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Introduction Foreign Direct Investment (FDI): An Observation about Tourism Sector of Bhutan On 2 June 1974, the first group of paying tourists arrived with 287 visitors, have increased to 64,028 in By 2011. Bhutan introduced FDI as


  1. Introduction Foreign Direct Investment (FDI): An Observation about Tourism Sector of Bhutan � On 2 June 1974, the first group of paying tourists arrived with 287 visitors, have increased to 64,028 in By 2011. � Bhutan introduced FDI as developmental strategy in Dr. Pawan Kumar Sharma, Bhutan introduced FDI as developmental strategy in 2002 including in tourism. Umesh N. Jadhav, � major source of employment. Elangbam Haridev Singh, � the second largest net earners of foreign exchange . Dr. Achintya Mahapatra � to facilitate private investments through public private partnership and focus on development of this sector including FDI. Salient Features of FDI for Tourism Objectives � In case of Five Star and above category hotels with � To determine the factors affecting FDI in Tourism minimum project cost of Nu. 200 million, 100% sector equity. � To evaluate the policies adopted to attract FDI � Four Star Hotels with minimum project cost of Nu. 25 � To examine the benefits of FDI in the growth of � To examine the benefits of FDI in the growth of million, only 75% equity. million, only 75% equity. Tourism sector � Incentives to FDI funded projects � Income Tax Holiday � Reinvestment Allowance, � Service Tax, � Daily tourist tariff/royalty has been waived.

  2. Eight FDI Funded Resorts Table 1. Reasons of FDI in Bhutan ��� ������� ���� ������� �������� �������� ������ ��� �� � ������ ������� ���� ��� ��� ������ ������ �������� ���� ������� !������� "������ ����� #�������� ��� ���������� ������ ������� ������� !������� �������� $ ������ %�� �������� ���� ��� ������� �������� ���� ��� ���� ��� ����(�� #�������� .��6�� ������� ) � ���� � �� �&� ���������� �'��������� ) %��� "��� *�� ��� ���� +�� ��&����� ��,�� ����� ��� +�� ����(�� .���� ������������ '������ *� '�������� +�� ������ '� -� '������ *� '�������� +�� ������ '� -� +�//��� �.'� 0 .1� ���� �������� = 2 2 ������ ������� ���� ��� �������� '����������� �!�������� ���� #�������� 3 4�(5'�� �����6�� ����� 0 ��+ 7���������� .'� ���� #�������� '�� ���� ��� ���/�� ������ = 2 8� ������9�� '�/���� ������ %������ '�/���� ���� ���� '�������� "����� .���� ������������ ������� ������� : ������ ������ ������� %������� ������������ ����� '���� !������ .���� ������������ ������� Graph ; +���������5+����� <������ #������� ���� ���� '�������� ���� .���� ������������ ������ 0 ������� ���� ��� Table 2. The perception on FDI Policy Table 3. Benefits of FDI to Country, Society, Business and Investor in Bhutan ��� �� ��� �� �/����������� ) � ����������� %//������ ��&� �/ �������� �����9 ) � %����9���� 2 = ������������� 4��� �� ������ �������� �����9 � ) ���/���>����9 ) � �/�������� ���������9 � ) ����/��� �/ �������� �����9 ) � �������� �����9�� ) � �������� ��� '(���� ����� ������� 2 = %������ �/ ��������� � ) �������

  3. Table 4. The Market Factors Attract FDI Table 5. Showing the Ratings of Cost in Bhutan Factors ���� ���� ����� ���� ���� ���� ����� ���� '�,� �/ ���(�� 2 = ������>����9 �/ ��>�� 2 = +��(�� ���&�� ) � ������>����9 �/ ��+ 2 = <�������/������ ��& ���� �/ �������������� ��& ���� �/ �������������� = = 2 2 &��� ������� ���(�� = 2 ������>����9 �/ ������� 0 <����� �� /����& �������� ) � ���������9 2 = <����� �� /����& 7�������� ������������� >9 ����������� = 2 ����� = 2 Table 7. Showing Social and Cultural Table 6. Political and Legal Factors factors ���� ���� ����� ���� ���� ���� ����� ���� 7���������9 &��� ������9 $ $ ��������� ���>����9 2 = .��6�� ������� ��� ��������� ) � �������� �������� ��� ��� $ $ $ $ *�����9 ����� 2 = *������������ !�������� ) � �������� $ $ ������ 0 ������ ��������� �/ ��� �������� � ) ������� = 2 !�� �������� � )

  4. Table 8. Showing Table 9. Showing the overall Rating of Factors Determining FDI in Bhutan Geographical/Location factors ���� ���� ����� ���� ������� ������� +��(�� 7������ $ *������ ��������� ) � *��� 7������ *��� 7������ ) ) ��������� ��� ����� 7������ 2 !������? !��������9 $ $ '����� ��� �������� 7������ 3 ������������?�������� 7������ � ������ �� ��9����� ��/����������� � ) Conclusion Cont… � FDI in tourism sector has been successful due to � Market, cost, political and legal environment, socio- favorable climatic conditions, unique culture and cultural, geographical location play vital role preserved social conditions can be capitalized. � Peace and political stability is the strength, but lack � The Companies Act 2001 of the Kingdom of Bhutan of infrastructure is a major reason for poor of infrastructure is a major reason for poor is not clear is not clear performance. � Liberalizing the restrictive FDI. � Availability of labor and raw materials become � Bhutan has not proved to be a viable destination for another important factor. high foreign investment � Large investors avoid investment in LDCs where � The government can capitalize on FDI to achieve the markets are small and operation cost is very heavy. sustainable growth of the economy.

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