Bhutan - Economy
Bhutan's economy, small and less developed, is based largely on hydropower, agriculture, and forestry, which provide the main livelihood for more than half of the population. Because rugged mountains dominate the terrain and make the building of roads and other infrastructure difficult and expensive, industrial production is primarily of the cottage industry type. The economy is closely aligned with India's through strong trade and monetary links and is dependent on India for financial assistance and migrant laborers for development projects, especially for road construction. Bhutan inked a pact in December 2014 to expand duty-free trade with Bangladesh, the only trade partner with which Bhutan enjoys a surplus.
Multilateral development organizations administer most educational, social, and environment programs, and take into account the government's desire to protect the country's environment and cultural traditions. For example, the government, in its cautious expansion of the tourist sector, encourages visits by upscale, environmentally conscientious tourists. Complicated controls and uncertain policies in areas such as industrial licensing, trade, labor, and finance continue to hamper foreign investment.
Bhutan’s largest export - hydropower to India - could spur sustainable growth in the coming years if Bhutan resolves chronic delays in construction. Bhutan currently taps only 5% of its 30,000-megawatt hydropower potential and was behind schedule in building 12 new hydropower dams with a combined capacity of 10,000 megawatts by 2020 in accordance with a deal signed in 2008 with India. The high volume of imported materials to build hydropower plants has expanded Bhutan's trade and current account deficits. However, Bhutan and India in April 2014 agreed to begin four additional hydropower projects, which would generate 2,120 megawatts in total. Bhutan also is exploring energy exports to Bangladesh.
The economy, one of the world's smallest and least developed, is based on hydroelectricity, tourism, agriculture, and forestry. Rugged terrain makes it difficult to develop roads and other infrastructure. Despite this constraint, hydroelectricity and construction continue to be the two major industries of growth for the country. As these two economic sectors contribute to increased productivity, Bhutan's development prospects are positive. The Tala hydroelectric project, completed March 2007, bolstered government revenue and exports, and will continue to do so for the next several years. In late 2009, Bhutan signed four memoranda of understanding (MOUs) with India to prepare four additional hydroelectric projects in Bhutan.
The Bhutanese Government expected the tourism sector to expand as well; however, restrictions on visitor numbers and minimum per-day spending requirements will impede rapid growth.
Bhutan's tenth five-year plan (2008-2013) focuses on ways to manage the country's new-found wealth with special emphasis on three development areas: rural, regional, and private-sector. India has pledged to support the plan and promised to double the amount of aid given to Bhutan in the previous five-year plan. The parliament had not yet finalized the tenth five-year plan as of October 2008; it intended to do so during the next session later in 2008.
Bhutan's economy has been on an upturn due to subregional economic cooperation efforts. Already this plan has strengthened the current trade relations with India, as well as opened an avenue of trade with Bangladesh. In May 2003, the Bilateral Free Trade Agreement between Bangladesh and Bhutan was re-signed. Bangladesh is Bhutan's second largest trade partner, after India. In January 2004, as a member of the South Asian Association for Regional Cooperation (SAARC), Bhutan also joined the South Asian Free Trade Agreement (SAFTA); Bhutan will host the SAARC summit in Thimphu in April 2010. In February 2004 Bhutan joined the Bangladesh, Indian, Myanmar, Singapore, and Thailand Economic Cooperation Forum (BIMSTEC). Bhutan applied for membership in the World Trade Organization and developed clear legal and regulatory systems designed to promote business development.
On the surface, Thimphu is an idyllic home of its 90,000 residents. Charming, traditional homes dot the lush, tree-covered mountains and a gentle river flows by the city. But the scenic beauty cannot mask the growing sense of impatience among an aspirational young generation as the Himalayan country struggles to create jobs. Besides tourism and hydropower generation, there is virtually no industry or private sector in Bhutan.
The law prohibits most forms of forced or compulsory labor, and the government effectively enforced applicable laws. The law makes exceptions with regard to prison labor, work that might be required during an emergency, and work required for “important local and public” celebrations. The penal code criminalizes trafficking for illegal, but not exploitative, purposes. Violations of the labor law are felonies subject to three to five years’ imprisonment. Resources, inspections, and remediation were adequate, and penalties were sufficient to deter violations.
Government officials acknowledged there may be forced labor among domestic servants working in private homes where the Ministry of Labor and Human Resources has no jurisdiction. Officials relied on citizens to report forced labor of domestics directly to the police.
Migrant workers from India who worked in the country’s construction and hydropower sectors and Indian women and girls who worked in domestic service or as caregivers were vulnerable to forced labor. Young, rural citizens were transported to urban areas, generally by relatives, for domestic work, and some of these individuals were subjected to domestic servitude. There were unconfirmed reports that girls who worked as domestic servants and entertainers in “drayungs” (karaoke bars), were subjected to labor trafficking through debt and threats of physical abuse. The National Assembly Human Rights Committee (NAHRC) conducted an investigation into “drayungs” and found no evidence of trafficking or forced labor.
Children performed agricultural and construction work, completed chores on family farms, or worked in shops and restaurants after school and during holidays. Child labor also occurred in hotels and automobile workshops. Girls were employed primarily as domestic workers, where they were vulnerable to abuse and exploitation. An estimated 19.6 percent of children between ages five and 14 were engaged in some form of child labor in 2011, which are the most current statistics. The government established that 18.4 percent of the labor force in 2010 consisted of children under 18.
|
NEWSLETTER
|
| Join the GlobalSecurity.org mailing list |
|
|
|
