📋 Tender Overview
Project Name
Trade Expansion and Diversification Program (Subprogram 1)
Project Number
58522-001
Country / Economy
Bhutan
Project Status
Proposed
Project Type / Modality of Assistance
Loan
Source of Funding / Amount
Grant: Trade Expansion and Diversification Program, Subprogram 1
Concessional ordinary capital resources lending US$ 12.00 million
Loan: Trade Expansion and Diversification Program, Subprogram 1
Concessional ordinary capital resources lending US$ 13.00 million
Sector / Subsector
Industry and trade / Industry and trade sector development
Gender
Some gender elements
Description
The role of trade as a driver of economic growth and poverty reduction has long been recognized, as manifested in various World Trade Organization (WTO) platforms and the principles behind Aid for Trade. The proposed PBL program aims to support the expansion and diversification of Bhutan's tradein trade partners and productsby unblocking policy bottlenecks, establishing institutional structures, filling legal and regulatory gaps, and rolling out new business processes and procedures. It aligns with the government's National Export Strategy 2022 and the 13th Five Year Plan (FYP), 2024-2028, which identifies the country's limited trade engagement as a barrier to deeper integration into the regional and international economy.
The proposed program will help create an enabling environment for trade by complementing other interrelated enablers under the 13th FYP, such as transport connectivity, access to finance, skills development and job creation, and production scaling. The shortage of jobs has been one of the most critical development challenges in recent years, triggering an outward migration at an unprecedented scale. Given the small domestic market, the 13th FYP recognizes greater access to external markets as a cornerstone for strengthening the industry sector, which, in turn, will support job creation.
Project Rationale and Linkage to Country/Regional Strategy
Bhutan's weak trade performance stems from multifaceted, interconnected, economy-wide challenges, including underdeveloped infrastructure, low industrial productivity, a shortage of skilled workers, and a weak finance sector. Efforts to improve the private sector's business environment are underway across multiple sectors. They include increasing investments in transport and logistics infrastructure, reforming state-owned enterprises to curtail their dominance, adopting the publicprivate partnership road map, and promoting e-commerce. The finance sector is at a nascent stage of strengthening its capacity but has begun expanding its role in providing trade finance solutions. New initiatives have been launched to support technical and vocational education, improving the skills and employability of youth, including in emerging fields such as new construction technology, food processing, and floriculture.
While these ongoing are expected to incrementally improve trade performa
