Bhutan’s Transformation through a Nepali Lens

Bhutan is often introduced, with characteristic humility, as a small country. Many of us Nepalis also use similar language about Nepal. But size can be a misleading way to understand national potential. Bhutan may be small beside its giant neighbors, yet in global perspective it is neither insignificant nor without leverage. More than 70 countries are smaller by area and more than 40 have smaller populations. Interestingly, over 100 countries have lower nominal GDP per capita. The more important story, therefore, is not Bhutan’s size. It is how Bhutan has used its constraints to shape a distinct development path.

Over the past two decades, Bhutan has made striking progress. Its GDP has grown fourfold, from about USD 750 million in 2004 to USD 3 billion in 2024, while per capita income has increased fivefold. Poverty has fallen sharply, from 65% to 12% in those twenty years, and extreme poverty has been eliminated. Human development indicators, including life expectancy, have improved.

Tourism, which drew fewer than 10,000 visitors in 2004, peaked at 315,000 in 2019 before the pandemic and is now recovering. Hydropower has powered much of this growth, while remittances, now close to 10% of GDP, are supporting consumption and wider economic activity.

For Nepal, the comparison is instructive. Both countries are being reshaped by electricity generation, migration, remittances, and changing aspirations among young people. Bhutan, like Nepal, is seeing more citizens leave for opportunities abroad, with Australia emerging as a major destination. 50% of Nepalis are under 25, and 50% of Bhutanese are under 30.  Nepal’s migration at USD 15 billion is nearly a third of its GDP. The policy question is no longer whether migration can be stopped; it cannot. The real question is whether governments can make migration safer, integrate returnees better, and design formal worker programs to fill domestic skills shortages. Nepal has begun formalizing migrant labor arrangements, for instance requiring Indian workers  in Nepal to register with the embassy. Bhutan may soon have to move in the same direction. Countries in the GCC, Singapore, Japan, and South Korea show that well-managed labor mobility can help economies bridge skill gaps without pretending that borders can be sealed against opportunity.

Nepal and Bhutan, A Shared Civilizational Inheritance

The relationship between Nepal and Bhutan, however, cannot be understood through economics alone. During my visit to Bhutan, the foundation stone for the Bhutanese monastery in Lumbini was being laid, reminding us that Buddhism has long tied the two countries together. Lyonpo Kesang Wangdi, Vice Chair of the Privy Council, spoke of these historical linkages, including the story of Beypina, near Samtenling Palace of HM the 4th Druk Gyalpo, where Newa artisans once settled. Nepalis, he said, were traditionally known as Beypups, or people of Bey Yul, the hidden paradise. “This fact is part of the testimony to our shared spiritual and cultural heritage that remains the cornerstone of our common destiny and progress,” he noted.

That inheritance runs deep. From the spread of Newa Buddhist paintings, or Paubha, beyond Nepal since the time of Guru Rimpoche, or Guru Padmasambhava, in the eighth century, to the metal sculptors brought by Shabdrung Ngawang Namgyal in the seventeenth century, Nepal’s artistic and spiritual influence has left a visible imprint in Bhutan. In the twenty-first century, the late Newa artist Raj Kumar Shakya led the construction of the world’s largest statue of Guru Padmasambhava, also known as Guru Rinpoche, in Lhuntse. Anyone visiting Bhutan’s monasteries can see that this relationship is civilizational.

On my flight from Paro, I met pilgrims travelling to Buddhist sites in Nepal. Some were combining pilgrimage in Nepal and using it as a transit point to Lhasa and other parts of China. More than 16,000 visitors from Bhutan came to Nepal by air, and another 10,000 arrived overland. These numbers may appear modest, but they point to a larger opportunity: Nepal and Bhutan can build a shared Buddhist circuit that connects pilgrimage, heritage, aviation, hospitality, and local enterprise.

From Civilizational Sentiment to Strategy for Mutual Economic Benefit

Pilgrimage and transit are natural areas of cooperation, but the possibilities go well beyond them. A Nepali company, Upaya City Cargo, has partnered with Bhutan’s Exim Express to help modernize logistics management by filling first-mile pick-up and last-mile delivery gaps. Sonam Chopel, CEO of CSI Market, who also advises Exim Express, spoke about Bhutan’s growing MSME ecosystem, with more than one thousand people connected to CSI Market, the country’s largest dedicated marketplace for products made and grown in Bhutan under one roof. This is precisely where Nepal and Bhutan should think practically: product sourcing, e-commerce, logistics, branding, and last-mile delivery can become the building blocks of a new Himalayan marketplace.

At the first edition of the Himalayan Future Forum, hosted in Kathmandu in February, Bhutanese and Nepali companies explored collaboration. The challenge now is to move from goodwill to scale. Too often, Nepal and Bhutan speak warmly about shared culture while leaving commercial cooperation to drift. That must change.

Trade is the obvious place to begin. Nepal could be a market for Bhutanese products, and Bhutan could offer opportunities for Nepali goods and services. The two countries still lack a formal bilateral trade agreement. In June 2022, both sides moved toward such an agreement. Years later, the logic remains even stronger. A new government in Nepal should revive and conclude the agreement, not as a symbolic gesture, but as a practical framework for duty preferences, rules of origin, cargo movement, services, and business-to-business collaboration.

Bhutan has built a global brand around nature, culture, and the Himalayas. With Gelephu Mindfulness City (GMC) taking shape, new openings will emerge for investors, professionals, service providers, educators, artists, and entrepreneurs across the region. Nepal should not watch from the sidelines. The two countries need to revisit their relationship with a forward-looking lens and build partnerships in tourism, logistics, education, climate resilience, culture, creative industries, and Himalayan brands for the world. As someone I met in Bhutan told me, “We cannot drive ahead by looking in the rear-view mirror.” True. But we also cannot create imaginary potholes on the road ahead. In my book Nepal 2043 – Road To Prosperity, I argue that climate change will redefine the world and reshape relations among Himalayan countries. That future is already arriving. Nepal and Bhutan should not wait for it passively. It is time to rethink, recalibrate, and act.

This article was originally published in Kuensel, the national newspaper of the Kingdom of Bhutan, and has been republished here as a NEFview.