RENUKA RAI | Thimphu
The Ministry of Infrastructure and Transport (MoIT) has said that its ongoing review of taxi licensing in Bhutan is a key policy exercise aimed at addressing long-standing concerns over the balance between taxi supply and passenger demand, particularly in urban centres such as Thimphu.
The review comes at a time when rising fuel prices and increased competition among operators have added further pressure on the urban transport sector.
Last year, the Ministry imposed a moratorium on the issuance of new taxi driving licences as a precautionary measure, citing the need to study whether the number of taxis in operation was aligned with actual demand. The decision was intended to prevent market saturation and to ensure the long-term sustainability of the taxi industry.
According to the Ministry, preliminary findings suggested that the number of registered taxis in Thimphu had already exceeded passenger demand during off-peak hours. This imbalance, officials said, was contributing to reduced earnings for existing taxi operators while also adding to traffic congestion in the capital.
The Ministry of MoIT Chandra Bahadur Gurung during the 28th meet the press session on 5 June, said the study was necessary to determine whether the suspension on new taxi licences should continue or whether adjustments should be made based on real demand patterns.
“The moratorium was primarily proposed and imposed as a precautionary measure to prevent the oversupply of taxis, which had been identified as a growing concern, particularly in Thimphu,” the Lyonpo Chandra Bdr Gurung said. “Preliminary assessment indicated that the number of registered taxis in Thimphu already exceeded demand during off-peak hours, leading to reduced income for existing taxi operators and contributing to traffic congestion in the city.”
Lyonpo further explained that the broader objective of the study is to develop a structured regulatory system that would allow periodic review and adjustment of taxi licences in line with actual demand trends. This, they said, would help create a more balanced and sustainable urban transport ecosystem.
“It was recommended that a structured regulatory framework be developed to periodically review and calibrate the number of taxi licences in line with actual demand,” the minister added.
However, the government also acknowledged that the scope and complexity of the study require specialised technical expertise and analytical capacity that are not fully available within the country at present. Officials said the assessment involves not only counting vehicles or measuring demand but also understanding behavioural patterns, urban mobility trends, fuel cost impacts, and broader transport economics.
“The assignment requires specialized technical knowledge, professional expertise, and analytical capacity, which are not readily available within the country. It involves a comprehensive understanding of sectoral requirements and the ability to develop recommendations based on technical evidence and international good practices,” Lyonpo Chandra Bdr Gurung said.
To address this gap, the government has proposed implementing the study through the World Bank-supported Accelerating Transport and Trade Connectivity in Eastern South Asia (ACCESS) project. The initiative is expected to provide technical expertise, methodological guidance, and international best practices to ensure that the findings are robust and policy-relevant.
Lyonpo said this approach would allow Bhutan to conduct a more structured and evidence-based assessment of the taxi sector, ensuring that future decisions on licensing are aligned with both economic realities and urban transport needs.
The issue of taxi supply and demand has become increasingly significant in the context of rising fuel prices, which have placed additional financial strain on taxi operators across the country. Drivers in urban areas, particularly Thimphu, have expressed concerns that higher operating costs, combined with increased competition, are reducing daily income and making the profession less sustainable.
The Ministry has indicated that the findings of the study will provide a clearer evidence base for future decision-making on taxi licensing. It will help determine whether the moratorium should be extended, relaxed, or replaced with a more dynamic system that adjusts licences according to demand trends and seasonal fluctuations.
Lyonpo added that the study is expected to contribute not only to taxi sector reform but also to broader transport planning in urban areas, particularly as Bhutan continues to experience growing urbanisation and increased mobility needs.
Once completed, the review is expected to serve as a key policy tool for ensuring that the taxi sector remains both economically viable for operators and efficient for commuters, while also supporting the government’s wider goals of sustainable and well-managed urban transport development,
