About
Bhutan

Economy of Bhutan

The economy, one of the world's smallest and least developed, is based on hydroelectricity, tourism, agriculture, and forestry. Rugged terrain makes it difficult to develop roads and other infrastructure. Despite this constraint, hydroelectricity and construction continue to be the two major industries of growth for the country. As these two economic sectors contribute to increased productivity, Bhutan's development prospects are positive. The Tala hydroelectric project, completed March 2007, has bolstered government revenue and exports, and will continue to do so for the next several years. In late 2009, Bhutan signed four memoranda of understanding (MOUs) with India to prepare four additional hydroelectric projects in Bhutan.

The Bhutanese Government expects the tourism sector to expand as well; however, restrictions on visitor numbers and minimum per-day spending requirements will impede rapid growth.

Bhutan's tenth five-year plan (2008-2013) focuses on ways to manage the country's new-found wealth with special emphasis on three development areas: rural, regional, and private-sector. India has pledged to support the plan and promised to double the amount of aid given to Bhutan in the previous five-year plan. The parliament had not yet finalized the tenth five-year plan as of October 2008; it intended to do so during the next session later in 2008.

Bhutan's economy has been on an upturn due to recent subregional economic cooperation efforts. Already this plan has strengthened the current trade relations with India, as well as opened an avenue of trade with Bangladesh. In May 2003, the Bilateral Free Trade Agreement between Bangladesh and Bhutan was re-signed. Bangladesh is Bhutan's second largest trade partner, after India. In January 2004, as a member of the South Asian Association for Regional Cooperation (SAARC), Bhutan also joined the South Asian Free Trade Agreement (SAFTA); Bhutan will host the SAARC summit in Thimphu in April 2010. In February 2004 Bhutan joined the Bangladesh, Indian, Myanmar, Singapore, and Thailand Economic Cooperation Forum (BIMSTEC). Bhutan has applied for membership in the World Trade Organization and is in the process of developing clear legal and regulatory systems designed to promote business development.

GDP (purchasing power parity 2007 est.): U.S. $3.359 billion.
Real growth rate (2007): 8.5%.
Per capita GDP PPP (2007 est.): U.S. $5,200.
Natural resources: hydroelectricity, timber, limestone, clay, and slate.
Sectors as percent of GDP (all figures, 2006-2007): Agriculture--22.3%; industry--37.9%; services--39.8%.
Trade: Principal exports (2006-2007)--electricity 26.5%, recorded media 16.8%, palm oil 7.4%, copper wire 6.2%. Principal imports (2006-2007)--diesel fuel 7.9%, copper wires 7.3%, crude palm oil 5.5%, petrol 3.1%. Major trade partners--India, Hong Kong, Japan, Germany, Singapore, and Thailand.

Geography of Bhutan

Government of Bhutan

Traditionally a decentralized theocracy and, since 1907, a monarchy, Bhutan completed its successful transition to a constitutional monarchy in 2008. Bhutanese officials began preparations for the first-ever elections in 2006, shortly before King Jigme Singye Wangchuck abdicated in December 2006. The National Council of the new bicameral parliament was elected in December 2007, and National Assembly elections followed in March 2008. The Druk Phuensum Tshogpa (DPT) won 44 out of 47 seats in the latter election in which 80% of the 320,000 registered voters cast a ballot.

Migration by Nepalis into southern Bhutan began in the early 19th century. Currently these and other ethnic Nepalis, referred to as Lhotsampas, comprise 35% of Bhutan's population. In 1988, the government census led to the branding of many ethnic Nepalis as illegal immigrants. Local Lhotshampa leaders responded with anti-government rallies demanding citizenship and attacks against government institutions. Between 1988-1993, thousands of ethnic Nepalis fled to refugee camps in Nepal alleging ethnic and political repression. As of January 20, 2010, 85,544 refugees resided in seven camps. Bhutan and Nepal have been working for over seven years to resolve the refugee problem and repatriate certain refugees living in Nepal. The resettlement of Bhutanese refugees from the camps in Nepal to the U.S., Australia, and New Zealand is proceeding, with over 26,000 refugees repatriated to third countries (over 23,000 are now settled in the U.S.). The transition to democracy may improve the situation: of its 47 candidates, the DPT fielded nine Nepali speakers. Officials from both the DPT and PDP have said that resolving the grievances of ethnic Nepalis is a priority.

The spiritual head of Bhutan, the Je Khempo--the only person besides the king who wears the saffron scarf, an honor denoting his authority over all religious institutions--is nominated by monastic leaders and appointed by the king. The Monk Body is involved in advising the government on many levels.

Bhutan is divided into 20 districts or dzongkhags, each headed by a district officer (dzongda) who must be elected. Larger dzongkhags are further divided into subdistricts called dungkhags. A group of villages are grouped to form a constituency called gewog, administered by a locally elected leader entitled a gup. There are 201 elected gups. In 2002, the National Assembly created a new structure for local governance at the geog level. Each local area is responsible for creating and implementing its own development plan, in coordination with the district.

Principal Government Officials
Head of State--King Jigme Khesar Namgyel Wangchuck
Prime Minister--Jigme Y. Thinley
Minister of Foreign Affairs--Ugyen Tshering
Minister for Economic Affairs--Khandu Wangchuk
Minister for Trade and Industry--Lyonpo Yeshey Zimba
Minister for Home and Cultural Affairs--Minjur Dorji
Minister for Finance--Wangdi Norbu
Minister for Education--Thakur Singh Powdyel
Minister for Health--Zangley Dukpa
Minister for Labor and Human Resources--Dorji Wangdi
Minister for Works and Human Settlements--Yeshey Zimba
Minister for Information and Communications--Nandalal Rai
Minister for Agriculture--Pema Gyamtsho
Ambassador to the United Nations Headquarters--Lyonpo Daw Penjo

The United States and the Kingdom of Bhutan have not established formal diplomatic relations; however, the two governments have informal and cordial relations.

Bhutan maintains a Permanent Mission to the United Nations in New York. The address is 763 First Avenue, New York, NY 10017; tel: 212-682-2268, fax: 212-661-0551.

Government
Type: Peacefully evolving from an absolute monarchy to a constitutional monarchy. The Royal Government, prompted by the King, released a draft constitution in March 2005. The King and Crown Prince conducted consultations on the constitution in all 20 dzongkhag (districts) in 2005 and 2006. Bhutan will adopt the constitution in early 2008. Elections for the National Council (upper house) took place in December 2007, and elections for the National Assembly (lower house) will occur in March 2008.
National Day: December 17 (1907).
Branches: Executive--King or Druk Gyalpo (chief of state), Prime Minister (head of government), Council of Ministers, Royal Advisory Council (together they make the Cabinet or Lhengye Zhungtsho). Advisory--Monastic Order (or Monk Body-Dratshang). Legislative--National Assembly (Tshogdu). Judicial--High Court (Thrimkhang Gogma), District Courts, and local area arbitration.
Administrative subdivisions: 20.
Political parties: Two. People's Democratic Party and Druk Phuensum Tshogpa
Suffrage: Registered resident with legitimate citizenship, age 18 and above.

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History of Bhutan

Bhutan's early history is steeped in mythology and remains obscure. It may have been inhabited as early as 2000 B.C., but not much was known until the introduction of Tibetan Buddhism in the 9th century A.D. when turmoil in Tibet forced many monks to flee to Bhutan. In the 12th century A.D., the Drukpa Kagyupa school was established and remains the dominant form of Buddhism in Bhutan today. The country's political history is intimately tied to its religious history and the relations among the various monastic schools and monasteries.

The consolidation of Bhutan occurred in 1616 when Ngawana Namgyal, a lama from Tibet, defeated three Tibetan invasions, subjugated rival religious schools, codified an intricate and comprehensive system of law, and established himself as ruler (shabdrung) over a system of ecclesiastical and civil administrators. After his death, infighting and civil war eroded the power of the shabdrung for the next 200 years when in 1885, Ugyen Wangchuck was able to consolidate power and cultivated closer ties with the British in India.

In 1907, Ugyen Wangchuck was elected as the hereditary ruler of Bhutan, crowned on December 17, 1907, and installed as the head of state Druk Gyalpo (Dragon King). In 1910, King Ugyen and the British signed the Treaty of Punakha which provided that British India would not interfere in the internal affairs of Bhutan if the country accepted external advice in its external relations. When Ugyen Wangchuck died in 1926, his son Jigme Wangchuck became the next ruler, and when India gained independence in 1947, the new Indian Government recognized Bhutan as an independent country. In 1949, India and Bhutan signed the Treaty of Peace and Friendship, which provided that India would not interfere in Bhutan's internal affairs but would be guided by India in its foreign policy. Succeeded in 1952 by his son Jigme Dorji Wangchuck, Bhutan began to slowly emerge from its isolation and began a program of planned development. Bhutan became a member of the United Nations in 1971, and during his tenure the National Assembly was established and a new code of law, as well as the Royal Bhutanese Army and the High Court.

In 1972, Jigme Singye Wanchuck ascended the throne at age 16. He emphasized modern education, decentralization of governance, the development of hydroelectricity and tourism and improvements in rural developments. He was perhaps best known internationally for his overarching development philosophy of "Gross National Happiness." It recognizes that there are many dimensions to development and that economic goals alone are not sufficient. Satisfied that Bhutan's democratization process was well in train, he abdicated in December 2006 rather than wait until the promulgation of the new constitution in 2008. His son, Jigme Khesar Namgvel Wangchuck became King upon his abdication.

People of Bhutan

The people of Bhutan can be divided into three broad ethnic categories--Ngalops, Sharchops, and Lhotsampas. The Ngalops make up the majority of the population, living mostly in the western and central areas. The Ngalops are thought to be of Tibetan origin, arriving in Bhutan during the 8th and 9th centuries A.D. and bringing Buddhism with them. Most Ngalops follow the Drukpa Kagyupa discipline of Mahayana Buddhism. In a country that is deeply rooted within the Buddhist religion, many people's sect of religion, as opposed to their ethnic group, characterizes them. The Ngalops predominate in the government, and the civil service and their cultural norms have been declared by the monarchy to be the standard for all citizens.

The Sharchops, who live in the eastern section of Bhutan, are considered to be descendants of the earliest major group to inhabit Bhutan. Most follow the Ningmapa discipline of Mahayana Buddhism. Sharchop is translated as "people of the east." The Ngalops, Sharchops, and the indigenous tribal people are collectively known as Drukpas and account for about 65% of the population. The national language is Dzongkha, but English is the language of instruction in schools and an official working language for the government.

The Lhotsampas are people of Nepali descent, currently making up 35% of the population. They came to Bhutan in the 19th and 20th centuries, mostly settling in the southern foothills to work as farmers. They speak a variety of Nepali dialects and are predominantly Hindu.

Nationality: Noun and adjective--Bhutanese.
Population: Approximately 672,425 (according to the 2005 census). Domestic and international estimates of the population vary greatly.
Annual population growth rate (2007 est.): 2.082%. Density--45 per sq. km.
Ethnic groups: Drukpa 50% (which is also inclusive of Sharchops), as well as ethnic Nepalese (Lhotsampas) 35%, and indigenous or migrant tribes 15%.
Religions: Lamaistic Buddhist 75% (state religion), Indian- and Nepalese-influenced Hinduism 25%.
Languages: Dzongkha (official language), Bumthang-kha, English (medium of instruction), Sharchop-kha, Nepali.
Education: Years compulsory--11. Literacy--59.5% (Ministry of Education General Statistics 2007). Primary school net enrollment rate 82.1% (UNDP). Women's literacy--59.5% (2007).
Health: Infant mortality rate (2007 est.)--total: 96.37 deaths/1,000 live births; male: 94.09 deaths/1,000 live births; female: 98.77 deaths/1,000 live births. Life expectancy --total population 67 years; male 69.1 years; female 59.5 years (Ministry of Education General Statistics 2007).
Work force (2005): Agriculture--94%; industry--1%; services--5%. The unemployment rate is 3.1% (2005 est.).