AGP Executive Report

Local Governance & Finance: Bhutan’s Ministry of Finance will start a performance-linked assessment for dzongkhags and thromdes from FY 2026–27, tying 30% of capital block grants to delivery of planned activities (50 points), financial management, and compliance—using annual key delivery targets as the baseline. Water Security: A National Water Resources Inventory Report 2026 flags serious stress in Paro and Thimphu, with 18 sources already dried up and 227 more drying out, pointing to climate change, forest degradation, and human activity as key drivers. Industrial Policy Delivery: MoICE says it hit 192 of 193 KPIs in FY 2025–26 (99.5%), including rapid industry establishment (5,285 new industries/CSIs) and strong regional office performance—while the next test is turning targets into productive jobs and exports. Cross-Border Retail Pressure: A Competition and Consumer Affairs Authority study finds Phuentsholing residents increasingly shop in Jaigaon—94.9% rely on it for some goods—fueling a cost-of-living squeeze in Bhutan’s border retail market. Energy & Investment: DGPC and JSW Neo sign agreements for the 920 MW Punatsangchhu-III hydropower project, with construction aimed to start in late 2027 and total cost pegged at Nu 78 billion at prefeasibility stage. Digital & Connectivity: BICMA clarifies the Third International Internet Gateway will operate under existing licensing and may not automatically cut consumer tariffs, as added gateway costs could be passed on. Tourism Diversification: Tourism arrivals surged in the first half of 2026, but coverage warns Bhutan must spread benefits beyond the western circuit into central, eastern, and southern communities. Agri-Exports & Niche Supply: Matsutake demand is rising (notably for Japan), but exporters in Genye say limited supply caps shipments—while the Matsutake Festival is drawing more visitors and local business interest.

MoICE Performance Push: Bhutan’s Ministry of Industry, Commerce and Employment says it hit 192 of 193 KPIs (99.5%), easing regulations and backing investment and businesses—while still flagging gaps like access to finance and some startups closing. Energy Diversification: Druk Holding Investments is mapping Bhutan’s geothermal potential at 11 known hot spring sites, supported by the World Bank and partners from Iceland and Kenya, as part of its 10X Roadmap beyond hydropower. Crypto Regulation Debate: A new policy argument says banning crypto isn’t working; Bhutan and the region should move toward practical regulation instead of prohibition. Tourism Pressure in Bumthang: Local businesses in Bumthang want more tourism facilities and attractions as occupancy stays low, even with national visitor numbers rising. Highland Support Plan: Bhutan’s Home Affairs Ministry is setting up a Special Technical Committee to assess highlanders’ livelihood challenges, with district representatives from 10 districts. India-Bhutan Connectivity & Investment: India’s PTA tranche includes Nu 3bn for projects like fencing to protect farms, hospital upgrades, disability services, and a National Emergency Operations Centre—plus ongoing India-Bangladesh cross-border connectivity plans that could improve regional trade routes.

Digital Payments & Fintech: A new report highlights how India’s UPI rollout built trust through safeguards like two-factor authentication, transaction limits, and fraud controls, and says the next fintech wave will use consented data and AI-enabled analytics to expand credit and insurance access. Bhutan-India Connectivity & Trade: India’s Project Tied Assistance tranche under the 13th Five-Year Plan includes Nu 500M for chain-link fencing to protect farms from wildlife, plus funding for urban infrastructure, hospital renovations, a disability centre, and a National Emergency Operations Centre—aimed at strengthening Bhutan’s food security, services, and disaster readiness. Hydropower Partnership: JSW Energy and Bhutan’s DGPC have signed pacts to jointly develop the 920 MW Punatsangchhu-III hydro project, keeping Bhutan’s energy pipeline and cross-border investment momentum in focus. Tourism & Local Business Pressure (Bhutan): Bumthang businesses are pushing for more tourism facilities and attractions after low occupancy and limited stays keep hotels underutilised, despite Bhutan welcoming over 200,000 tourists in 2025. Highland Support (Bhutan): Bhutan’s Home Affairs Ministry is setting up a Special Technical Committee to assess highlanders’ challenges, with district representatives including Bumthang, Haa, Gasa, Lhuentse, Paro, Thimphu, Trashigang, Trashi Yangtse, Trongsa and Wangdue Phodrang.

Bhutan–India Energy Deal: JSW Energy and Bhutan’s DGPC signed a shareholders’ agreement to jointly develop the 920MW Punatsangchhu-III hydropower project in Wangdue Phodrang, with DGPC holding 51% and JSW Neo Energy 49%; the detailed project report is now being prepared. Bhutan Development Funding: India approved a new tranche of Project Tied Assistance under the 13th Five-Year Plan for Bhutan, including Nu 500M for chain-link fencing to protect farms from wild animals, Nu 480M for urban infrastructure in seven districts, and major health, disaster-response, and disability-centre allocations. Local Tourism Pressure: Bumthang business owners say low tourist numbers and limited attractions are leaving hotels underutilised, urging more tourism facilities and private investment after occupancy stays around 50% in peak periods. Highland Support Plan: Bhutan’s highland districts (including Thimphu) are set to feed into a Special Technical Committee formed by India’s Home Affairs Ministry to assess winter livelihood challenges like grazing limits, human-wildlife conflict, and livestock losses. Regional Business & Connectivity: India’s cross-border connectivity push via Bangladesh aims to link Northeastern states with road/rail and boost trade, including port-rail links that could connect India, Nepal and Bhutan to Bay of Bengal routes. Industry Signals from India: Page Industries reported a 7.9% Q1 FY27 revenue rise, reflecting steady consumer demand in apparel and innerwear.

Hydropower Deal: JSW Energy and Bhutan’s DGPC signed a shareholders’ agreement to jointly develop the 920MW Punatsangchhu-III project, with DGPC holding 51% and JSW Neo Energy 49%, and the detailed project report now being prepared. Cross-border Support: India approved a new tranche of Project Tied Assistance under the 13th Five-Year Plan for Bhutan, including Nu 500M for chain-link fencing to protect farms from wild animals, Nu 480M for urban infrastructure, and funding for health, disaster readiness, and a new Thimphu district court. Local Industry & Tourism: Bumthang businesses are pushing for more tourism facilities and attractions as occupancy stays low, with hoteliers reporting very limited room use even in peak season. Highland Livelihoods: Bhutan’s Home Affairs Ministry is setting up a Special Technical Committee to assess highlanders’ winter challenges, with districts like Bumthang, Haa, Gasa, and Thimphu nominating representatives. Construction Watch: Haa Dzongkhag lifted its moratorium on construction activities after revising the Haa Local Area Plan and Development Control Regulations, restarting approvals for new builds and major renovations.

Bhutan-India Connectivity & Trade: India is planning cross-border road and rail links via Bangladesh to connect its Northeast to the mainland, with the Khulna–Mongla port railway project also flagged as a route that can link India, Nepal and Bhutan to Bay of Bengal ports. Hydropower Deal: JSW Energy and Bhutan’s DGPC signed a shareholders’ agreement to jointly develop the 920 MW Punatsangchhu-III hydro project in Wangdue Phodrang, with DGPC holding 51% and JSW Neo 49%, and DPR work underway. Development Finance (PTA): India approved a new tranche of Project Tied Assistance for Bhutan under the 13th Five-Year Plan, including Nu 500M for chain-link fencing to protect farms from wild animals, Nu 480M for urban infrastructure in seven districts, and funding for health, disability services, and disaster readiness. Urban Planning & Construction: Haa lifted its moratorium on construction activities after revising the Haa Local Area Plan and Development Control Regulations, restarting approvals for new builds, renovations and land subdivisions. Cross-Border Retail Pressure: A Bhutan study says most Phuentsholing residents shop in Jaigaon (94.9% for at least some purchases), driven mainly by lower prices and wider choice, putting local retailers under cost and supply-chain strain. Energy & Skills: Bhutan’s solar push is increasing demand for engineers trained in designing and assessing utility-scale solar projects. Industry Snapshot: Bhutan’s SOEs contribute 23.06% of GDP but only 3.55% of employment, underscoring their weight in capital-intensive sectors like hydropower and telecom.

Hydropower Deal: JSW Energy and Bhutan’s DGPC signed a shareholders’ agreement to jointly develop the 920 MW Punatsangchhu-III hydro project, with DGPC holding 51% and JSW Neo 49%, and DPR work already under way. India-Bhutan Cooperation: India approved about Nu 3 billion in new PTA projects under the 13th FYP, including chain-link fencing for farms, urban infrastructure in seven districts, Gelephu Hospital renovations, a Selwa Centre for persons with disabilities, and a National Emergency Operations Centre. Energy & Growth Context: Bhutan’s economy grew 8.52% in 2025, with electricity generation and the commissioning of Punatsangchhu-II highlighted as key drivers for industry expansion. Construction Update: Haa Dzongkhag lifted its moratorium on construction activities within the Haa Throm boundary, restarting approvals under revised local planning rules. Industry Finance: Page Industries reported Q1 FY27 revenue up 7.9% to Rs 1,420.44 crore, driven by apparel volume growth, though net profit fell 4% year-on-year. Tourism & Skills: Engineers have begun advanced solar training at CST as the sector scales up, while PATA’s knowledge and youth tourism forums are set to bring regional industry leaders and emerging professionals together in Malaysia. Trade & Consumer Pressure: A cross-border retail study says nearly 95% of Phuentsholing residents shop in Jaigaon for better prices and choice, pointing to structural disadvantages for local retailers.

Hydropower Deal: JSW Energy and Bhutan’s Druk Green Power Corporation (DGPC) signed a shareholders’ agreement to jointly develop the 920 MW Punatsangchhu-III hydro project in Wangdue Phodrang, with DGPC holding 51% and JSW Neo Energy 49%; the detailed project report is underway. Energy Skills Push: Engineers have started advanced solar training at CST as Bhutan’s solar sector expands toward larger utility-scale projects. Construction Policy Update: Haa Dzongkhag lifted its moratorium on construction activities inside the Haa Throm boundary, resuming approvals after revisions to the Local Area Plan and Development Control Regulations. Investment & Jobs Angle: A US business delegation met Bangladesh PM adviser Mahdi Amin to discuss expanding US investment and creating jobs—useful context for regional investor sentiment. Tourism Industry Watch: PATA announced the PTM Knowledge Forum 2026 speaker line-up in Sarawak, Malaysia, running alongside PATA Travel Mart, focusing on partnerships and purposeful growth. Economy Snapshot: Bhutan’s state-owned enterprises generated 23.06% of GDP in 2023 while employing only 3.55% of the workforce, underscoring their role in capital-heavy sectors.

Hydropower Deal: JSW Energy and Bhutan’s DGPC signed a shareholders’ agreement to jointly develop the 920 MW Punatsangchhu-III hydro project, with DGPC holding 51% and JSW Neo 49%; DPR work is underway and the JV will be set up for development in Wangdue Phodrang. Solar Skills: Engineers have started advanced solar training at CST as Bhutan scales up solar ambitions toward larger utility-scale projects. Construction Rules: Haa Dzongkhag lifted its moratorium on construction activities after revising the Haa Local Area Plan and Development Control Regulations, with the engineering sector resuming approvals for new builds, renovations and land subdivisions. Food Safety: BFDA tightened lab testing and import controls after calcium carbide was detected in some imported mango consignments, moving to broader surveillance. EV Policy: Bhutan said it will assess the EV market before considering extra incentives, noting EVs still keep a favourable tax setup under recent reforms. Mining Prospects: Bhutan’s first nationwide airborne survey flagged promising copper and tungsten anomalies, plus rare earth and geothermal potential, but officials stressed ground studies are needed to confirm viability. Industry Snapshot: A Finance Ministry report says SOEs contributed 23.06% of Bhutan’s GDP in 2023 while employing only 3.55% of the workforce, underscoring their role in capital-heavy sectors.

Hydropower Deal: JSW Neo Energy and Bhutan’s DGPC have signed a shareholders’ agreement to jointly develop the 920 MW Punatsangchhu-III project in Wangdue Phodrang, with DGPC holding 51% and JSW Neo 49%; DPR work is underway, marking JSW’s first power generation venture outside India. Construction & Land Use: Haa Dzongkhag has lifted its May 22 moratorium on construction inside the Haa Throm boundary, effective immediately, after revising the Haa Local Area Plan and Development Control Regulations; the Dzongkhag Engineering Sector will resume processing building and renovation approvals. Food Safety & Imports: BFDA has tightened mango import testing and rules after calcium carbide was detected in Indian mango consignments; initial tests found 2 positives out of 11, prompting broader surveillance. EV Policy: Bhutan says EVs keep major tax advantages even after GST reforms, and the government will assess affordability in the market before considering further incentives as it targets 70% of new vehicle sales to be electric by 2035. Mining Prospects: Bhutan’s first nationwide airborne survey flagged promising copper and tungsten anomalies, plus potential rare earth and geothermal structures, but officials stress ground studies are needed to confirm viable deposits. Business Environment: Bhutan’s government says it has accelerated reforms to attract investment and strengthen domestic industry, including eased FDI rules, faster approvals, and support for cottage and small industries. Economy Snapshot: Bhutan’s economy grew 8.52% in 2025, driven largely by higher electricity generation after Punatsangchhu-II commissioning, alongside construction and services gains. Cross-Border Retail: A new study finds most Phuentsholing shoppers rely on Jaigaon for lower prices and wider choice, citing higher local operating costs and fragmented supply chains. Infrastructure Resilience: Engineers and planners are being trained to assess and retrofit infrastructure for disaster risks, including earthquakes and glacial lake outburst floods.

Hydropower Deal: JSW Neo and Bhutan’s DGPC have signed a shareholders’ agreement to jointly develop the 920 MW Punatsangchhu-III project, with DGPC holding 51% and JSW Neo 49%, and DPR work now underway. Economic Growth: Bhutan’s economy expanded 8.52% in 2025, led by higher electricity generation after Punatsangchhu-II commissioning, alongside gains in finance, construction and ICT. Business Reforms: The government says it has accelerated policy, regulatory, financial and industrial reforms to improve the business climate, ease FDI and licensing, and support cottage and small industries. EV Affordability: Bhutan’s finance minister says EVs keep major tax advantages even after GST, but the state will assess the EV market before adding more incentives for private buyers. Food Safety: BFDA tightened mango import testing and rules after calcium carbide was detected in consignments, using risk-based oversight to protect consumers. Mining Prospects: Bhutan’s first nationwide airborne survey flagged promising copper and tungsten anomalies, plus rare earth and geothermal potential, but officials stress ground studies are needed. Infrastructure & Industry: Engineers and planners are being trained to strengthen disaster-resilient infrastructure, while Thimphu Thromde’s Olakha clearance targets encroachments ahead of road works. Retail Reality: A cross-border retail study shows most Phuentsholing shoppers rely on Jaigaon for lower prices and wider choice, pressuring local retailers. SOE Footprint: A Finance Ministry report says SOEs generate 23.06% of GDP but employ only 3.55% of the workforce, reflecting their capital-intensive role.

Bhutan Business Reforms: Bhutan has accelerated policy, regulatory, financial and industrial reforms to improve the business climate, ease foreign investment rules, simplify licensing, and expand industrial parks and financing for cottage and small industries. Economic Growth Watch: Bhutan’s economy grew 8.52% in real terms in 2025, driven mainly by higher electricity generation after Punatsangchhu-II, plus gains in construction, finance and information/communication—while mining and agriculture slowed. Food Safety & Imports: BFDA tightened mango import testing and rules after calcium carbide was detected in consignments, with lab checks expanding beyond initial samples. EV Affordability: Bhutan says EVs still keep strong tax advantages, but it will assess the EV market before adding new incentives as it targets 70% of new vehicle sales to be electric by 2035. Mining & Energy Pipeline: Bhutan’s first nationwide airborne survey flagged copper, tungsten, rare earth and geothermal prospects, moving now to ground verification; meanwhile renewable expansion under the 13th Five-Year Plan is pushing more hydropower and solar capacity. Industrial Expansion: Samtse’s industrial transformation is gaining momentum with two industrial parks attracting about Nu 1.72 billion and creating space for 75 industries. Local Industry Disruption: Thimphu Thromde’s clearance of encroachments at Olakha supports road and pothole repairs, but workshop owners worry about construction impacts on customers. Tech/Connectivity Angle: Bhutan’s push for a third international internet gateway is highlighted as a long-term affordability hope.

Food Safety & Imports: BFDA tightened controls on imported Langra mangoes after calcium carbide was found in 12 of 34 samples, requiring pre-release testing and import permits; the earlier round also flagged positives, prompting broader surveillance across border entry points and Thimphu markets. EV Policy: Bhutan will assess the EV market before adding incentives, even as finance officials say EVs keep a favourable tax setup (mostly GST only) while conventional vehicles face GST plus excise. Mining & Geology: A nationwide airborne survey has flagged promising copper and tungsten prospects, plus rare earth and geothermal structures, but the DGM stresses airborne anomalies are only a starting point pending ground verification. Business Climate Reforms: Government accelerated policy, regulatory, and financial reforms to attract investment and grow cottage and small industries, including eased FDI rules and faster approval timelines. Economy Watch: Bhutan’s real GDP grew 8.52% in 2025, led by electricity generation, construction, and finance/insurance, while mining and agriculture slowed. Tourism & Local Economy: The 24-hour SDF waiver will expand beyond Rinchending from September to include Milarepa Lhakhang and Pachu Community Ecotourism Site via approved packages with licensed guides. Industrial Development: Samtse’s industrial parks are expanding manufacturing and heavy industry capacity, with Nu 1.72 billion invested across Dhamdum and Norbugang parks for 75 industries. Energy & Finance Pressure: Foreign reserves fell about USD 31M to USD 1.19bn by July, with higher fuel import costs and ngultrum depreciation cited as key pressures. Governance & Compliance: OAG reported 1,014 criminal and civil cases in FY 2025–26, with substance abuse-related offences dominating the caseload.

Food Safety: BFDA tightened controls on imported Langra mangoes after calcium carbide was found in 12 of 34 samples, triggering mandatory lab testing before release; Bhutan imported over 1,100 tonnes worth nearly Nu 80M last year. Industry & Infrastructure: Thimphu Thromde’s clearance drive at Olakha is removing scrap and encroachments ahead of a 10-month road and pothole repair project—workshop owners welcome better access but worry about construction disruption. Tourism & Services: From September, the 24-hour SDF waiver will let regional visitors go beyond Rinchending to Milarepa Lhakhang and the Pachu Community Ecotourism Site via approved packages with licensed guides, aiming to turn Phuentshogling into a destination. Energy & Renewables: Under the 13th Five-Year Plan, Bhutan is accelerating hydropower and solar expansion, targeting 15,000MW of new hydropower and 5,000MW solar by 2040 to reach 25GW cumulative capacity. Mining & Economic Diversification: Bhutan’s airborne geophysical survey has flagged promising targets for copper, tungsten and rare earth elements, with DGM moving to ground validation and drilling. Industrial Growth: Samtse’s industrial transformation is gaining momentum with Nu 1.72B invested in two industrial parks creating space for 75 industries across manufacturing, agro-processing and heavy industry.

Eurovision Asia: Bhutan is set to crown its first Eurovision Asia star tomorrow, with five finalists competing live on BBS for the chance to represent the country on the world stage. Food Safety & Trade: BFDA tightened controls on imported Langra mangoes after calcium carbide was found in 12 of 34 samples, requiring pre-market testing before release. Mining & Industry Potential: Bhutan’s airborne geophysical survey has flagged promising targets for tungsten, copper and rare earth elements, with DGM moving to ground validation—potentially reshaping exports beyond construction minerals. Renewable Energy Expansion: Under the 13th Five-Year Plan, Bhutan is accelerating hydropower and solar growth toward a long-term 25GW goal, aiming to support industry and investment. Industrial Parks: Samtse’s industrial transformation is gaining momentum with two parks attracting about Nu 1.72B and space for 75 industries across manufacturing, processing, engineering and heavy industry. Tourism Operations: The 24-hour SDF waiver will expand beyond Rinchending from September, letting regional visitors join approved packages to Milarepa Lhakhang and the Pachu Community Ecotourism site. E-mobility Push: Government defended its EV roadmap amid affordability concerns, including duty-car EVs and plans to scale charging infrastructure, targeting major fuel import savings by 2030. Digital Connectivity: Bhutan’s Third International Internet Gateway is aiming for early 2027 rollout, with officials stressing resilience benefits while affordability depends on follow-on mechanisms. Tourism Demand: First-half 2026 arrivals rose, with May hitting 47,343 and Phuentsholing leading as the busiest entry point. Energy & Finance Pressure: Foreign reserves fell by about USD 31M between June and July, with higher fuel import costs and ngultrum depreciation cited as key drivers.

Renewables Push: Bhutan’s 13th Five-Year Plan is accelerating hydropower and solar expansion, targeting 15,000MW of new hydropower and 5,000MW of solar by 2040 to reach 25GW total capacity. Industrial Parks: Samtse’s industrial transformation is gaining traction with Nu 1.72B invested across two parks, creating space for 75 industries spanning manufacturing, agro-processing, engineering and heavy industry. Mining Outlook: Bhutan’s first nationwide airborne geophysical survey has flagged potential copper, tungsten and rare earth elements, with DGM moving to ground validation—raising big questions on how mining can fit GNH and conservation. Food Safety: BFDA tightened controls on imported Langra mangoes after calcium carbide was found in 12 of 34 samples, requiring testing before release. Tourism Access: The 24-hour SDF waiver will expand beyond Rinchending from September, letting approved visitors join licensed packages to Milarepa Lhakhang and the Pachu Community Ecotourism site. Energy Cooperation: India and Bhutan reviewed trans-border river management and hydropower progress, including Punatsangchhu-I, with plans to strengthen hydro-meteorological data sharing. Crypto Treasury: Reports say Bhutan’s Royal Government continues selling BTC from its hydropower-mined reserves, with another 434.87 BTC moved to Binance.