Introduction Foreign Direct Investment (FDI): An Observation about - - PowerPoint PPT Presentation

Foreign Direct Investment (FDI): An Observation about Tourism Sector of Bhutan By

• Dr. Pawan Kumar Sharma,

Umesh N. Jadhav, Elangbam Haridev Singh,

• Dr. Achintya Mahapatra

Introduction

On 2 June 1974, the first group of paying tourists arrived with 287 visitors, have increased to 64,028 in 2011. Bhutan introduced FDI as developmental strategy in Bhutan introduced FDI as developmental strategy in 2002 including in tourism. major source of employment. the second largest net earners of foreign exchange. to facilitate private investments through public private partnership and focus on development of this sector including FDI.

Salient Features of FDI for Tourism

In case of Five Star and above category hotels with minimum project cost of Nu. 200 million, 100% equity. Four Star Hotels with minimum project cost of Nu. 25 million, only 75% equity. million, only 75% equity. Incentives to FDI funded projects Income Tax Holiday Reinvestment Allowance, Service Tax, Daily tourist tariff/royalty has been waived.

Objectives

To determine the factors affecting FDI in Tourism sector To evaluate the policies adopted to attract FDI To examine the benefits of FDI in the growth of To examine the benefits of FDI in the growth of Tourism sector

Eight FDI Funded Resorts

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Table 1. Reasons of FDI in Bhutan

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Table 2. The perception on FDI Policy in Bhutan

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Table 3. Benefits of FDI to Country, Society, Business and Investor

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Table 4. The Market Factors Attract FDI in Bhutan

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Table 5. Showing the Ratings of Cost Factors

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Table 6. Political and Legal Factors

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Table 7. Showing Social and Cultural factors

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Table 8. Showing Geographical/Location factors

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Table 9. Showing the overall Rating of Factors Determining FDI in Bhutan

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• Conclusion

Market, cost, political and legal environment, socio- cultural, geographical location play vital role

• Peace and political stability is the strength, but lack
• f infrastructure is a major reason for poor
• f infrastructure is a major reason for poor

performance. Availability of labor and raw materials become another important factor. Large investors avoid investment in LDCs where markets are small and operation cost is very heavy.

Cont…

FDI in tourism sector has been successful due to favorable climatic conditions, unique culture and preserved social conditions can be capitalized.

• The Companies Act 2001 of the Kingdom of Bhutan

is not clear is not clear Liberalizing the restrictive FDI. Bhutan has not proved to be a viable destination for high foreign investment The government can capitalize on FDI to achieve the sustainable growth of the economy.

References

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http://www.bhutantimes.bt/index.php?option=com_content&task=view&id=1233&Itemid=

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http://www.dit.gov.bt/sites/default/files/FDI%20POLICY%202010(new).pdf

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• http://www.investmentcommission.in/tourism.htm#v
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