Introduction

1. Introduction • Bhutan embarked upon the path of modernization in 1961.A rigorous mountainous terrain, lack of easy access to sea routes and a small population all makes economic development difficult for Bhutan.Dispite these difficulties, Bhutan has made impressive progress in economic and social spheres. The economy of Bhutan has grown at an average rate of 7 % per annum for more then two decades. This has lead to substantial improvement in the living standard of the Bhutanese people. The Bhutanese people enjoy a per capita income of $847 which is one of the highest in south Asia.

2. The structural transformation from a largely agrarian economy to an industrial one occurred only in the late 1980s with the commissioning of the Chukha Hydropower Project. Prior to this, private sector development also didn’t receive much attention to the policy makers. It was only since the Sixth Five Year Plan (1987-1992) that the government has recognized the private sectors as the engine for the economic growth of the country. Today private sector development and industrialization are seen as essential component for the development strategy to generate employment, diversify the economy and foster successful integration into the global economy

3. General Information of the SMEs in the country. The industrial sector in Bhutan comprises of the four major sectors namely: A) production sector. 1) Bhutan Power Corporation.(BPC) 2) Bhutan Board Particles Limited. (BBPL) B) Manufacturing sector. 1)Bhutan Chemical and Carbide Limited. (BCCL) 2)Druk Agro Product Limited. (DAPL) 3) Bhutan Ferro and Alloys Limited.( BIFAL) C) Service sector. 1) Druk Airline. 2) Bhutan Post and Tele communication . 3) Bhutan Tourisms Corporation Limited D) Construction sector. 1) All the private firms which are under construction section.

4. Today there are 16428 registered industries in our country. a) Construction sector with 9212 companies. b) Service sector with 5468 firms. c) Production and Manufacturing with 874 Industries. d) Wood based with 368 Industries. e) Agricultural based industries with 162. f) Mineral Based with 66 Industries. g) 278 which falls under other categories.

6. Industries in Bhutan are classified in terms of Capital input. Industries with capital input of Nu.1 million or less are categorized as cottage, those with capital input between Nu.1 and 10 million as small, those with capital input between Nu.10 or 100 million as medium and those with capital input over Nu.100 million as large industries. • Contract business follows a different way of classification. Contractors that can execute contract size above Nu.15 million are called as A contractors, those that can execute contract size up to Nu.15 million as B, and those that can execute contract size up to Nu.7.5 million as C and those who can execute work worth Nu.1.5 million as Petty contractors. Following the above classification systems, we find that the industrial sector in Bhutan is dominated by small and cottage industries and by petty contractors.

7. Achievements. • It is within the back drop of above industrial set up that Bhutan has accorded high importance to development of small and medium sized enterprises. The importance of SMEs is repeatedly mentioned in major policy documents. For example, vision 2020, Bhutan’s long term policy and strategy outlines that “Our potential is seen to reside in two main areas: The further development of our hydropower potential and development of small micro enterprises”. Similarly “The promotion of small, cottage and micro enterprises as means to stimulate the rural economy” is one of the seven objectives of the Ninth Five-Year Plan. Promotion of rural enterprises is one of the strategies to promote private sector in Bhutan.

8. TASHI DELEK