COUNTRY BACKGROUND - Gross National Happiness Commission

Manufacturing and Trade
II. Review of Past PerformanceII. Review of Past Performance
A. Objectives of the 6FYPA. Objectives of the 6FYP
18.26 The main objectives in the manufacturing and trade sector were to:
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· increase the share of industry GDP through industrial development
· improve trade balance and promote internal trade
· substitute imports through domestic production
· increase exports of manufactured and processed goods to international markets in order to earn hard
currency
· promote regional balance
· generate foreign exchange revenue from tourism while protecting the environment and culture from
possible adverse consequences of tourism.
B. Achievement of ObjectivesB. Achievement of Objectives
Manufacturing sectorManufacturing sector
TradeTrade
18.27 The share of manufacturing sector of total GDP remained small, although its contribution to GDP has
increased from about 3.2% in 1980 to 7.1% in 1989. The real rate of growth of the manufacturing sector was 15%
in the 1980s.
18.28 Foreign trade as a proportion of GDP increased over the period 1982-1988 from 53% in 1982 to 75% in
1988. The ratio of trade with India to GDP increased from 47% in 1982 to 56% in 1988; whilst the share of third
country trade rose from 6% in 1980 to 19% in 1988.
18.29 Imports from both India and third countries are mainly manufactured foods and machinery and transport
equipment. In terms of third country exports, the food and allied sectors accounts for the largest share, mainly
because of the recent increase in the export of fresh fruits (apples and oranges) to Bangladesh. Other important
exports to third countries are cardamum (mainly to Singapore), broom handles (mainly to The Netherlands), and
philatelic stamps and handicraft goods to various countries. The main exports to India are electric power, crude
materials (agro, forestry and mineral) and some wood and mineral products.
18.30 The current account balance with India has improved as a result of the export of electricity and increases in
the export of raw materials, including wood and mineral products. The share of export (in the total trade with India)
increased from 32% in 1985 to 89% in 1988. The manufacturing trade balance with third countries worsened as a
result of the combined increase in the import of capital goods and transport equipment and the slow growth of
exports to these countries. The share of manufactured exports in the total trade with third countries increased from
7% in 1985 to 9% in 1988. The proportion of third country exports in GDP was less than 1% in 1988, implying that
the export trade has been overwhelmingly with India. Also evident from the above is the fact that there is high
dependency of the export sector on Indian market and a consequent need for diversification.
18.31 New trade routes and transit points between India and Bhutan, and Bangladesh and Bhutan were opened in
the 6FYP to facilitate increased trade.
18.32 The 6FYP envisaged the establishment of the Dungsum Cement Project in Nanglam at an estimated cost of
Nu 848 m or 33.15% of 6FYP allocation for the Department of Trade and Industry. Funds were used for site
development and pre-investment studies for the project. However, the Project will only be started in the 7FYP.
Industrial Activities in the 6FYPIndustrial Activities in the 6FYP
18.33 Despite the delays in the implementation of the Dungsum Cement Project, which would have made
significant difference to the manufacturing growth rate, other enterprises were initiated in the 6FYP in the
manufacturing sector stepped up its activities in many other areas. Bhutan Calcium Carbide Limited, Bhutan