Introduction

The aim of this report is to represent the business profile of a country imagining that I am
working for World Bank. So, I choose Bhutan; officially the Kingdom of Bhutan is a
landlocked country in South Asia. The rationale behind choosing Bhutan and preparing its
business profile is to further extend our knowledge about our neighborhood country and to
analyze potential business opportunities that may arise with the course of time. To ease
readers understanding, this report is broken into three major sections; the current economic
situation of Bhutan, its trading patterns and its exchange rate trends. Then, eventually we
reach to conclusion and sum up the findings of the report.

Current Economic Condition: The economy of Bhutan is primarily based on agriculture

and forestry which contributes to livelihood for more than 60% of the population. Thimphu,
is the capital and the largest economic centre of Bhutan. The nation currency of Bhutan is
called “Ngultrum”. Bhutan follows the fiscal year of 1 Jan-31 December. The primary
language of Bhutan is Bhutanese (Dzongkha). In South Asia, Bhutan ranks first in economic
freedom, ease of doing business and peace; also is the least corrupt country as of 2016. To
better understand the current economic condition of Bhutan, major economic variables are
highlighted below-

 GDP: $2.627 Billion (nominal, FY 2018 est.)

 GDP growth rate: 7.6% (18/19 e)
 GDP per capita: $3215 (nominal, FY 2018est.)
 Inflation: 3.987% (2019 f est.)
 Unemployment: 3.2% (2017 est)
 Main industries: cement, wood products, processed fruits, alcoholic beverages,
calcium carbide, tourism.
 Foreign reserves: $ 1.206 billion (31 December 2017 est)

Trading Patterns: Trading patterns including exports and imports; the major export goods of
Bhutan are electricity, ferrosilicon, cement, cardamom, calcium carbide, steel rods/bars,
dolomite and gypsum which lead to $554.6 million export (2017 est). Its major export partner
is India accounted for 81.1% of total export (See table in appendix 1). While, the major
import goods are fuel and lubricants, airplanes, machinery and parts, rice and motor vehicles
which accounted for $1.025 billion (2017 est) resulted in trade deficit of $ 470.4 million
(2017).
The economy is largely dependent on India for its strong trade and monetary links and for
financial assistance. Main production in the industrial sector is cottage industry type.
However, each economic program is influenced by the government’s desire to protect the
country’s environment and cultural traditions. For example, the government attracts visitors
who belong to upscale category and environmentally conscientious, in its carefully expansion
of tourist sector. In addition to, Bhutanese government is very sensitive in the issue of
smoking and selling of tobacco. It was the first country in the world to ban smoking and the
selling of tobacco (Wikipedia).

Exchange Rate Trends: The national currency of Bhutan is Ngultrum and is officially
pegged to the Indian Rupee (Rs.), also Indian Rupee is acceptable all over Bhutan except Rs.
500 and Rs.2000 currency notes (VisitBhutan.com). So, the Bhutan currency to INR is,
1 Rupee=1 Ngultrum.
The exchange rate for the Bhutan currency works similarly to that of India's. The
currency value is floating, rather than being fixed. It depends on various factors such as
demand and supply of the Bhutan currency, demand and supply of foreign currency,
interest rates applicable etc. (Holify.com).

The past 5 years trend of exchange rate between BTN and INR shows that BTN is
closely related to INR and the volatility of BTN is largely influenced by IDR (Refer to
historical exchange rate of last 5 years in Appendix 1).

Conclusion: After analyzing Bhutan’s current economic condition, trading pattern and
exchange rate trends, it can be said that Bhutan has huge potential to expand its
businesses globally specially its Hydropower and tourism industry can become a major
part of its GDP contributions. In addition to, making further contribution towards
building proper infrastructure and meeting shortage in the labor market will give Bhutan
an ease to boost its businesses internationally.