in productive investment. Despite its relatively small share, the digital economy emerged as one of the fastest-growing segments, with rising project values signalling a structural shift in global investment patterns. In Bhutan, FDI approvals were highly volatile, with approvals surging to 17 projects in 2024, an increase of 41.7 percent, before declining to 14 projects in 2025, representing a drop of 17.6 percent. The service sector continued to dominate overall FDI, accounting for 69 percent of projects. Reflecting global patterns, the digital economy played an increasingly significant role in driving FDI approvals in the country. Of the total 135 approved projects, 47 percent had commenced commercial operations. FDI projects were largely concentrated in Thimphu, Paro and Chukha. An assessment of FDI projects was carried out through an annual survey, with data verified in coordination with relevant agencies, including the Royal Monetary Authority, the Department of Revenue and Customs, and agencies within the ministry such as the Corporate Regulatory Authority. The survey recorded a response rate of about 94 percent among operating FDI companies, while 64.5 percent of projects under construction responded. Capital inflows for 2024 were compiled from reporting companies and verified with the Royal Monetary Authority. During the year, FDI projects attracted capital inflows amounting to USD 5.99 million (mn) in convertible currency, along with INR 223.33 mn. As of December 2025, FDI projects employed a total of 6,167 workers, comprising both Bhutanese and expatriate employees under regular and casual categories. Of this total, 5,213 were Bhutanese employees, including 2,875 regular male and 2,338 regular female workers. An additional 284 Bhutanese were employed on a casual basis, consisting of 178 males and 106 females. Employment across sectors showed that FDI companies employed 5,213 regular Bhutanese workers. The hotel and resorts sector accounted for the largest share with 1,780 employees, representing 34 percent of total FDI employment. Financial services followed closely with 1,569 employees, accounting for 30 percent. The IT and ITES sector employed 675 Bhutanese workers, or 13 percent of the total. Production and manufacturing contributed 973 jobs, representing 18.7 percent, while agro-based production and other services accounted for 159 employees, or 3 percent, and 57 employees, or 1 percent respectively. Tax contributions from reporting FDI companies amounted to Nu 2.37 bn for the income year 2024. This represented an increase of 14.2 percent compared to the contribution of Nu 2.07 bn recorded in the income year 2023. The figures were compiled from the annual survey and included corporate tax, customs duties and other applicable taxes, as well as contributions to the Government.