A study conducted on economic freedom by an American research and educational institution and think tank based in Washington DC, Heritage Foundation, has ranked Bhutan the 94th freest country with a economic freedom score of just 59.3 in the 2022 index.
Bhutan is ranked 19th among 39 countries in the Asia–Pacific region, and its overall score is above the regional average, which is 58.5 but below the world average, which is 60.
The report says that economic growth suffered a mild downturn in Bhutan in 2020 but resumed in 2021. It also states that led by score increases in rule of law and fiscal health, Bhutan has recorded a 0.9-point overall gain of economic freedom since 2017 and is close to the threshold of the “Moderately Free” category, though the report has categorized Bhutan as “Mostly unfree.”
It also states that Bhutan’s modest tax burden supports economic freedom, but the lack of trade freedom, investment freedom, and financial freedom continues to hold back progress.
Bhutan’s score on Open Markets, assessed through three sub-parameters, Trade Freedom, Investment Freedom and Financial Freedom is also very low painting a dismal picture of Bhutan’s ability to draw foreign investors to the country.
The Index evaluates a variety of restrictions that are typically imposed on investment and points are deducted from the ideal score of 100 for each of the restrictions found in a country’s investment regime.
Further, it states that there is extensive government interference, with credit allocation extensively influenced by the government. It hints that the government owns or controls a majority of financial institutions or is in a dominant position. Financial institutions are heavily restricted, and bank formation faces significant barriers. It also signals that foreign financial institutions are subject to significant restrictions.
How did we come to this? In a era when nations are diversifying their strategies to reap the shrinking global economy, our planners have seem to just paint a glossy picture of the government while significant loopholes still mars it from foreign investors willing to step into Bhutan.
Given our limited natural resources and other areas of economic diversification areas, It is imperative that we create a better platform if we are to reap any benefits from linking ourselves to this global chain of economy and start seeing tangible results in the near future.
Simply creating and painting a glossy picture while the system reeks of inefficiency and bureaucratic red-tapism is like smothering our own chances of diversification and creating new economic opportunities for our private sector growth.
If these trends continue, we will continue to see our youths and potential businessmen from the private sector leave in the droves to seek greener pastures across the globe. Until then only we will be left to blame for our follies which we could have then redeemed.