ADB Supports Bhutan’s Trade Expansion and Diversification to Build a Competitive, Resilient Economy – EQ
In Short : The Asian Development Bank (ADB) has approved a USD 25 million financing package to assist the Royal Government of Bhutan in accelerating trade expansion and economic diversification. This support is aimed at strengthening Bhutan’s competitiveness, enhancing resilience against external shocks, and promoting inclusive growth through policy reforms, infrastructure improvements, and expanded access to markets and finance
In Detail : MANILA, PHILIPPINES — The Asian Development Bank (ADB) has approved a $25 million financing package to help the Royal Government of Bhutan accelerate trade expansion and economic diversification. The assistance comprises a $13 million policy-based loan and a $12 million policy-based grant funded through the ADB-administered Asian Development Fund (ADF).
The Trade Expansion and Diversification (TREAD) Program will support comprehensive policy, legal, regulatory, procedural, and institutional reforms to strengthen Bhutan’s trade ecosystem and foster private sector–led inclusive growth. The reforms are expected to enhance export competitiveness and expand market access for Bhutanese enterprises.
“This program reflects ADB’s commitment to supporting the Kingdom of Bhutan to build a resilient and diversified export-oriented economy that is fully consistent with its environmental sustainability and climate neutrality goals,” said ADB Country Director for Bhutan Sonomi Tanaka. “These high-impact, cross-sector reforms will widen access to global markets and value chains, increase foreign direct investment in priority sectors, and build long-term economic resilience.”
Bhutan’s narrow economic base, limited production capacity, low productivity, and underdeveloped trade ecosystem—together with its landlocked geography, rugged terrain, and inefficient logistics systems—have led to high trade costs and weak export competitiveness. Although state-owned enterprises dominate the economy, most registered enterprises are small, and 95% contribute less than 5% to the country’s gross domestic product. While extreme poverty has been eradicated, unemployment and underemployment persist, particularly among the youth.
The program addresses these structural challenges by consolidating the fragmented institutional landscape and strengthening operational capacity, expanding Bhutan’s formal trade partnerships, digitalizing customs and logistics systems, and improving policy and regulatory frameworks to facilitate private sector investments to generate economic benefits nationwide.
The program builds on ADB’s ongoing support in developing South Asia’s trade facilitation ecosystem. The program aligns with and contributes to key objectives of Bhutan’s Thirteenth Five-Year Plan, including improving the investment climate and promoting economic diversification.
The ADF provides grants to the poorest and most vulnerable countries in Asia and the Pacific. During 2021–2024, the fund helped 384,000 people emerge from poverty and generated around 500,000 jobs.
ADB is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.
