Study Finds 54 Regulatory Hurdles Impeding Business in Phuentsholing and Samtse

Businesses in Bhutan’s two principal border commercial hubs, Phuentsholing and Samtse, are grappling with 54 regulatory and operational barriers that are constraining trade, investment and economic growth. Spread across 11 major regulatory domains, these include, complex licensing and permit requirements, shortages of skilled workers, challenges associated with the Goods and Services Tax (GST) amongst others.

The above has been outlined in the “Economic Gateways of Bhutan: Business Regulatory Process Review in Phuentsholing and Samtse”, which was released by the Bhutan Chamber of Commerce and Industry (BCCI) last week.

Phuentsholing and Samtse serve as Bhutan’s primary gateways to international trade, handling more than 90 percent of the country’s imports and facilitating a significant share of exports. However, despite their strategic importance, businesses operating in these regions continue to face regulatory bottlenecks, labour shortages, trade barriers and infrastructure constraints that undermine competitiveness and increase the cost of doing business.

Among the most pressing concerns are complex licensing and permit requirements, shortages of skilled workers, challenges associated with the Goods and Services Tax (GST), procurement inefficiencies, delays in government service delivery, limited access to finance, market access constraints, land shortages and inadequate trade infrastructure.

Businesses also highlighted concerns over quality management systems, cross-border trade barriers and the lack of structured private-sector participation in local planning and decision-making processes. As Bhutan’s principal trade gateways, disruptions affecting business operations in these areas often ripple through the national economy, influencing supply chains, commodity prices and the availability of goods across the country.

The study also outlines ten strategic recommendations aimed at transforming the two border towns into stronger engines of national economic growth.

Among the recommendations is the development of a dedicated Border Economic Development Strategy that would provide targeted incentives, simplified licensing procedures and specialized support for sectors most exposed to cross-border competition.

It also calls for an Integrated Border Tourism Strategy, including extending the Sustainable Development Fee waiver period from 24 hours to 72 hours to encourage longer visitor stays and boost local tourism-related businesses.

Other recommendations include establishing single-window regulatory service centres in both Phuentsholing and Samtse, reforming GST provisions to better protect domestic industries, strengthening enforcement against business fronting, modernizing digital trade and compliance systems, and improving access to finance for businesses.

Recommendations for stronger bilateral engagement with Indian authorities to address cross-border trade bottlenecks such as Bhutanese vehicles’ access to the FASTag toll system, cargo clearance limitations at Chamurchi Land Customs Station and the reopening of the Duarpani Gate in Samtse are also made.

Investment in warehousing facilities, road networks and freight infrastructure also features prominently among the proposed interventions.

Additionally, the study advocates institutionalizing private-sector participation in local governance through formal consultation mechanisms involving business associations and local governments.

The review builds on the first national Business Regulatory Process Review conducted in 2024, which identified 235 regulatory bottlenecks affecting businesses across Bhutan.

Business leaders welcomed the report, describing it as an important platform for bringing regional concerns into national policy discussions.

BCCI Regional Secretary Kelzang said addressing the identified barriers could generate significant economic benefits for both the border regions and the wider national economy.

Chorten Dorji, Project Director, V4GCP Project & Executive Director, Handicrafts Association of Bhutan, said it would strengthen the private sector’s participation in decision-making to realize the ambitions of Bhutan’s 21st Century Economic Roadmap.

General Secretary of Bhutan Exporters Association (BEA), Tshering Yeshi said that the report has pioneered in providing a platform for regional economic sectors to voice their concerns and issues, which will bring far-reaching economic impacts to the nation’s economic artery. “We hope BCCI will continue to carry forward this initiative in the future,” he added.

Similarly, stakeholders from the export sector noted that improving conditions in Bhutan’s key trade gateways would strengthen economic resilience and enhance the competitiveness of Bhutanese enterprises.

The report also presents a roadmap for addressing long-standing regulatory constraints and unlocking the economic potential of the country’s most critical border trade corridors.

With businesses increasingly calling for faster reforms, the findings are expected to feed into ongoing government efforts to improve the business environment, facilitate trade and strengthen Bhutan’s economic competitiveness in the years ahead.

The report was developed through an extensive consultative process involving multi-sectoral Technical Working Group comprising representatives from key industries and economic sectors in both towns. The review included consultations with businesses, field visits to industrial estates and border facilities, peer validation exercises and discussions with relevant government agencies.

Tashi Namgyal, Thimphu

Post Views: 17