Bhutan is on the brink of signing a free trade agreement with Thailand
Foreign Minister DN Dhungyel said that the first round of talks to sign a Preferential Trade Agreement (PTA) with Thailand will be held in May. The discussions will take place between the Ministry of Industry Commerce and Employment (MoICE) and the Thai Ministry of Commerce. The Foreign Ministry will just facilitate the meetings.
Other than that, Bhutan signed a PTA with Bangladesh in December 2020. However, it was only implemented in July 2022 due to the pandemic. Bhutan is the first country to sign PTA with Bangladesh. Under the agreement, Bangladesh will enjoy duty benefit on export of 100 local products and Bhutan will enjoy duty benefit on its 34 products.
According to the PTA, Bhutan exports Milk, Mineral Waters, Cement, Ferro Silicon, etc to Bangladesh while the country imports Juices, Particle Boards, Textiles, Vegetables, etc. The PTA was signed to ease further trade barriers between the two countries and facilitate an increase in the volume of bilateral trade.
The successive rounds of annual Bilateral Meetings at Commerce Secretary Level (CSLM) have focused on strengthening trade relations between the two countries. Further, it attempts to explore new areas of cooperation for expansion of Bhutan’s bilateral and international trade through the development of institutional linkages and collaboration between the chambers of commerce, tourism authorities, and standards authorities of the two countries.
Bangladesh is the 2nd largest trading partner of Bhutan after India. Both the countries are enjoying excellent bilateral trade relation and both the countries are members of SAFTA, BIMSTEC, BBIN etc. Bhutan’s trade has always been directed towards the two neighboring countries, namely India and Bangladesh, which jointly accounts for 86% share of the total trade.
Bangladesh’s export to Bhutan is characterized by very limited products. Garments, melamine, pharmaceuticals, furniture, aluminum structures (doors, windows etc), dry food, confectionary items (sweet biscuits, cakes & pastry), fruit juice, mineral water, kitchenware, toiletries dominate the export of Bangladesh to Bhutan. Bhutan’s exports to Bangladesh mainly consist of boulders, cardamom, oranges, pebbles and gravels, limestone, dolomite, ferroalloys, gypsum, semi-finished products of iron or non-alloy steel, silicon carbide etc.
Total trade between Bhutan and Bangladesh saw substantial increase in the last 10 years as reflected in the Figure below. Over the years, both export and import saw an increasing trend. Bhutan has always been enjoying favorable balance of trade with Bangladesh. Over the last ten years, the variety of items imported from Bangladesh increased considerably. Imports from Bangladesh, both in terms of volume and diversity are expected to increase with the further developments in bilateral trading arrangements between the two countries.
Furthermore, Bhutan will set up an Economic Zone in the Northern District of Bangladesh. The two countries have taken initiatives to invest in each-other’s economic zones. Both the countries have agreed to establish a Special Economic Zone (SEZ) in the northern district of Bangladesh by Bhutan. Bangladesh agreed in principle to provide land for a SEZ in Kurigram district which is only 190km from the southern city of Gelephu.
Additionally, Bhutan is working on a master plan to prepare a SEZ in the southern district of Gelephu where Bangladesh will consider investing.
Meanwhile, five rounds of talks/discussions were already held between Bhutan and Nepal for signing a PTA. The foreign minister said that tax related issues will be sorted out first and then only the PTA will be signed with Nepal.
By Tashi Namgyal, Thimphu
