Bhutan to open doors to 100 percent FDI in agriculture

Last Updated on November 3, 2024 5:27 am

The Ministry of Agriculture and Livestock (MoAL) has proposed a major change in the foreign direct investment (FDI) rules and regulations, specifically for the agriculture sector, to allow 100 percent foreign equity investment.

The new FDI rules have been submitted to the cabinet for approval.

Currently, the MoAL is in discussions with four foreign companies—PRAN RFL (Bangladesh), Pico Live (Thailand), Satguna Agro Farms (India), and Oshiye & Company (Japan)—regarding 100 percent investments in the country.

MoAL Minister Younten Phuntsho said that the ministry is awaiting cabinet approval for the revised FDI regulations. “Unlike other sectors such as tourism, industries, and services, agriculture is not particularly attractive in Bhutan due to numerous challenges,” he said. “However, FDI in agriculture is crucial for securing investments that enhance food and nutrition security.”

Lyonpo said that FDI would bring new technology, market access, and diversified crops, yet noted that such advancements have been limited despite allowing foreign investments since 2010. “By permitting 100 percent equity injection, we aim to make the sector more appealing to foreign investors,” he added.

This discussion took place during the Bhutan Agri-Food Trade and Investment Forum (BATIF) 2024, organised by the MoAL in collaboration with partner agencies from May 15 to 19.

The ministry has already received musk-melon germplasm from Oshiye & Company, which has been distributed to Agriculture and Research Development Centres for trial production.

In partnership with Satguna Agro Farms, focused on cultivating paddy, pulses, and coconuts, a trial shipment of quinoa and potato seeds has been agreed upon. However, due to the current political situation, implementation has faced challenges. “The Royal Bhutanese Embassy in Dhaka is actively following up on this,” Lyonpo noted.

Satguna Agro Farms has also engaged in discussions with Food Corporation of Bhutan Limited (FCBL) to explore connections with Big Basket, a retail outlet in India.

With PRAN RFL, Bangladesh’s largest food and beverage company, FCBL is collaborating with the Fair Group to explore the market for frozen potatoes. “FCBL has already submitted a proposal to the Prime Minister’s Office,” Lyonpo said.

PRAN RFL is interested in establishing a large-scale agricultural farm in Bhutan, spanning 1,000 acres, focusing on diverse crops across various agricultural zones.

The company plans to conduct a two- to three-year pilot trial with selected commodities before scaling up operations. Its primary commodity focus includes organic potatoes, turmeric, cardamom, and ginger, with secondary interests in crops such as mango, chili, cassava, carp fish, rainbow trout, poultry, and animal feed.

PICO Live is collaborating with Nob Sustainability Solutions Private Ltd, its Bhutanese counterpart, to establish an FDI company that manufactures sustainable environmental solution products. The necessary formalities for this company’s establishment are now complete.

Oshiye & Company Ltd is exploring opportunities in hybrid seed breeding and production in Bhutan, focusing on crops like cabbages, seedless melons, and bunching onions. Given Bhutan’s favorable weather and landscape, the company has expressed interest in collaborating on seed breeding and production initiatives.

During the BATIF 2024 event, approximately 53 business-to-business meetings were organised, providing a platform for international private companies and domestic entrepreneurs to engage in in-depth discussions.

 These meetings focused on exploring future collaboration opportunities, fostering partnerships, and exchanging innovative ideas to drive mutual growth and development.

BATIF 2024 attracted a total of 60 international participants, including 33 delegates from private companies, 13 development partners, and 14 institutions. In addition, 40 exhibitors and 12 food stall owners, along with government officials from the ministry and partner agencies, participated from Bhutan.

In the 13th Plan, the government has set ambitious targets to increase agriculture’s contribution to GDP to USD 600 million by 2029. The agriculture sector currently employs 43.5 percent of the population, contributing 14.67 percent to the GDP.

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