Bhutan Advances Digital Transformation, Targets Expansion of Digital Economy

June 25, 2026

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Bhutan is making steady progress in its digital transformation journey, with the digital economy emerging as a growing source of employment, income generation, and innovation across sectors, according to the State of the Nation Report presented to Parliament on June 16 by Prime Minister Dasho Tshering Tobgay.

The report highlights key achievements under the National Flagship Programme for Digital Transformation and outlines ambitious plans to further strengthen the country’s digital economy during the 2026-2027 fiscal year.

Describing technology as indispensable to national development, the report states that it presents a significant opportunity to accelerate economic growth and improve service delivery, reaffirming the government’s commitment to harnessing digital technologies to drive socio-economic progress.

Over the past two years, the digital economy has become an increasingly important contributor to employment. According to the report, the sector has created jobs for approximately 1,230 Bhutanese, while the Information and Communication Technology (ICT) industry now generates an estimated Nu. 500 million in additional income annually.

One of the most notable achievements in Bhutan’s digital transformation efforts has been the successful establishment of the National Digital Identity (NDI) system. The report notes that the platform enables citizens to access services and verify their identities online in a safe and secure manner, making digital transactions and government services more efficient and accessible.

The NDI system has also attracted international attention. According to the report, Bhutan’s digital identity platform has gained global recognition, with discussions underway with several countries interested in adopting or learning from the technology.

As the use of digital services expands, the government is placing greater emphasis on cybersecurity. The report states that a Cyber Security Strategy has already been developed and is being implemented to strengthen digital resilience and safeguard critical systems and infrastructure from emerging cyber threats.

Another significant development is the formulation of a National Artificial Intelligence (AI) Strategy. The report outlines plans to harness AI across key sectors, including agriculture, education, healthcare, and public service delivery.

According to the report, artificial intelligence has the potential to improve efficiency, enhance productivity, strengthen decision-making, and create new opportunities for innovation and economic growth.

To support the expanding digital economy, Bhutan is also working to improve internet connectivity and digital infrastructure. The report states that discussions are ongoing with India and Bangladesh to establish a Third Internet Gateway, which is expected to strengthen the country’s internet backbone and support the growth of an ICT-driven economy.

The proposed gateway is regarded as a critical step toward improving connectivity, enhancing network reliability, and reducing Bhutan’s dependence on a limited number of international internet links.

Despite the progress made, the report identifies the high cost of internet access as one of the most significant barriers to digital transformation. It notes that “the biggest challenge in digital transformation is the high cost of internet access” and states that the government is engaging with Druk Holding and Investments to explore ways of reducing internet costs for both consumers and businesses.

Meanwhile, the government has set ambitious targets for expanding the digital economy during the 2026-2027 fiscal year.

According to the report, the digital economy’s contribution to Gross Domestic Product (GDP) is expected to increase from USD 44.081 million in 2025 to USD 60 million.

To achieve this goal, the government plans to strengthen the capabilities of ICT professionals, promote innovation, support startups, attract foreign investment, and expand digital skilling programmes.

The report also sets a target of creating 1,000 quality jobs in the digital sector. These opportunities will be supported through initiatives focused on capability development, strengthening the innovation and startup ecosystem, building international partnerships, attracting foreign direct investment (FDI), and promoting digital freelancing.

Foreign investment is expected to play a key role in accelerating sectoral growth. The government aims to attract five FDI projects in the technology sector over the coming year to stimulate investment, create employment opportunities, and introduce new technologies and expertise into the country.

Efforts to strengthen digital public infrastructure will also continue. The report states that at least 10 GovStack components will be developed and implemented to improve government service delivery and enhance interoperability across digital platforms.

The NDI system will undergo further enhancement as part of these efforts. According to the report, 10 additional NDI features are expected to be introduced or upgraded, including API integrations for digital signatures, financial services, telecommunications, biometric authentication, and guardianship wallets.

These improvements are expected to make digital transactions more secure, seamless, and accessible for citizens and businesses alike.

Sherab Dorji, Thimphu

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