Bhutan has recorded substantial progress in infrastructure development, investment promotion, education, healthcare, and digital transformation during the first two years of its 13th Five-Year Plan, according to the Prime Minister’s annual State of the Nation Report. However, concerns over increasing youth migration and rising fuel costs continue to pose significant risks to the country’s long-term economic ambitions.
The current Five-Year Plan carries a budget of Nu 512 billion, representing a sharp increase of nearly 65 percent compared to the previous plan period. Government leaders say the expanded investment is aimed at accelerating Bhutan’s transition toward high-income status by 2034.
A major share of the effort has focused on strengthening the country’s physical infrastructure. Over the past two years, four new national highways have been completed, while eight existing highways have undergone upgrades. Additional road improvement projects are planned across the country. Rural connectivity has also expanded through the construction and blacktopping of roads linking gewog centres.
Bridge construction has similarly advanced, with five new bridges completed and another nine currently under construction. Seven additional bridge projects are expected to commence during the next fiscal year.
Recognising the challenges of being a landlocked nation, the government has also prioritised logistics infrastructure. Three dry ports are being developed at an estimated cost of around Nu 4 billion. Facilities at Pasakha and Nganglam have already been completed, while work on the Gelephu dry port remains underway.
Transport connectivity is set to receive another boost through planned railway and aviation projects. The government views these investments as critical for reducing transportation costs, expanding trade opportunities, and positioning Bhutan as a regional transit hub. Detailed project reports have been completed for both the Gelephu–Kokrajhar and Samtse–Banarhat railway links, with construction on the former expected to begin next year.
The report also highlighted growing confidence among international investors. During the first two years of the Plan, authorities approved 35 foreign direct investment projects with a combined value of approximately Nu 226 billion. Officials believe these investments could contribute significantly to economic diversification and employment generation, although their impact will depend largely on timely implementation and job creation.
On the trade front, Bhutan continues to explore new market opportunities beyond its traditional partners. Negotiations for free trade agreements with countries in the region are progressing, while efforts to secure membership in the World Trade Organisation are also moving forward.
Despite these positive developments, the Prime Minister identified two major economic pressures that require urgent attention. The first is the rising cost of fuel, driven largely by geopolitical instability and conflict in West Asia. The second is the continuing outflow of Bhutanese citizens seeking opportunities abroad.
More than 71,000 Bhutanese are currently employed overseas, the majority of them young, educated, and skilled workers. While remittances remain an important source of income for the economy—reaching USD 342.94 million in 2025—the growing departure of working-age citizens raises concerns about the country’s future labour supply.
The challenge is particularly significant because the same generation needed to implement Bhutan’s ambitious development agenda is increasingly choosing to leave. International assessments indicate a sharp increase in migration since the pandemic, with overseas Bhutanese communities expanding rapidly in destinations such as Australia.
To address the issue, the government has invested heavily in skills development and workforce training. Capacity at Technical Training Institutes has increased from 900 to 3,000 trainees. More than 55,000 young people have received training over the past two years, including 10,500 unemployed youth and roughly 7,000 individuals trained in information and communications technology. Programmes such as De-suung, Gyalsung, and Pelsung continue to play a role in preparing Bhutanese youth for employment and national service.
Education and healthcare services have also expanded during the reporting period. However, health data revealed a growing challenge from non-communicable diseases. Screening services are now available in all 20 districts, and approximately 278,000 people have been tested. Of those screened, around 68,400 were diagnosed with hypertension or diabetes and are currently receiving treatment.
The report further noted progress in digital transformation initiatives and efforts to preserve Bhutan’s cultural heritage, both of which form part of the country’s broader development strategy.
As Bhutan enters the second half of the 13th Five-Year Plan, the government maintains that the foundations for sustained growth have been laid. The coming years, however, will determine whether infrastructure investments, job creation efforts, and economic reforms can move quickly enough to retain the young workforce essential for achieving the country’s long-term development goals.
