Presentation on Bhutan

BHUTAN- Land of Thunder Dragon

The SAARC Perspective:

• South Asian Association for Regional Cooperation (SAARC) was established in 1985.
• Formed as non-political forum to create cooperation among Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
• Platform for the people of South Asia to strive towards socio-economic progress in a spirit of friendship, trust and understanding.
• Afghanistan joined the organization in 2005.
• South Asian Free Trade Area (SAFTA) was introduced in 2004 at the 12^th SAARC summit in Islamabad.

Bhutan’s SAARC Perspective:

• Joining SAARC was politically significant for a small nation-state like Bhutan.
• Bhutan was compelled to extend its relations with countries other than India to consolidate its status as the sovereign nation that it has been historically.
• His Majesty said at the first SAARC summit in 1985: “We have to bear in mind that in spite of all our heterogeneity, we are geographically one homogeneous unit, that our peoples have lived together in peace and friendship for countless centuries, and that they share many values rooted in our common past.”
• As a member of SAARC Bhutan has been able to diversify its trade link with South Asian countries while enhancing its status as an independent nation-state.

About Bhutan:

•      Location: Southern Asia, between China and India, Landlocked

•      Area: 38, 394 sq. km

•      Nationality: Bhutanese

•      Population: 716,896

•      Ethnic Groups: Bhote 50%, Nepalese 35%, Indigenous or migrant tribes 15%

•      Religions:  Lamistic Buddhist 75%, Indian and Nepalese- influenced Hinduism 25%

•      Language: Dzongkha (Official)

National Flag of Bhutan

National Emblem of Bhutan

            H.M. Jigme K.N. Wangchuck

            H.E. Jigmi Y. Thinley

Economic Review:

Other SAARC Nations and Relations:

India

•      It is the largest country among the SAARC nations.

•      Economically very strong

•      Acts like father figure among SAARC nations.

Relationship with Bhutan:

• Bilateral cooperation in the hydropower sector has been carried forward with the formal inauguration of the 60 MW Kurichhu Hydroelectric project in April 2006, and commissioning of the 170 MW first unit of 1020 TALA Hydroelectric Project in July 2006.
• In Joint Session of the Bhutanese Parliament in May 2008, Prime Minister Dr. Manmohan Singh informed that the total bilateral economic engagement with Bhutan over the next five years to be of the order of Rs./ Nu. 100 billion.
• India is not only Bhutan's main development partner but also its leading trade partner.
• A free Trade regime exists between India and Bhutan. The India-Bhutan Trade and Commerce Agreement which expired in March 2005, has been renewed for a period of 10 years. Currently, the major items  of exports from Bhutan to India are electricity (from Tala, Chukha and Kurichhu Hydroelectric Project), base metals and articles, minerals, vegetable fat and oils, alcoholic beverages, chemicals, cement, timber and wood products, cardamom, fruit products, potatoes, oranges and apples, raw silk, plastic and rubber products.

Nepal

•      Like Bhutan it is also landlocked and known as “Country of Himalayas”

•      Known for Birth Place of Buddha

Relationship with Bhutan:

• The growth of trade between Nepal and Bhutan has been affected due to the refugee crisis.
• In 2008-09, Bhutan's exports to Nepal stood at Rs. 300 million, while Nepal's exports to Bhutan amounted to Rs. 200 million.
• Bhutan and Nepal are landlocked Himalayan countries with close social and cultural linkages.
• Bhutan and Nepal both are predominantly agricultural countries. However, there exists scope for increasing bilateral trade, cultural exchanges and cooperation in the field of tourism.

Bangladesh

•      It is second most populous country in SAARC

•      Second largest exporter to third countries among SAARC countries

•      It is the world’s largest contributor to United Nations peacekeeping operations.

Relationship with Bhutan:

• Bhutan and Bangladesh signed a treaty and bilateral trade agreement in 1980, granting each other the "most favored nation" preferential status for development of trade. 
• In the renewed agreement, Bangladesh gave free access to 18 major categories of import items from Bhutan.
• The Bangladeshi Prime Minister also promoted the importing of electricity generated in Bhutan, and proposed a Bhutan-Bangladesh bus service across the territories of India.

Pakistan

•      It is the only sovereign country in South Asia.

•      It is the second largest country among SAARC nations.

Relationship with Bhutan:

• Non- resident diplomatic relation was established in 1988.
• There is not a high degree of bilateral cooperation between the two countries.
• Bhutanese nationals have attended various programs , trainings and courses in Pakistan under the funding schemes of UNDP, World Bank, UNESCO , UNICEF and so on.
• Over the years, various levels of official visits have taken place in relation to SAARC agendas as well as meetings arranged by UN agencies.

Sri Lanka

•      Best known for Democratic Socialist Republic country.

•      It is an island situated in northern Indian Ocean.

•      Attractive destination for tourists.

Relationship with Bhutan:

• Both countries are rich in Buddhist tradition and non-resident diplomatic relation established in 1987.
• Thimpu served as the venue for talks between representatives of the Sri Lankan Government and six Tamil groups including the Tamil United Liberation Front.
• Under SAPTA, Sri Lanka has agreed to grant Bhutan a special tariff import rate for apples, concessions for oranges, processed fruits, and wood products.
• Likewise, Bhutan has agreed to grant concessions on the import of tyres, chocolates and semi-precious stones from Sri-Lanka.
• Government of Sri Lanka also sponsor for various courses, training and programs in Bhutan.

Maldives

•      It is also an island country in Indian Ocean.

•      It is the smallest country among SAARC Nations.

•      Attractive destination for luxurious tourists.

Relationship with Bhutan:

• Formal diplomatic relation between Bhutan and the republic of Maldives is established on 20^th July, 1984.
• Cultural cooperation was signed in during president Gayoom ‘s visit to Bhutan in 1987.
• Maldivian government has made technical cooperation by sponsoring nurses at Royal Institute of Health Sciences in Bhutan and trained Bhutanese in hotel and catering services.
• There has been a steady stream of visits made by Bhutanese and Maldivian officials.
• In 1987, his Majesty presented a contribution of Nu. 1 million towards relief operations in the aftermath of a tidal wave disaster in Maldives.

Afghanistan

•      Became SAARC member in 2005.

•      Largely affected by terrorism.

•      Countries security is under supervision of NATO force.

Relationship with Bhutan:

• The Islamic Republic of Afghanistan established diplomatic and consular relations with the Royal Government of Bhutan on April 20, 2010.
• They are not involved in any kind of trade.

Problem Areas:

• For two decades, Bhutan has failed to live up to its assurances that it will resolve its refugee problem. 
• There are a number of environmental issues in Bhutan. Among Bhutan's most pressing issues are traditional firewood collection, crop and flock protection, and waste disposal, as well as modern concerns such as industrial pollution, wildlife conservation, and climate change that threaten Bhutan's population and biodiversity.
• Although Bhutan and India share an extraordinary friendship, there are some issues that are of concern to both countries. These are mainly centered on the illegal presence of militants in Bhutan rebelling against the Indian government, the state of relations with China, and (more exclusively for Bhutan) the liberalization policies in India.
• Rural areas, where at least 90 percent of the poor are concentrated, lag behind cities in infrastructure, health, education and other social services, and urban problems are growing worse as well.

Strategic Perspective & understanding about other nations:

• Although Bhutan has excess hydro power energy to distribute other SAARC nations, they are still backward in modern technology infrastructure so they need to cooperate with other SAARC nations to develop technological infrastructure.
• Bhutan must emphasize on industrialization to create more job opportunities for youth of nation.
• One of the major GDP contributors of Bhutan is exporting herbal products; if they can establish their own herbal pharmaceutical companies it will help in economic growth of nation.
• In order to attract more tourists, Bhutan must make flexible policies relating tourism industry.
• As it is an agricultural country it must adapt to modern methodology of agriculture.

PEST Analysis:

Political: 

• Bhutan has a hereditary monarchy.
• Major reforms and innovations started from 1990 through the successful leadership of Wangchuck dynasty.
• Bhutan has diplomatic relation with 21 countries and with the European Union.
• Bhutan is member of various international and regional organizations such as United Nations, SAARC, IBRD, IMF and ABD.
• India is single largest trading and development partner of Bhutan.
• Bhutan does not have diplomatic relation with china.

Economic:

• Historically, Bhutanese economic activity was confined to subsistence farming and animal husbandry.
• Total land under cultivation is around 8% of the total geographical area and it contributes around 21% share to GDP.
• Bhutan has done significant progress in national economy through the development on hydro electricity. Some of the major hydro projects are:

•      Chukha Hydropower Project  - 336 mw

•      Tala Hydropower Project- 1020 mw

•      Kurichhu Hydropower Project-60 mw

•      Basochhu Hydropower Project- 64 mw

• Due to good development of hydropower projects many of the rural areas of Bhutan are gaining significant growth on infrastructure.

Social:

• Population of Bhutan is 716,896
• Ethnic groups: Bhote 50%, ethnic Nepalese 35%, indigenous or migrant tribes 15%
• Religion: Lamastic Buddhist 75%, Indian and Nepalese influenced Hinduism 25%
• GDP-Per Capita(PPP) : $6200
• Population below :poverty line: 23.2%
• Literacy Rate: 47%

Technology:

• Bhutan is still behind in modern technological facilities.
• Telephone - Main line in use :26,300
• Telephone - mobile cellular : 394,300
• Internet User : 40,000
• Broadcast and Telecast Stations: Radio- AM 0, FM 9, Shortwave 1
• Television broadcast stations 1

Strategic Grouping:

As most of the SAARC nation's economy is based on agriculture and agriculture has been a major GDP contributor for countries like Nepal, Bhutan, Afghanistan, and Pakistan. Therefore, strategic grouping has been done on the basis of contribution of agriculture on GDP.

SWOT Analysis of Bhutan:

STRENGTH

• Agricultural Market-organic farming
• Rural labor force
• Cultural and religious importance

WEAKNESS 

• Low economic growth rate
• Low trade of various goods and services

OPPORTUNITIES

• Huge possibilities of job opportunities
• Increase in per capita income
• FDI

THREAT

• Loss of small cottage industries
• Decline in environment and quality of labor
• Threat of financial crisis

Solution and Reboot:

• Bhutan should show some flexibility to solve the refugee problem with the help of good mediator.
• Use of clean energy should be encouraged for domestic purpose. As it’s the initial stage for the development of industrialization and construction work, it is very important to make far sighted plan to control pollution and environmental degradation.
• In this globalized scenario, Bhutan should be more open to other nations beside India also. It will make Bhutan more competitive and there will not be question and risk on national sovereignty.
• Bhutan should not only think about the development of Gross Domestic Product but it is very important to take some serious major to develop Gross Domestic Happiness.

Strategic Leadership Aspect:

• Bhutan has huge Hydropower potential.
• Hydropower is the largest renewable energy sources in Bhutan.
• Hydropower potential is estimated at 60,000 MW.
• Total estimated Renewable energy resources of Bhutan are given

Possibility of Success:

• Hydroelectricity
• Tourism
• Herbal Products – Pharmaceuticals Cosmetics
• Processed Food – Petty Consumer Items, beverages
• Textiles, organic products and tea

References

•     Trading economics., 2013. trading economics.com [Online] Available at: www.tradingeconomics.com
[Accessed 20 10 2013].

• Global energy observer., 2013. globalenergyobservatory.org [Online] Available at: globalenergyobservatory.org [Accessed 20 10 2013].

•   Global Finance., 2013. [Online] Available at: http://www.gfmag.com/gdp-data-country-reports/212-nepal-gdp-country-report.html#axzz2guyeh1uT [Accessed 19 10 2013].

•  Bhutan 2008., 2008. [Online] Available at: http://www.bhutan2008.bt/en/image/tid/4 [Accessed 21 10 2013].

•    IDE JETRO., 2013. [Online] Available at: http://www.ide.go.jp/English/Publish/Download/Jrp/pdf/132_3.pdf
[Accessed 21 10 2013].