When the free trade agreement with Thailand comes through, Bhutan could export its produce to Thailand without having to pay taxes to the Thai government. Negotiations for a Free Trade Agreement between the two nations have been initiated. The agreement is anticipated to be finalized by November next year. This was decided during the 5th Joint Trade Committee Meeting held between the two countries today.
Through the free trade agreement, Bhutan and Thailand intend to enhance bilateral trade and increase investment with an ambition to reach trade target of USD 120 M annually. The minister for Industry, Commerce and Employment said one of the first steps towards achieving this target is to finalize the free trade agreement between the two nations.
“When we have such arrangement and protocols in place, that ensures whatever goods and service entering each other’s territory comes under certain arrangements whereby levying of taxes, import duties, are in some cases does not exist because of some formal arrangements. Currently, because we don’t have some arrangements, our goods entering Thai market are taxed quite heavily. Therefore, our goods are not really competitive,” said Namgyal Dorji, Minister for Industry, Commerce and Employment.
His Thai counterpart said that Thailand will be benefitted mostly in the sectors such as exporting dry fruits, garments and electronic appliances among others to Bhutan.
“Significantly, for Bhutan FTA will generate opportunity and also enhance opportunity for investment, not only the trading goods. So, we really believe that the FTA will enhance the GDP from both countries and also creating the chance to investment between Thailand and Bhutan,” said Napintorn Srisunpang, Deputy Minister of Ministry of Commerce in Thailand.
The minister highlighted that Bhutan’s current trade dynamics are primarily focused on imports. The Free Trade Agreement is expected to address these trade imbalances, facilitating easier market access and enabling products from Bhutan to penetrate more effectively in Thai markets.
As per the national statistics, overall trade in terms of goods between Thailand and Bhutan in 2023 amounted to USD 23 M which is more than Nu 1.8bn. Of the total amount, 95 per cent constituted imports from Thailand with only five per cent making up Bhutan’s export to Thailand.
“We have a big potential in our agriculture sector, textile, mineral-based products. So, there is a huge market in Thailand. Currently, our goods are not able to penetrate because we do not enjoy this free trade and market access. With coming of free trade agreement, our products will enjoy that free market access. And that’s where we have the opportunity to improve the current imbalance that we have with Thailand,” said Namgyal Dorji, Minister for Industry, Commerce and Employment.
Thailand is the fourth largest trading partner for Bhutan. During the last two years, Bhutan exported mostly agricultural products to Thailand. On the import front, Bhutan bought machinery, electronic equipment, consumer goods and mobile phones among others from Thailand.
During the event, a Memorandum of Understanding was also signed for the sustainable arts and crafts institute between the two nations.
Samten Dolkar
Edited by Phub Gyem
