Two of the seven major developmentchallenges of the Royal Government of Bhutan identified forthe Donors Development Forum, held in Thimpu in November2000, were private sector development and employmentgeneration. Given the fact that the public sector isunlikely to expand further in the forseeable future, theseissues become two sides of the same coin. Future employmentgeneration in Bhutan can only come from the further growthof the private sector. The prinicpal objectives of thisreport and associated survey work is to assist theGovernment in developing an improved information base on theprivate sector and to thereby assist it in formulating itsstrategy for private sector support over the period of theNinth Five-Year Development Plan. The main recommendationsput forth for private sector development include:Establishment of a transparent system of tax relief andpossibly a system of industry levies to support radicallyincreased worker and management training. Development of atransparent, time-bound, policy for recruiting non-nationalworkers. Encouragement of the development of innovativefinancial instruments and payment modalities. Support oftechnology transfer mechanisms and provide incentivesthrough tax breaks. Finalization and approval of the newforeign direct investment law. Implementation of a system ofduty drawback on imported raw materials used to produceexport products. Development of a clear, consistent, andtransparent policy environment.
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