Bhutan has been reforming its doingbusiness environment in recent years as part of a policyshift to improving its investment climate and economicperformance.Overall, it is ranked 75 out of 190 countriesand is the highest ranked country in the South Asia region,significantly outperforming Bangladesh and Pakistan. In thelast decade, as part of a Government policy agenda toimprove competitiveness, Bhutan has launched across theboard reforms in many areas.During the DB 2018 period, therewas not a reform momentum in Bhutan. The very slightdowngrading of the ranking can be attributed to reforminertia after a decade of success. Another factor for thelack of improvements in DC in 2018 has been Government focuson other reforms, especially involving hydropower, cottageand small industries and SOE’s.Reforms clearly needacceleration after a decade of strong reform momentum,spurred by desire to see improvements in Bhutan’s overallranking has not moved significantly in either direction.There has been significant improvement in dealing withconstruction permits and in enforcing contracts butdeterioration in protecting minority investors andregistering property. The lack of forward momentum reflectsslippages in reform momentum due to policy environment andshifting government priorities.First, access to credit inBhutan is improving due to the expansion of the scope ofcollateralizable assets and the deepening of the creditbureaus. Second, the National Land Commission, a competentand responsible public agency managing land administration,has made progress in terms of land registration and onlineportals. According to the National Land Commission (NLC),the average days to register property declined from 54 daysin 2016 to 42 days in 2018. Finally, recent Governmentattempts to streamline regulations and dismantleadministrative complexities should help reduce transactionscosts for private operators.top of these areas, Bhutan’sbusiness climate remains constrained by imperfections infactor markets, limited access to product markets, and statedominance.The focus has been on ways to set up businesses,improve construction permits, improve credit bureaus, ensurebetter land registration, and protect minority investors.The Bank/IFC team is working in close collaboration withthis new team and providing relevant internationalexperience and support.
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