INTO THE

NEXT DECADE
A Roadmap for DHI and Group
Druk Holding & Investments Limited
Motithang, Thimphu, Bhutan
Post Box 1127
Phone: 00975-2-336257/58
Fax: 00975-2-336259
www.dhi.bt
©DHI, 2018

Content development: Druk Holding and Investments Limited

Design & print: Yoebar Prints - yoebarprinters@gmail.com
 INTO THE
NEXT DECADE
A Roadmap for DHI and Group

1
16 2 ROADMAP 2030
MANAGING AND SAFEGUARDING NATION’S WEALTH
 DEDICATION
To the people of Bhutan, the trustees of
the nation’s resources

3
 TABLE OF
CONTENTS

4 ROADMAP 2030
 FOREWORD 6

INTRODUCTION 9

A DECADE OF DHI 11
Performance Improvement 12
Resource Optimization 14
New Investments 16
Private Sector Development 18
Revenue To Government 20

MACRO-ECONOMIC VIEW 22
Bhutan’s Socio-Economic Development Progress 23
Bhutan’s Economic Development Goal 24
Dhi And Economy 25
Key Challenges 26

THE NEXT DECADE 29

Mission 30
Vision 31
Destination 32
Guiding Themes 33

GOALS, OBJECTIVES AND MILESTONES 39

Performance Improvement 40
Resource Optimization 44
New Investments 48
Leading And Complementing Private Sector 78
Revenue To The Government 80

DHI IN 2030 82
Performance Excellence 84
Human Capital Excellence 86
Economic Transformation 88

CONCLUSION 91

ANNEXURES 92
Acronyms 98

5
 FOREWORD
DHI completed its first 10 years on 11th
November 2017. In keeping with the
vision enshrined in the Royal Charter, DHI
has lived up to the mandates set out for
the decade.
It braved many challenges that riddled the
company’s journey thus far. The outcome
has been in its acceptance as the company
it was conceived and later evolved
into, besides being able to establish its
autonomy and consolidate the Group.
DHI, today, is an integral part of the
Bhutanese corporate landscape and shares
a harmonious and professional working
relationship with all of its companies.
In operations, it was able to enhance
corporate governance, improve
6 ROADMAP 2030
performance of companies, thereby,
contributing to growing dividends and
taxes to the Government. For fiscal year
2016/17, its share comprised 41% of the
government’s total internal revenue, which
helped finance 50% of the total recurrent
expenditure. Besides, it also made modest
investments and was able to support
private sector development through
entrepreneur promotion initiatives.
Stepping into the next decade, DHI plans
to accelerate the growth and contribute
twice as much as in the first decade.
The government has proposed a new
economic development goal to attain
upper middle-income country status with
GNI per capita of at least USD 11,000
by 2030. This will be made possible
primarily due to the commissioning of the
hydropower projects under construction,
or in advanced stages of construction.
Bhutan will have an additional 3,658MW
of power in the next five years; an addition
of 228% on the current capacity and an
additional 768MW of firm power.
For the same reason, DHI intends to
increase its contribution to government’s
internal revenue and finance entire
recurrent expenditure for the 2029/30
fiscal year. Conscious of the need to
maintain adequate liquidity in times
of national exigencies, DHI also aims
to increase the Bhutan Future Fund,
established on 11th November 2017 with
a seed fund of Nu. 300 million, to Nu. 30
billion in 2030.
DHI has adopted three key themes to
guide the Group through the new decade.
Resolved to increasing shareholders’
return, primarily through efficiency and
productivity, Performance Excellence is
the first theme. Determined to accelerate
growth of non-hydro segments,
help economic diversification and
finance government’s entire recurrent
expenditures, Economic Transformation
is the second theme. Finally, mindful of
HR being the single most critical element
for the Group’s success, Human Capital
Excellence is the final theme.
While significant improvements in
product quality, service efficiency and
people productivity will be made, there
will still be challenges to cope with,
especially in meeting people’s growing
expectations.
Major investments slated for the decade
will have to battle policy and regulatory
challenges, including those related
to finding appropriate partners and
investors, given Bhutan’s small economy.
The Group will also have to grapple
with development of world-class human
capital, capable of taking up projects with
in-house capacity and expertise.
Nonetheless, with steadfast and dedicated
support of shareholders, unfaltering
commitment and hard work of boards,
managements and employees, all under
the enlightened guidance of His Majesty
the King, we will achieve unprecedented
growth in the coming decade.
Dasho Ugen Chewang
Chairman
Druk Holding and Investments Limited
7
 ROYAL CHARTER FOR DRUK HOLDING AND INVESTMENTS

8 ROADMAP 2030
 INTRODUCTION
On 11th November 2007, His Majesty issued
a Royal Charter establishing Druk Holding
and Investments Limited (DHI) to hold and
manage the existing and future investments
of the Royal Government for the long-term
benefit of the people of Bhutan.
In keeping with the Charter, DHI was
formed with an initial grouping of selected
companies1 in hydropower, banking, natural
resources and manufacturing sectors, where
the government had full or partial stake. The
company started with a total net worth of Nu.
19,558.12 million.
Being a revolutionary concept in the country,
the establishment of DHI, however, posed
some challenges. The greatest challenge
was in its existence itself, as it had to justify
the need for the country to have a holding
company. Operationally, the biggest challenge
Thrust area framework
1
DGPC, BPC, Drukair, BTL, BOB, NRDCL, RICBL, BNB, STCBL, BBPL, PCAL, BFAL
was in establishing the autonomy of DHI.
Fortunately, whenever there were doubts
about how issues were to be resolved,
the Royal Charter provided the clarity and
inspiration in meeting these challenges.
DHI developed the ownership policy, which
provided a framework for administering its
portfolio companies and defining its key
relationships with other stakeholders. With its
implementation, DHI firmly established itself
as the largest and only government holding
and investment company in the country.
In order to ensure that DHI creates and
maximises returns to its shareholders, the
19 primary functions highlighted in the Royal
Charter, were summarised and grouped into
a Thrust Area Framework, as illustrated in
Figure 1, and used as the basis for making
strategic plans, setting targets and evaluating
performance.
T1 Performance Improvement
T22 Resource Optimization
T3 New Investments
T4 Private Sector Development
T5 Revenue to the Government
9
10 ROADMAP 2030
 A DECADE OF DHI
The first 10 years were largely a period of consolidation. As a new entity, DHI needed to establish
and clarify its role, while strengthening the subsidiary companies to improve corporate governance
and performance.

This involved developing processes and systems to institute and enhance a culture of performance,
accountability and responsibility in the companies. It also involved ploughing back profits to
existing companies to modernize systems and upgrade infrastructure for more efficient service
delivery. Further, DHI also made achievements in new investments through setting up of Thimphu
Tech-Park Limited, Dagachhu Hydro Power Corporation, Nikachhu power project and others that
were carried out through the subsidiaries.

The achievement of the first decade are presented through the five thrust areas.
11
PERFORMANCE IMPROVEMENT

12 ROADMAP 2030
DHI instituted a very strong performance
driven culture in its companies. Although
it is only ten years old, DHI has already
earned acknowledgement and recognition
for excelling in corporate governance. DHI’s
achievement is a culmination of the numerous
game-changing initiatives it took to transform
the companies. The main ones being the re-
composition of Board Directors, PMS and HR
Guidelines with flexibility for top management
recruitment and remuneration.
It started with the introduction of the Annual
Compact in 2008. The compact, signed every
year between DHI and the companies, is
the guiding document for the companies.
The performance-based variable pays and
allowances of the companies are tied to the
achievement of the targets in the compact.
A mother document for target setting, the
Compact Guideline was developed in 2009.
This has enabled our companies to become
more efficient while posting higher revenues
and profits at the same time.
The Ownership Policy outlines DHI’s
relationship with the companies and therefore
the application of its Corporate Governance
Code (CG Code). The CG Code includes the
Guidelines for the Board of Directors and the
appointment of the Chief Executive Officers
of companies. Through this, DHI could ensure
selection of the right composition of Board
Directors specific to each company, which in
turn ensured selection and appointment of
the right leader for each company.
Several other policies and applications have
been put in place to enhance the performance
of the group. To improve service delivery of
customer-oriented companies, DHI instituted
the annual independent customer satisfaction
survey in 2012. In order to ensure growth and
competitiveness, companies were mandated
to prepare Five-Year Financing and Investment
Plans (FYFIPs) from 2009, required to be
updated annually.
Avenues such as the CEO Round Table Meeting
(RTM), Chairmen’s Forum and CXO Forums
were initiated to foster group wide synergy.
These forums have made it easier to align
the companies toward the overall vision of
the Royal Charter. The day to day operations
of DHI companies are made easier with the
introduction of Enterprise Resource Planning
(ERP) application in most of the companies.
Through these initiatives, DHI and its
companies have championed the twin pillars
of corporate governance and performance
management. DHI has already started making
its presence felt in the region. It will continue
its efforts towards achieving excellence in
Corporate Governance and seek a place
among the global CG champions in the
coming ten years.
13
RESOURCE OPTIMIZATION

14 ROADMAP 2030
Before being consolidated under one holding
company, the existing government companies
were operating in independent silos.
Recognising that the cumulative cost for DHI
would have been extremely high if companies
continued to conduct business as before, the
first task of DHI was to consolidate resources
and avoid duplication of the existing and
new services. While consolidating, DHI also
prudently allowed flexibilities in enabling
companies, such as DGPC, to set up their own
subsidiaries for optimal use of HR and financial
resources and leverage their strengths within
the sectors.
The consolidation of the lands owned by
the companies under the ownership of DHI
was one of the biggest achievements of
DHI in terms of resource optimization. The
transfer of company-owned lands to DHI
ensures perpetual state ownership of this
precious asset which could otherwise have
been converted to private ownership in
case of divestments in the future. This also
guarantees land availability for expansion of
existing companies and for new initiatives.
DHI took a bold leap in 2016 by merging CDCL
and DHI INFRA. The latter was formed by DHI
in its early years of operation as a company
that would specialize in infrastructure
development. The former, transferred
to DHI in 2015, was also a government
undertaking specialized in construction. The
companies were merged to avoid existence
of two companies with similar mandates. The
initiative enabled the merged CDCL to venture
into new areas of construction such as into
hydropower and transmission infrastructure.
DHI launched the Inter-Corporate Loan
Policy and Corporate Guarantee Policy in
2015. The inter-corporate loan enabled easy
access to short-term loans among companies
at mutually beneficial interest rates. DCCL,
one of DHI’s companies that frequently runs
short of funds due to the industry dynamics,
benefitted most from inter-corporate
reserves. The company also secured an
external commercial borrowing of INR 2
billion through DHI Corporate Guarantee.
The Inter-Corporate Loan has been extended
to other controlled companies with lower DHI
shareholdings like DPL. This has brought about
huge savings in cost of funds for companies.
DHI has also been encouraging cross-company
businesses to reduce outflow of capital and
strengthen group-wide synergy. Launched
in 2014, Bhutan Telecom’s data centre now
houses the servers of DHI companies like
DGPC and BoB, among others.
Several resource optimization studies
were done ranging from consolidating
transportation to centralising procurement.
The aforementioned are some of the prioritised
initiatives in the first decade. Additionally, our
companies benefitted through inter-company
human resource pooling and through DHI’s
consulting services. As the next decade unfolds,
more such initiatives will be considered to
optimize resources in the group.
15
NEW INVESTMENTS
Investment is a key mandate of DHI. Ever
since its inception, DHI has made a number
of new investments in various sectors, while
also investing in existing companies to
expand their businesses, diversify products
and services, and to maximise returns.
One of the first investments of DHI was the
Thimphu TechPark Limited (TTPL), a joint
venture between DHI and Assetz Property
Group (APG). DHI took full ownership of the
company in 2014. TTPL started making profit
by 2015. Today the tech-park houses about 10
16 ROADMAP 2030
foreign ICT companies employing more than
700 Bhutanese youth.
DHI embarked onto another joint venture
in 2011 with Shin Nippon Biomedical
Laboratories Limited (SNBL) to start Koufuku
International Private Limited (KIPL), a dairy
plant in Chenary - Trashigang with Gouda
cheese as its premium product, for export
to the Japanese market. To take lead in the
long-term interest of the company, DHI took
over 71% of SNBL’s shares and increased the
ownership to 80% in 2017. Today, the plant
buys a minimum of 1,000 litres of milk from
farmers in Trashigang, paying them about Nu.
30,000 everyday.
Along with the takeover of Dungsam Cement
Corporation Limited (DCCL) project in 2009,
DHI also started Dungsam Polymer limited
(DPL) in Nganglam, and offered 49% of its
shareholding to the people of Bhutan. One of
the most strategic and profitable investments
of DHI was the establishment of State Mining
Corporation Limited (SMCL) in 2014. SMCL
currently operates a coal mine in Samdrup
Jongkhar and will be taking up more mines
in future. SMCL demonstrated its revenue
earning potential for the government when it
made profits and even declared dividends just
in the second year of its operation.
With support from the Ministry of Finance
(MoF), and financing secured from the Asian
Development Bank through substantial grants
and low-cost debt, DHI is undertaking the
Phuntsholing Township Development Project.
The project, which was initially conceived
to mitigate the risk of floods to the existing
township and improve the quality of life of
its residents, will reclaim more than 162
acres of land by training the Amochu river.
The river bank protection works will start in
2018. The project will be implemented by
the Construction Development Corporation
Limited (CDCL), a subsidiary of DHI.
DHI recently partnered with Azista Industries
Pvt. Ltd., India and formed Azista Bhutan
Healthcare Limited, a pharmaceutical
company. The plant is under construction in
Samdrup Jongkhar. Through this project DHI
hopes to curb import and also promote brand
Bhutan in a global market through export of
pharmaceutical products. DHI is also setting up
the largest steel manufacturing unit in Bhutan
and Northeast India with an installed capacity
of 200,000 MTPA in Motanga Industrial Park,
Samdrup Jongkhar. A power intensive plant, the
unit is expected to add value to the country’s
cheap renewable energy, generate employment
and earn convertible currency from exports.
To revitalise, restructure and expand the
businesses of existing companies, DHI
has also been making investments in its
existing companies. In the past decade,
Drukair increased its fleet to four aircrafts.
Further, investments in two new aircrafts, an
additional Airbus and replacement of an ATR,
have already been approved for future growth
and expansion.
The Group also ventured into major endeavors
in the energy sector through DGPC, BPC
and CDCL. Among others, DGPC completed
the construction of the 126 MW Dagachhu
project and started the 118 MW Nikachhu
project. DGPC also completed a number of
diversion schemes such as the Tsibjalumchhu
to augment generation from its existing
Chhukha and Tala power plants. DGPC further
established Bhutan Hydropower services with
Alstom and recently entered into a partnership
with Andritz to start Bhutan Automation to
provide automation services to hydropower
stations, substations and related industries.
DHI will continue to invest in new ventures
and existing companies on a year on year
basis.
17
PRIVATE SECTOR DEVELOPMENT

18 ROADMAP 2030
Recognising the importance of the private
sector for creation of better opportunities
and overall socio-economic growth in the
country, DHI also played a role in leading,
complementing and spearheading growth
of a dynamic private sector. In keeping with
the Royal Charter, the DHI-Private Sector
Partnership Framework (DPP Framework) was
developed to enable DHI and its subsidiary
companies to undertake projects with the
private sector in an objective and transparent
manner.
In 2012, a comprehensive entrepreneurship
development program, “BEGIN” (Business
Entrepreneurship Growth and Innovation)
was framed for private sector development.
DHI helped smaller entrepreneurs to develop
new ideas and expand their businesses.
The program was later merged with Loden
Foundation’s entrepreneurship program and
a special fund of Nu. 20 million was created
to provide collateral and interest free loans
to prospective entrepreneurs. A total of 30
entrepreneurs in diverse sectors benefitted
from the fund.
Since its operation in 2012, TTPL’s Bhutan
Innovation and Technology Center (BITC) has
helped numerous start-ups. Similarly, with an
objective of bolstering private sector growth,
DHI played a leading role in organising the
first ever Better Business Summit in 2014.
Considering the high demand for herbal
products and mismatch in demand and supply
of Bhutanese herbal products, DHI assisted
Menjong Sorig Pharmaceutical (MSP) in
carrying out an R&D for herbal product. DHI
and MSP identified herbal tea as a potential
project and, following that, pilot manufacture
of cinnamon tea was carried out. Upon
realising its success, the product has now
been transferred to MSP. Additionally, DHI
in partnership with Department of Roads,
Ministry of Works and Human Settlement,
College of Science and Technology, CDCL and
DCCL has initiated a study to assess techno-
economic viability of cement concrete roads
in Bhutan as a substitute for bituminous roads.
The preliminary results are very encouraging.
DHI also maintains a Corpus Fund at BoB to
help entrepreneurs access capital in the form of
bank guarantee for bidding of contract works,
supplies or services. The fund is available
to entrepreneurs bidding for small contract
works/supplies/services up to Nu.1.5 million.
In 2018, DHI launched the DHI Business
Acceleration Program, (DHI BiZAP) in
partnership with IC2 institute, University
of Texas. It is aimed at complementing the
growth of the cottage and small industry
in the country. This high level structured
training is expected to sharpen entrepreneurs’
value proposition, define target markets, get
market feedback on product/technology and
determine effective business model for an
enterprise. Graduates from this prestigious
program will immensely benefit from IC2’s
rich and wide mentorship network with
local support consisting of subject matter
experts at DHI and experienced Bhutanese
entrepreneurs.
Beyond that, the DHI companies have been
paving the way for the private sector to improve
products and services, while enhancing
efficiencies and quality. For instance, CDCL
has set very high standards for construction
in terms of work quality and the engagement
of hundred percent Bhutanese workforce. In
the power sector, inroads have been made
for greater participation by the Bhutanese in
transport, supplies of construction material
and in the construction of tunnels, dams and
power houses.
19
REVENUE TO GOVERNMENT

20 ROADMAP 2030
One of DHI’s primary functions is to maximise
returns on investments and, thereby, ensure
steady stream of revenue to the government.
In order to fulfill the mandate, the foremost
task DHI had to undertake was improve
performances of the companies and, thereby,
ensure a sustained revenue from them.
In the past decade, DHI’s standalone revenue
increased from Nu. 4,508.43 million in 2008
to Nu. 7,922.98 million in 2017. The return on
equity averaged at 8.55%. All the returns came
from the companies that were transferred to
DHI during its formation, mainly the hydro
sector companies (DGPC and BPC). Averaging
at 86.56%, the combined dividend income
from DGPC and BPC did not drop below 84%
in the last five years.
DHI in its first 10 years (from 2008 – 2018),
contributed a total dividend of Nu. 30,116.00
million to MoF. Dividend contribution increased
from Nu. 1,463.85 million paid for FY2008 to
Nu. 4,038.23 million paid for FY2017.
2
DHI’s dividend for the first five years does not include Tala’s contribution.
In the five-year period (2002-2006) preceding
DHI’s inception, MoF collected a total
dividend of Nu. 8,257.22 million. It accounted
for 25.10% of the government revenue then.
However, following the transfer of government
linked companies to DHI in 2007, the total
dividend income for the following five years
(or DHI’s first five years: 2008-2013) increased
to Nu. 11,708.432 million (registering 15%
CAGR), and to Nu. 30,116.00 million for the
10-year period (registering CAGR of 22.50%).
Today, DHI’s dividend contribution accounts
for 42% of total government revenue.
In addition to dividend payments, for the
first ten years, DHI also contributed Nu.
16,125.40 million as its income tax and the
Group companies contributed Nu. 40,089.19
million as their income taxes. Further, DGPC
also makes a royalty payment averaging Nu.
2,300 million a year; accounted for at 15% of
annual energy generation.
21
 MACRO-ECONOMIC VIEW

22 ROADMAP 2030
BHUTAN’S SOCIO-ECONOMIC
DEVELOPMENT PROGRESS
Under the visionary leadership of its
monarchs, Bhutan has become emblematic of
a politically stable, economically prosperous
and spiritually happy country in South Asia
and beyond. Bhutan achieved significant
socio-economic development since the start
of planned activities in early 1960s.
Poverty has been reduced from a high of 36.3%
in 20003 to 12% in 2012. Today, Bhutan’s
general literacy rate reached 71.4% and youth
literacy at 93.1%. Since the introduction of
modern health care system in early 1960s,
health facilities cover 95% of the total
population, ensuring that a health facility is
within three hours walking distance of any
human settlement.
About 97% of all births in the 12 months
preceding the 2017 Census were attended
by health professionals. According to the
National Health Survey of 2012, there has
been significant decline in mortality rates
compared to 1984 – infant mortality rate has
declined from 102.8 to 30 per 1,000 live births;
and maternal mortality has declined from 777
to 86 per 100,000 live births. Similarly, the
overall life expectancy has also increased to
70.2 years in 2017 from 66.3 in 2005.
As per the Population and Housing Census
of Bhutan 2017, Bhutan’s total resident
population as of 30th May 2017 was 735,553
persons. Out of the total population, 681,720
persons were Bhutanese and 53,833 persons
non-Bhutanese, including 8,408 tourists.
The sex ratio of the population (number of
males for every 100 females) at the national
3
Poverty assessment started in 2000
4
Source: National Accounts Statistics 2017
level was found to be 110. The median age
was found to be 26.9 years, indicating that
half of Bhutan’s population is younger than
26.9 years. The total dependency ratio was
found to be 47.0, implying that for every 100
economically active persons, there are 47.0
dependents.
In terms of the economy4, Bhutan has been
achieving impressive growth rates over the last
decade. However, given its shallow economic
base, its GDP is small by most international
standards. Bhutan’s total GDP was about Nu.
148,678.93 million in 2016, having grown
from about Nu. 54,712.89 million in 2008,
registering an average growth rate of 6.57% for
the period. On the other hand, given its small
population size, Bhutan enjoys a relatively
high per capita GDP. The per capita GDP has
increased to Nu. 193,447.02 in 2016 from Nu.
81,586.13 in 2008. Similarly, the per capita
GNI has also increased to Nu. 177,294.94 (or
USD 2,640.17) in 2016 from Nu. 79,380.65 (or
USD 1,824.42) in 2008.
Correspondingly, government’s revenue
also increased during the period. The total
revenue increased to Nu. 29,713.60 million
in 2017 compared to Nu. 12,345.99 million
in 2008. Revenue in 2017 was 19.62% of the
GDP as compared to 24.11% of GDP for 2008.
Similarly, the total expenditure also increased
to Nu. 49,966.60 million in 2017 from Nu.
19,693.03 million in 2008. In keeping with
the Constitution, all recurrent expenditures
for the period were met through domestic
revenues.
23
BHUTAN’S ECONOMIC
DEVELOPMENT GOAL
At per capita GNI of USD 2,640.175 in 2016,
Bhutan is considered a lower middle-
income country, but considering structural
impediments to sustainable development,
Bhutan remains in the Least Developed
Country (LDC) bracket.
However, considering that Bhutan has met
all three criteria6, the UN’s Committee for
Development Policy (CDP) has recommended
for Bhutan’s graduation from LDC status in the
forthcoming UN General Assembly. Bhutan’s
policy on graduating from its current Least
Developed Country (LDC) status has been
implicit in its vision 2020 document which
envisages Bhutan as a middle-income country
by 2020. Besides, the EDP also envisions self-
reliance by 2020. Similarly, in its 11th Five
Year Plan, the government explicitly included
graduation from the LDC category by 2020
as one of the key targets to be achieved.
However, absence of quantitative measures
resulted in difficulties to set specific economic
goals for the country.
As the key driver of our economy, hydropower
is considered the cornerstone of Bhutan’s
socio-economic development policy and of
strategic importance to the future of Bhutan’s
economy and economic diversification. For
instance, in 2016/2017, electricity sector
contributed 10.3% of total internal revenue.
Considering payments made by DGPC on
account of royalty energy (Nu. 2,275.58 million
for FY2017) and 85% of DHI’s dividend coming
from DGPC and BPC, electricity’s contribution
increases to 29.34%. Its contribution to 2016
GDP was 13.36%. Further, Bhutan registered
the highest GDP growths either during
completion of a mega hydropower project or
when a substantial export tariff increase came
into effect.
Hence, based on the assessment of the
optimal pace of hydropower development
for economic progress and in consideration
of the result7 of the ‘baseline scenario’8
therein, Bhutan’s proposed new economic
development target is “to achieve upper
middle-income status by 2030”.
According to the World Bank, an upper-middle
income country is defined as any nation which
has a GNI per capita range between $3,896 -
$12,055. This means Bhutan must achieve an
average economic growth rate of 7.7%9, which
would be one of the highest in the world.
DHI and Group companies will have to play
an increasingly critical role of doubling its
revenues to the government, to help Bhutan
attain the “upper middle-income’ country
status by 2030.

5
National Accounts Statistics, 2017;
6
(as per UN’s CDP Report 2018): (i) GNI per capita $ 2,401, against the threshold of $1,230, (ii) Human Asset Index (HAI) 72.9, against the threshold of ‘66 or
above’, and (iii) Economic Vulnerability Index (EVI) of 36.3, still above the threshold of ‘32 or below’, the index is much lower than LDC’s 41.3.
7
With the completion of the ‘Baseline projects’ within 2023*, average economic growth rate is expected at 6.8% from 12th FYP – 14th FYP, Hydropower
Development Strategy 2017;
8
With two mega projects (Punatsangchhu I & II), two large projects (Mangdechhu and Kholongchhu) and one medium size project (Nikachhu), there will be 3,658
MW capacity addition, taking the total capacity to 5,264 MW, Hydropower Development Strategy 2017;
9
While the baseline scenario itself puts Bhutan to an upper middle-income status and projects an economic growth rate at 6.8%, the scenario also projects
a breach in the constitutional requirement for Forex reserve. Hence, there is a need to take up an additional power plant project, which then projects an
economic growth rate of 7.7%, Hydropower Development Strategy 2017;

24 ROADMAP 2030
DHI AND ECONOMY
Ever since its inception, the Group has From Nu. 4,364.28 million in 2008, the Group’s
contributed significantly to the national total contribution to the government revenue
revenue. The contributions are mainly through increased to Nu. 12,253.28 million in 2017,
dividend paid to the Ministry of Finance registering a compounded annual growth
(MoF) by DHI, DHI’s standalone income tax rate (CAGR) of 10.88%. The total contribution
and Group companies’ income taxes10 paid for the first 10 years is exhibited in the chart
directly to the government. below:

Group's total contribution to MoF (in million Nu.)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
DHI dividend 1,463.85 1,451.59 2,864.35 2,989.37 2,939.27 3,127.53 3,769.98 3,689.74 3,782.10 4,038.23
DHI standalone tax 1,332.16 1,516.24 1,327.03 1,292.39 1,267.01 1,361.65 1,666.15 1,855.77 2,180.93 2,326.06
Group companies' tax 1,568.28 2,842.30 3,076.09 2,858.99 3,022.16 4,629.91 5,034.09 5,261.77 5,906.61 5,888.99

Group's vs others' contributions to National Revenue (41.69%) 17,460

16,164
14,334
12,774
13,126 11,983
10,318
8,371
8,239
7,982 11,870 12,253
10,470 10,807 (41%)
9,119 (41%)
(45%) (43%)
7,267 7,141 7,228 (43%)
4,364 5,810 (46%) (41%) (36%)
(35%) (41%)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Group Contribution Others

10
Income taxes of companies considered fully owned as per the Bhutanese Accounting Standards (BAS) are considered in Group’s contribution.

25
Its contribution to the government’s internal last decade, the Group’s average contribution
revenue increased from Nu. 4,364 million to the total internal revenue (for 10 years) was
in 2008, which was 35% of the total, to Nu. 41.69%. The Group helped finance 50.78% of
12,253 million in 2017, which is 41.24% of government’s recurrent expenditure in 2017.
the total. Including payments made by DGPC It grew from 44.87% in 2008. Overall, for the
on account of Royalty energy (Nu. 2,275.58 last 10 years, the Group covered 50.30% of
million for 2017), the total contribution for government’s total recurrent expenditure.
2017 increases to Nu. 14,528.86 million, which The contributions are illustrated in the charts
is 48.89% of the total internal revenue. For the below:
Financing government's recurrent expenditure (50.30%)
Financing government’s recurrent expenditure (50.30%)
24,130
22,880
22,044

18,626 17,897

16,706
13,837 14,735

11,061
9,726
11,870 12,253
10,470 10,807 (51%)
9,119 (52%)
(59%) (49%)
7,267 7,141 7,228 (49%)
4,364 5,810 (53%) (43%)
(48%)
(45%) (53%)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Group Contribution Total recurrent expenditure

KEY CHALLENGES
According to the Economic Development Policy 23,495.12 million in 2008, while exports
2016, sustainable economic growth continues increased only marginally to Nu. 37,297 million
to remain a major challenge in Bhutan and from Nu. 22,590.64 million in 2008. Electricity
economic growth is largely financed by external export comprised 32.13% of total export for
aid. The major constraints facing economic 2017. Excluding export of electricity, total
growth in Bhutan, as outlined in the EDP, are: exports increased by 119% from 2008 (or Nu.
13,756 million) whereas imports increased by
i. A small domestic market;
ii. Narrow export product base and markets;
185% from 2008 (or Nu. 43,499 million). The
iii. Inadequate infrastructure; overall trade imbalance stood at Nu. 29,299
iv. High transportation cost; million, with more than 75% of it with India.
v. Difficult access to finance;
vi. Inconsistent policies/lack of coordination; The quantum of imports from India (Nu.
vii. Lack of management skills; 53,973 million) and export to India (Nu.
viii. Shortage of professionals; 31,618 million) formed more than 81% to
ix. Low productivity of labor; 85% of the overall imports and exports,
x. Absence of R&D capability; and respectively in 2017. Due to this structure,
xi. Access to land. prices of commodities in Bhutan broadly
Bhutan’s imports increased almost three follow developments in India and, hence,
folds to Nu. 66,996 million in 2017 from Nu. inflation is largely tied to the Indian economy.

26 ROADMAP 2030
Considering how the Indian economy
influences Bhutan’s growth, it is important to
assess and understand multiple dimensions
between the two markets. Understanding the
market dynamics of the two countries will help
determine the areas of concern, opportunities
and policy interventions, if Bhutan is to balance
the existing trade imbalance. Even the slightest
change in Indian economic policy impacts our
economy. For example, the introduction in
India of the Goods and Service Tax (GST) in
2017 significantly reduced the competitive
edge of Bhutan’s export-oriented industries.
Bhutan claims the 82nd place in the Global
Competitiveness Report 2017-18 released
by the World Economic Forum (WEF), which
is a 15-place jump from the 97th position
in the previous year. In South Asia, Bhutan
is placed second after India (40). The WEF
classifies Bhutan among 17 economies,
including Vietnam, the Philippines, Nigeria
and Kuwait, that are transitioning from stage
one factor-driven economies dependent on
the basic requirement measure to stage two
or efficiency-driven economies.
The report’s executive opinion survey found
that the five most problematic factors to
doing business in Bhutan, in order, are:
i. access to financing;
ii. restrictive labour regulations;
iii. inadequate supply of infrastructure;
iv. poor work ethics in the National Labour force;
and
v. forex regulations.
Adding to the list are other factors like
unskilled work force, insufficient capacity to
innovate, inefficient government bureaucracy,
tax regulation s and tax rates.
The share of FDI to GDP of Bhutan remains
relatively low compared with other developing
countries. In terms of stock, FDI represents
less than 10% of GDP. In 2016, FDI capital
inflow totaled Nu. 600.53 million, of which
306.70 million was in Indian Rupee and the
remaining in USD 4.45 million, an increase by
178 percent compared to the previous year.
The increase in inflow was driven by the inflow
of additional capital in projects approved
prior to 2016, as the number of projects
approved during the year remained same as
previous year. Overall, the tax contribution of
FDI projects were to the tune of Nu. 1580.67
million, which is equal to 7.23 percent of the
tax revenue for the year 2016.
Hydropower is the main economic driver of
Bhutan, with 85% of the Group’s contribution
coming from this sector. Including royalty
payments made to the government, the
sector’s contribution could be well within 40%
of the government revenue.
Currently operational projects represent 7%
(1,606 MW) of the techno-economically viable
potential of 23,760 MW. The hydropower
sector is expected to harness another 3,658
MW of power from projects, which are under
construction and a few that are about to start.
In the coming decade, hydropower could
represent as high as 50% of Bhutan’s GDP.
The fact underscores the critical role
hydropower plays in the economic development
of Bhutan. Any major policy changes in the pace
of hydropower development would need deep
considerations to ensure benefits are maximised
while adverse impacts to the Bhutanese
economy are reduced to the extent possible.
As the O&M of the hydro-plants are entrusted
to the Group, it will be very important that
DHI and Group companies render all possible
support to the hydro sector companies, thus
ensuring plants are operated at their optimal
capacities and maintained well to avoid
unpleasant events in future. As the Group will
also play an increasingly important role in
developing the hydropower potential in the
future, DHI and Group will need to invest not
just in O&M but also in building capacity in the
complete chain of “water-to-wire” business.
27
28 ROADMAP 2030
 THE NEXT DECADE
Considered mainly a period of consolidation,
DHI was still able to enhance corporate
governance and improve performances of its
companies in the first 10 years. The group
was also able to contribute significantly to
the government’s internal revenues. While
the group takes pride in the first decade’s
achievements, the coming decade, with its
many challenges and opportunities, calls for
DHI to work harder and smarter.
In the backdrop of Bhutan’s new economic
development goal, which was proposed based
on the results of assessment for optimal pace
of hydropower development, the Group will
have to play a significant role while being
mindful that it will have to take in operations
and management of additional hydropower
plants, and play a bigger role in the
development of new hydropower potential.
Expectations from all other economic sectors
will be higher than the first decade, and every
aspect of its performance will be monitored
closely.
Hence, in the next decade, the Group should
focus primarily on economic development
and play a significant role in taking Bhutan
to an ‘upper middle-income country’ status
by 2030. The Royal Charter also envisions the
need to build a strong dynamic economy as
one of the five aspirations.
Consequently, to guide the group companies
into the next phase, DHI must reflect upon
its purpose and re-establish the high-level
strategic elements, a solid foundation on
which to build successes for the next decade
- the Mission, the Vision and the Guiding
Themes to fulfill the 2030 Destination. These
elements reflect the organization’s purpose,
what it intends to be in the future, and the
main drivers of success for the next 10 years.
29
MISSION
Organizations are formed for a purpose or a
mission. His Majesty issued a Royal Charter
on 11th November 2007 and established DHI
to hold and manage the existing and future
investments of the Royal Government for the
long-term benefit of the people of Bhutan.
The primary purpose of DHI is to ensure
that its companies meet the challenges and
requirements of the corporate sector in a
highly competitive global economy, such
that DHI creates and maximises returns to its
shareholders, the people of Bhutan. Among
others, DHI is required to:
a. Strengthen corporate governance: by
clearly separating the ownership and
management of DHI, and also improve
governance of the government companies
by appointing board directors and CEOs
who are professionally qualified, well
experienced, highly motivated and of
high integrity;
b. Enhance performance of the government
linked companies: by making them
responsible and accountable in their
performances. To bring improvement,
DHI is required to track performances
of the companies by setting targets
and benchmarks, and holding them
responsible for meeting those targets
and benchmarks;
c. Provide managerial support: and other
support services on a fee basis to both
public and private sectors;
d. Achieve optimal capital efficiency
and optimal utilization of resources:
by consolidating resources of the
government companies. Further, it
is required to maximize returns on
investments by optimal utilization of
resources;
30 ROADMAP 2030
e. Provide guarantees: to the government
companies, where required;
f. Divest shares in government companies
with no strategic interest: to the
government or where government
participation may not be necessary;
g. Raise funds: through borrowing from
domestic and international financial
institutions and through the issuance
of debt, equity or other securities in
the domestic and international capital
markets;
h. Subscribe or purchase equity, debt or
other securities;
i. Undertake investments: in the existing
government companies to revitalize,
restructure and expand their businesses,
and also invest in new companies and
businesses. DHI is also allowed to make
investments abroad and undertake
investments in reserved sectors and
activities. Further, DHI is required to
implement all future commercially
oriented projects developed by the
government by transferring their shares
upon formal incorporation;
j. Promote and encourage entrepreneurship
and business development: through
venture capital and other required
institutional support;
k. Act as an incubator and initiate business
in new areas;
l. Promote private sector through the
following:
a. Liaising with government
agencies: to facilitate an enabling
environment through credible long-
term government policies for the
development of a dynamic private
sector;
b. Facilitating research and
 development (R&D): to identify
changing potentials and challenges
for broader investment avenues
within and outside the country; and
c. Promoting Bhutan’s brand image. and
m. Provide predictable and increasing
revenue inflows to the government: by
mutually agreeing on the amount of
revenues to be provided to MoF annually.
In determining the direction for the new
decade, DHI is mindful of its primary purpose
prescribed in the Royal Charter. Some of
the key phrases from the Royal Charter are
“national wealth”, “prudent investment” and
the “people of Bhutan as the shareholder”.
Motivated by the Charter, thus, DHI’s mission
is to:

Safeguard and enhance national wealth for all generations of

Bhutanese through prudent investments.

While it is DHI’s mission statement, the Group companies are to draw their purposes aligning
with the safeguarding and enhancing of national wealth for all generations of Bhutanese through
prudent investments.

VISION
In stating the purpose, the Royal Charter also
describes the future intent of DHI. It depicts
the idealised state for DHI to pursue and,
hence, provides a direction to DHI and its
employees.
As the Roadmap is being prepared for
the entire group, it is imperative that the
companies and employees derive motivation
and be guided by the essence and long term
vision enshrined in the Royal Charter. Hence,
it is clear that DHI’s vision should reflect the
intent and spirit of the Royal Charter, that
DHI’s vision should provide direction to the
Group companies, their employees and other
stakeholders. And finally, that the visions of
the group companies should be aligned to the
overall vision of DHI.
Aligning to the mandates and the future intent
of the Royal Charter, the DHI’s Vision is:

To be the leading wealth management and creation organization

that helps transform Bhutan into a globally competitive economy
guided by the principles of Gross National Happiness.

31
DESTINATION
With a new economic development goal for the
country, set in quantitative terms, it becomes
incumbent upon the Group to also quantify its goal
for the next decade. The requirement is more from
the perspective of bringing focus to the Roadmap.
Hence, to be able to bring focus and operationalise
the high-level strategic elements, a single statement
with a desired result and milestone target is being
proposed in the form of a destination statement.
In the last 10 years, the Group contributed an
average of 42% of the total internal revenue
and, thereby, financed an average of 50% of total
recurrent expenditure. For the next 10 years,
the Group targets to increase the contribution
exponentially and be able to finance the
government’s total recurrent expenditure for the
fiscal year 2029/30.
Further, conscious that adequate liquidity needs
to be maintained for exploring opportunities and
catering to national exigencies, the Bhutan Future
Fund was established on 11th November 2017
with a seed fund of Nu. 300 million. In comparison,
the seed fund is only 1.24% of the total recurrent
expenditure for fiscal year 2017/18. DHI also aims
to increase the Fund to Nu. 30.00 billion in 2030.
Hence, the following Roadmap destination is
proposed:

DHI Group finances the Government’s entire recurrent expenditure for

fiscal year 2029/30 and
the Bhutan Future Fund is worth Nu. 30 billion in year 2030.

In proposing the new national economic to study the impact of various hydropower
development goal, the Macroeconomic Framework development scenarios. Based on their simulation,
Coordination Technical Committee (MFCTC) had following fiscal projections were made until 2030.
carried out several macroeconomic simulations

2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30
Resources 39,007.43 60,700.78 62,422.82 61,654.39 58,837.51 73,620.33 67,609.99 73,764.10 76,316.84 85,106.19 85,539.10 88,393.02
Domestic
34,119.27 46,025.27 44,033.67 46,305.46 48,799.47 58,559.37 62,699.99 68,854.10 71,406.84 80,196.19 82,581.28 85,435.21
Revenue
Grants 4,888.16 14,675.50 18,389.16 15,348.93 10,038.04 5,060.00 4,910.00 4,910.00 4,910.00 4,910.00 2,957.82 2,957.82
Total
39,718.24 66,140.96 68,803.11 67,834.77 67,180.88 66,367.08 87,047.81 93,519.72 102,942.46 105,961.37 93,534.31 106,744.87
Expenditure
Current
28,945.94 39,430.03 40,926.88 41,106.34 43,148.05 43,112.14 56,458.56 58,535.30 60,030.70 62,354.56 64,663.03 68,767.97
Expenditure
Capital
10,772.30 26,710.93 27,876.23 26,728.44 24,032.83 15,327.94 21,714.58 25,546.56 30,655.87 34,487.86 17,627.13 26,057.49
Expenditure

As per the table above, the total internal revenues The Group’s destination, hence, is to finance Nu.
projected in fiscal year 2029/30 is Nu. 85,435.21 68,767.97 million in year 2030; more than a five-
million and the total current expenditure projected fold increase in revenue contributions over the
is Nu. 68,767.97 million. next decade.

32 ROADMAP 2030
GUIDING THEMES
To help reach the destination, it will be important
for the Group to adopt key themes to serve as an
overarching guide. The themes must be relevant
to every company: ones existing now, those that
might be transferred to DHI from MoF and the ones
that may be established as a part of expansion and
new investment initiatives.
As the Royal Charter always provided the clarity and
inspiration in times of uncertainties, the themes for
the future are also expounded within its spectrum.
Not only would these themes serve to resolve
issues and challenges of the new decade, but they
would effectuate perfect alignment of operational
initiatives to the Roadmap’s mission and vision.
The themes that will guide the group into the new
decade are: Performance Excellence; Economic
Transformation; and Human Capital Excellence.
Performance excellence
DHI laid a very strong foundation in Corporate
Governance (CG), a pivotal pillar for performance
excellence, in its first decade. Several other
initiatives from consolidation to restructuring and
merging of companies were carried out. Instituting
a culture of performance in the group was one
of the highlights. Such measures have increased
efficiency and productivity of our companies.
In the coming decade, DHI will continue to scale up
its initiatives in corporate governance, performance
improvement and resource optimization. Efficiency
and productivity with customers and stakeholders
at heart would be the focus. For every initiative,
having pre-identified components for excellence
and processes that help create excellence, so that
high performance becomes a natural phenomenon,
would be the desired outcome.
Economic transformation
This theme is derived directly from the Charter-
to help build a strong dynamic economy. With
hydropower as the single largest entity in the
economy contributing to national revenue and the
GDP, the Group is the backbone of our economy.
The Group employs more than 7,000 Bhutanese.
Subsidiaries such as BT and BoB among others
catalyse development and other economic activities.
With a share of close to 30% of government’s total
internal revenues, and the gross contribution slated
to treble with the commissioning of a number of
hydropower projects, economic concentration on hydro
sector is a key concern voiced by many. For DHI too, its
hydro sector revenue constitutes more than 85%.
While increased contribution to the government
revenue, primarily driven by hydro segment, would
obviously help transform Bhutanese economy,
DHI will seek economic transformation in terms
of diversification. Drastic measures will be taken
to upscale non-hydro sectors. The Group will also
embark upon new segments and even go beyond
the borders of Bhutan to help build the economy.
DHI targets to enhance the pace of growth for non-
hydro segment companies and, thereby, increase
their share of revenue to more than 40% in 2030,
up from 15% today.
Human capital excellence
Development of human capital will be the Group’s
primary focus in the coming decade. Currently,
DHI is faced with high attrition rates. It is also in
want of skills in most segments. The fulfilment of
goals and objectives under other guiding themes
depends on DHI’s success in development and
retention of human capital.
While the nation’s economic development
goals have been set with an ambition to achieve
economic self-reliance at the earliest, there is
also a greater need for conception of self-reliance
in human capital. The Group will work towards
achieving human capital self-reliance at the end
of the Roadmap. Further, the desire is also to go
beyond the national borders and be able to provide
expertise in the region, particularly in specific areas
of hydropower, transmission, rural electrification
and ICT. The Group will also enhance capacity
to make investments abroad, not just through
partnerships but independently by developing our
own internal capabilities.
With an exception to areas that are highly
specialized and of latest modern technologies, the
ambition is to be in a state where the group no
longer needs services of external consultants in all
areas of operation.
33
 OUR MISSION
Safeguard and enhance
national wealth for all
generations of Bhutanese
through prudent
investments.
MISSION

DESTINATION
OUR DESTINATION
DHI Group finances the entire of
Government’s current expenditure
for fiscal year 2029/30 and the
Bhutan Future Fund is Nu. 30
billion in year 2030.
PERFORMANCE EXCELLENCE

TRANSFORMATION
ECONOMIC

34 ROADMAP 2030
GUIDING
 OUR VISION
To be the leading wealth management
and creation organization that helps
transform Bhutan into a globally
competitive economy guided by the
principles of Gross National Happiness.

VISION
HUMAN CAPITAL

THEMES 35
 36 ROADMAP 2030
140 DHI'S journey: THe FIrST 10 yeArS
“It will be his (Gyalsey Jigme
namgyel Wangchuck)
sacred responsibility to
build a harmonious and just
society, and thereby, fulfill
all the aspirations of his
people."
his maJesty the kinG,
on the occasion oF the naminG ceremony
oF his royal hiGhness the Gyalsey, april, 2016

37
141
38 ROADMAP 2030
GOALS,
OBJECTIVES AND
MILESTONES
While shared common mission and themes
adopted to guide the group through the
new decade lends itself to many priorities,
the specific functions for DHI that the Royal
Charter highlights are mutually exclusive and
collectively exhaustive of all those priorities
and are designed to meet the needs of
evolving circumstances.

From its initial days, DHI has summarised

these functions under five thrust areas to
provide the Group with powerful objectives
and initiatives to steer the process of change.
They are the tangible expression of the spirit
of the Royal Charter and also embody guiding
themes and shared common mission. As such,
they acquire special significance in elaborating
preferred directions of the roadmap. The
thrust areas are and will continue to be: (i)
Performance Improvement, (ii) Resource
Optimization, (iii) New Investments, (iv)
Private Sector Development, and (v) Revenue
to the Government.

39
 PERFORMANCE IMPROVEMENT

40 ROADMAP 2030
Strengthen Corporate Governance
DHI is required to strengthen Corporate
Governance (CG) of the government
companies by appointing board directors
and CEOs who are professional, qualified,
experienced, highly motivated and of high
integrity.
In the last decade, DHI made significant
improvements in CG and achieved high
standards. The achievement was mainly
through initiatives such as the annual board
orientation program, training programs for
boards and managements on CG, leadership,
finance and other management areas.
However, the achievement is more or less
limited to the Group companies only. There
is a need to share the instruments and impart
knowledge gained to companies and agencies
beyond the Group.
At present, there are more than 81 companies
with DHI, MoF, listed with RSEBL and registered
as large and medium private companies.
Including civil society organizations (CSOs)
and independent bodies governed by boards
or trustees, the number can easily go beyond
100. In a bid to enhance CG in their respective
sectors/areas, many independent groups
are seen to be carrying out CG initiatives in
silos, resulting in duplication and wastage
of resources and time. Given the size of
the number of companies and independent
agencies, a common CG Code could serve the
purpose.
At the national level, even with the Registrar
of Company taking the lead to draft national
Performance agreement drawn between DHI & Companies and Board & Management, based on which incentives are paid out or withheld at the end of the
11
year.
CG Codes, DHI could act as the facilitator
and catalyst in discussions regarding the
furtherance of CG in Bhutan. It is recommended
that all concerned authorities (RoC, RMA, DHI,
RSEBL and MoF) establish a united front to
ensure that rules and regulations issued by
various authorities are in harmony with the
Companies Act and the proposed national CG
Code. Ever since its establishment, DHI has
acted as the vanguard of CG in Bhutan and
with about 10 years of experience, DHI has
a good repository of literature, knowledge
and experience that can be used to support
national level initiatives.
At the Group level, there is a growing need
for a research and training institute to
consolidate CG resources, carry out research
and studies on CG and related areas and, on
that basis, train the boards and managements
of all the agencies. The institute can also
serve as a research and training center on CG
for organizations in the region in future.
Enhance performance of government
linked companies
To enhance performance, DHI is required to
make companies responsible and accountable
for their performances. It is also required
to track performances of the companies by
setting targets and benchmarks and holding
them responsible for meeting those targets
and benchmarks.
The initiatives carried out under this function
has been one of DHI’s biggest achievements.
With the introduction and implementation
of Performance Compacts11 and Performance
41
Management Systems, it was able to institute
a culture of performance in the Group.
Considered successful, DHI also assisted the
government in introducing the Government
Performance Management System (GPMS).
Through the proposed new research and
training institute, DHI will continue to make
improvements in its performance systems.
For the Group to succeed in achieving the plans
of the Roadmap, the most critical element will
be to address the Group’s HR needs. Hence,
the first and foremost initiative to be planned
and implemented will have to be the review
of Group’s HR policies, succession plans,
remuneration policies and regulations to help
attract and retain talent. Therefore, a detailed
Group HR Masterplan that aligns with the
Roadmap, will be studied and developed.
Following streamlining of HR plans and
policies, DHI will carry out other initiatives to
bring about efficiency and productivity and,
thereby, improve performance. DHI will carry
out process reengineering of all internal and
external business processes. As the number
of companies under DHI’s hold has increased
since its inception, the number of products and
services the Group as a whole provides have
also multiplied. As the products and services
touch the lives of every citizen in some way
or the other, the Roadmap aims to extend
world-class services to every citizen, for which
business process reengineering is imperative.
Another function classified under
performance improvement thrust area is
42 ROADMAP 2030
providing managerial and other support
services on a fee basis. During the first 10
years, DHI initiated an internal consultancy
unit within its corporate structure. It was
mainly to streamline management systems
and procedures in the Group and to help
institute performance systems, strategic plans
and carry out other business and management
interventions in the companies.
Similarly, some of the Group companies
had also initiated profit centers to extend
specialized services. For instance, DGPC has
a Druk Green Consultancy and Center of
Excellence (CoEs) concept in five specialized
areas. Plans are to expand these CoEs to
about nine specialized areas and extend
services to both the local industries and in the
international market.
Further, the Group will initiate CoE for
Transmission and Rural Electrification at BPC
to venture into international markets and CoE
for Information Technology (IT) at Thimphu
Tech-Park Limited (TTPL) to function as the
Group’s IT manager.
The CoE for IT will focus on consolidating the
Group’s IT services and resources (including
the data centers), replace all legacy systems
and applications with up-to-date applications.
Later, it will be required to provide IT and
IT enabled services (system development)
to all local agencies and then function as IT
Manager to the Group, government agencies,
and other independent agencies.
 MILESTONES
• Institute Research and Training Institute for Corporate Governance : 2020
• HR Masterplan (standalone for DHI and respective companies) : 2019
• Business Process Management and Re-engineering : 2019 - 2020
• Druk Green Consultancy scope expanded and projects undertaken : 2020 - 2025
• Integrate DGPC’s CoEs under Hydropower Research & Development : 2019 - 2025
Center and strengthen the service
• Center of Excellence for Transmission and Rural Electrification : 2020 - 2021
• Center of Excellence in Information Technology : 2020 - 2022

43
 RESOURCE OPTIMIZATION

44 ROADMAP 2030
Ensure optimal capital efficiency
Under resource optimization thrust area,
DHI is first required to ensure optimal capital
efficiency by consolidating resources of the
government companies. Further, it is required
to maximize returns on investments through
optimal utilization of resources.
Realizing duplication of resource utilization
for similar activities caused by silo operational
models, initiatives were carried out to merge
companies with similar mandates, including
transfer of some of the strategic SOEs under
MoF to DHI. After the transfer of CDCL to
DHI in 2015, DHI-Infra, an infrastructure
development company set up by DHI, was
immediately merged with CDCL as their
mandates had complementary strengths
and these could be leveraged to pursue
large and meaningful projects. Similarly, DHI
conducted a resource optimization and value
creation study among six DOCs in 2014-
15 to explore synergy quotients in various
fields of operation. It revealed more than 23
areas with significant synergy quotient. The
Group has initiated implementation of the
recommendations from the study.
For the next decade, DHI will review/re-
conduct the resource optimization and value
creation study, but with all the companies
under its hold. It is expected that the study
will reveal more areas with high synergy
quotient and high potentials to improve the
earnings before interest and tax (EBIT) at the
Group level.
Similarly, DHI will work with MoF to explore
SOEs that complement the Group’s mandates
and have high synergy quotient with the
Group companies. Based on the findings,
initiatives will be taken to transfer the SOEs
from MoF to DHI. However, as part of the
review and consultation process for this
Roadmap, mandates of some of the SOEs were
studied. Based on the review, following list of
companies are recommended to be brought
under DHI’s hold in the coming few years:
- Bhutan Postal Corporation Limited;
- Bhutan Development Bank Limited;
- Bhutan Lotteries Limited;
- Bhutan Duty Free Limited;
- Bhutan Helicopter Services Limited; and
- National Housing Development Corporation
Limited.
Under transport and communication
segment, the Group spends close to a billion
Ngultrums as freight charges. There is a
business case for the Group to consider an
independent transport and logistics company.
This is mainly on account of the inefficiencies
of the private transporters and poor fleet
management which led to increased freight
charges. Further, unlike passenger buses
and taxis, trucks and transporters are not
regulated by the Road Safety and Transport
Authority (RSTA) and freight rates are based
on market conditions.
DHI believes that greater efficiencies can be
achieved through good fleet management
practices and use of technology. In 2017
and 2016, DCCL and SMCL together spent
Nu. 694.22 million and Nu. 721.18 million
respectively as freight charges. DCCL and
SMCL are still in its nascent stages. As DCCL
and SMCL expand their operations, the freight
45
charges are only going to grow. Moreover,
as DHI slowly embarks on its journey to
diversify its portfolio, DHI is expecting more
manufacturing companies in its portfolio.
Logistics is inevitably going to become an
increasingly crucial function for the group to
bring about efficiencies and optimal use of
resources.
Considering that Bhutan Post is also mandated
to carry out transport and logistics business, it
may be prudent for DHI to take over Bhutan Post
from MoF and mandate it to take up the Group’s
transportation business, at least partially
to act as a stabilizer of prices in the private
transportation business and as a safeguard
against cartels and cartel-induced behaviour. The
initiative stands to benefit the group companies
in terms of removing hassles of having to deal
with transportation related works and bring
focus back to their core mandates.
The other functions under this thrust
area are carrying out divestments, raising
funds and subscribing or purchasing other
financial instruments. In the last decade, DHI
deliberately went slow with divestment, as
its focus was on consolidation, performance
improvement and maximising returns to the
shareholders.
In the coming decade, DHI will study and
segregate companies into strategic12 and
non-strategic companies and then initiate
divestment of shares in non-strategic
companies or companies where state’s
involvement is no more required.
12
Companies in which the government and DHI has no strategic interest
46 ROADMAP 2030
Further, the Group should also plan on the
management part of the hydropower projects
after their commissioning. DGPC already has
its fair share of challenges, given the number
of generating units, subsidiary companies
and new investment initiatives it currently
manages. With the commissioning of the
plants that are already under construction and
others in future, those challenges will only
magnify. Hence, a study will be conducted to
explore alternatives to break up DGPC into
multiple units for better management and
to segregate the strategic and non-strategic
components in this sector.
In terms of ensuring optimal capital efficiency,
the Group’s efforts are constrained by the
ceiling on exposures on related parties for
borrowing from financial institutions. For
instance, Drukair currently is purchasing
two aircrafts. While BoB has the capacity
and Drukair is willing to be financed by BoB,
owing to BoB reaching the maximum ceiling
on lending to related parties, it is not able to
lend to any of the companies in the Group.
This has led to more expensive borrowings
and resources going out of the Group. While
DHI has been discussing with RMA on this, the
issue is yet to be resolved and needs further
review and favourable interventions. With the
commissioning of at least three hydropower
plants in the next few years, there will be
opportunities for DHI to set up many new
industries and will require financing from
local financial institutions.
 MILESTONES
• Resource optimization and value creation : 2019 - 2025
(study and implementation of recommendations)
• Study and initiate transfer of MoF SOEs to DHI : 2020
• Initiate Group transport and logistic business under Bhutan Post : 2019 - 2020
• Segregate strategic and non-strategic companies and initiate : 2019 - 2021
divestment
• Optimal capital efficiency in the Group : 2020

POLICY INSTRUMENTS IMPACTING THE GROUP

1. RSTA Motor vehicle regulation
2. RMA’s Prudential Guidelines/Regulation
3. Financial Services Act

47
With an additional 3,658 MW of power and
additional 768 MW firm power, there will be
an opportunity to create more than 54 new
industries in next five years.

NEW INVESTMENTS

48 ROADMAP 2030
Undertake investments
Most new investments in Industries happen
when a new hydropower plant is commissioned
with the availability of new firm power.
Historically, each time a medium, large or
mega hydropower plant was commissioned,
it immediately led to jumpstarting of energy
intensive industries. For instance, when Tala
Hydropower Project became operational in
2011 and added 200 MW of firm power, 11
HV industries and 28 MV industries were
developed. With the hydropower projects
under construction anticipated to become
operational between 2019-2023, Bhutan
would have an additional 3,658 MW of power
in the next five years; an addition of 228% on
the current capacity and an additional 768 MW
of firm power. Considering the same average
and assuming13 the same pattern of power
distribution between HV and MV as currently
prevailing, the additional firm power of 768
MW provides opportunities to create 29 new
HV and 29 new MV industries. DHI intends to
harness this opportunity for diversification
by exploring new energy-intensive industries
either on its own or through partnerships
with regional/international companies.
Further, to revitalize, restructure and expand
their businesses, DHI also makes investments
in the subsidiary companies. Since the
subsidiary companies are grouped in different
segments and different stages of its life cycle,
the milestones for the new decade are also
planned through the segments.
Energy segment
If the entire additional firm power is to be
utilised in the country, by attracting and/
or creating new industries, first, there is a
13
By 2022, Bhutan could have additional firm power of 768 MW (21% of new capacity). Assuming that 25% will be used by LV customers as forecasted by BPC
in the 2016 tariff proposal, and as per current trend if 70% is used by HV and 5% by MV, there will be 538 MW for HV and 38 MW for MW totaling to 576 MW.
14
The determination of asset additions is based on the consideration of investment plans of BPC, which is submitted to BEA for scrutiny during the tariff review.
need to address some constraints. One of
the constraints that the Group might be able
to help address is through long term Power
Purchase Agreement (PPA) for industries.
Although Bhutan’s power tariff has been
relatively low, power intensive industries
generally prefer and demand for a long term
PPA with predictable power tariff.
Efficiency in power tariff and long term PPAs
The existing tariff determination policy
incentivises14 additional transmission and
distribution lines, and thus additional redundant
lines sometimes get strung based on simple
analyses in the investment plan document.
However, industries are yet to come to the
Jigmeling and Damdum industrial estates and
start drawing electricity, and the costs from
additional assets (depreciation and O&M costs)
are added to the tariff for existing consumers.
Further, majority of BPC’s assets were those
that were taken over from the government,
when the company was corporatised, and
are nearing replacement. Hence, cost of
replacement will also have bearing on the
electricity tariff when it is reviewed next.
BPC, in its Five-Year Investment and Financing
Plan (FYIFP) document, has already laid out
Nu. 2,623 million worth of investment plans
for ‘Replacement of Assets’ and ‘Business
Expansion’ for the FY2019-2020.
Hence, going forward, a detailed assessment
of the existing infrastructure will be carried
out and opportunities to improve redundancy
within the existing infrastructure will be
explored. The additional and new transmission
and distribution lines will be decided based
on the new master plan document.
49
With the master plan document, BPC should
be able to predict power tariffs for a longer
duration and then be able to propose for long
term PPAs to the HV industries. The PPA tariffs
will then be outside of any asset additions
during the PPA tenure, which might increase
the power tariff. BPC should, however, initiate
investments (transmission lines to the HV
industries’ locations) only after signing PPAs
and also start billing the industries as per the
drawing date stated in the PPAs.
Hydropower related industries
As noted above, the additional firm power
will open up opportunities to set up many
industries, mainly power related/intensive
industries. But even before exploring
investment opportunities in power intensive
industries, opportunities opens up for the
energy sector itself. Some of the potential
business clusters that are of interest to the
Group are:
a. Hydropower consultancy
While the overall hydropower development
will be guided by the new Hydropower
Development Strategy, the group will still
need to play a key role right from the
development phase. DGPC has established a
profit center unit, Druk Green Consultancy
(DG Consultancy), that engages in conducting
feasibility studies and preparing Detailed
Project Reports (DPR) for hydropower
development. DHI and DGPC will work with the
government to take up more studies and DPR
and expanding its scope to implementation
in the capacity of Owners’ engineers and/or
project management consultants. Towards the
first part of the next decade, DHI and DGPC
will work towards engagement in regional
hydropower consultancies.
Similarly, through the CoE for Transmission
15
Tunneling work for Adit four and the head race tunnel (HRT) of Nikachu hydropower project (NHP) at Tangsibji in June 2017
50 ROADMAP 2030
and Rural Electrification, transmission related
studies and DPRs will also be explored to be
taken up by BPC. Through this, there would
not only be a building of competencies of
Bhutanese but accountability with Bhutanese
entities as well. The scope of the CoE will
be further expanded in future to take up
businesses in the region.
b. Construction of hydropower projects
and transmission lines
DGPC has already started building capacity
in hydropower construction, by deploying
employees in on-going projects on deputation.
Together with DGPC, DHI has also been able to
engage CDCL16 in hydropower construction to
build and enhance its capacity to build future
hydropower projects. The initiative is on the
right track as the recent development on the
600 MW Kholongchhu hydropower project
agreement has a mandatory clause stating
interested foreign investors must have a local
partner. Therefore, it is imperative that DGPC,
BPC and CDCL enhance their capacities in
hydropower construction at the earliest and
take up construction of hydropower projects
on a much larger scale.
With its engagement in the Associated
Transmission System (ATS) works (for power
evacuation to India), BPC earns revenue both
during construction phase (for the deposit
work), and operation phase (wheeling
revenue). However, since the assets are
transferred to the company after completion
of construction, BPC is required to service
the debt. Hence, it is only prudent that ATS
projects are capitalised at lower costs to be
able to service the debts easily and to ensure
affordable and competitive tariffs.
One of the primary causes of cost escalation,
recently, has been policy changes. BPC
CDCL team at Nikachhu Hydroelectric Power Project site
initially received tax exemption on import
of transmission tower and tower parts. This
reduced the capital cost significantly. The
exemption has, however, been lifted for some
projects in the last few years, resulting in a
much higher cost for transmission lines,
which ultimately had negative impact on the
tariff. This is also the case with some DGPC
projects where the taxes are not always
uniformly applied. DHI, DGPC and BPC will
work with the government in reinstating such
fiscal incentives.
Related to this and in consideration that about
80% of the transmission construction cost are
for tower and tower parts, there is a need to
study and consider a unit for fabrication of
transmission tower parts and electric poles.
Based on the study results, DHI will initiate
setting up of such units under one of the
existing companies, either at BHSL or CDCL.
Further, based on its experience in design
and managing contractors, BPC has built
adequate in-house capacity in transmission
line design and construction. In addition to
being able to take up construction of all future
transmission lines (ATS and system expansion),
DHI will venture into regional transmission
construction works. In line with that a CoE for
Transmission and Rural Electrification is being
proposed. DHI, BPC and CDCL will work on
creating this Center of Excellence and seriously
engage in design and construction of all
transmission lines in house. DHI will also work
with the government to engage its companies
in all hydropower projects constructed through
different modalities (mainly IG model).
51
Construction of 66kV D/C transmission line from
Jemina to Changedaphu

c. Manufacturing of electro-mechanical
and hydro-mechanical components
It is proposed that Bhutan Hydropower
Services Limited (BHSL) will add capacity
to manufacture many of the mechanical
components of electro-mechanical and
hydro-mechanical equipment. This could
further be expanded to produce specialized
hydro equipment such as runners and other
underwater components in collaboration
with manufacturers and end-users of such
technologies for which a lot of interest has
already been generated. BHSL could also
manufacture bridge components for the
bridges in Bhutan and in future consider
expanding to the region.

However, for the manufacturing business to

succeed, specific clauses would need to be
inserted in the bidding documents enabling
supplies of such electro-mechanical and
hydro-mechanical equipment either directly
from such facilities in Bhutan or through joint
ventures with others to all the hydropower
plants and projects in Bhutan. DHI and DGPC
will play an active role at the policy level for
the success of this initiative.

Related to this, BPC spent Nu. 57.66 million

between 2015-2017 on purchase of new
transformers from Nepal and India. Further,
out of 256 received for repair, it repaired 160
transformers at Begana and 60 in Gairkata,
India and 29 in NEEK, Nepal from 2016
until today, and spent Nu. 10.63 million
on purchase of parts alone during repair.

52 ROADMAP 2030
Considering the volume, there is potential for
DHI to consider expansion or relocation of
the Begana transformer repair unit or require
BHSL to add transformer repair component to
their list of services.
d. Hydropower research and development
center
Similar to its consultancy unit, DGPC also
manages R&D Center through CoE in
five specialized areas – (i) vibration and
thermographic analysis, (ii) projects contracts
management, (iii) control and protection, (iv)
dielectric materials analysis, and (v) gates and
instrumentation. These centers were created
to minimize dependency on foreign expertise
and also to build in-house expertise in the field.
DGPC intends to consolidate these COEs
and expand the scope of services under an
R&D Center to provide specialized services
and applied research in nine specific areas
to start with. The R&D Centre with the
Hydropower Services Centre and the Druk
Green Consultancy group could evolve to be
technically competent as well as competitive
in providing international level consultancies
and acting in the capacity of Owner’s
Engineers.
Similarly, in the next decade, DHI would
explore investments in electric transport
with particular emphasis on mass transit as
a commercial venture. The R&D Center could
then also cater to some the research require
for the Bhutanese market in the field.
e. Secondary equipment integration for
automation, control and protection
An offshoot under the R&D Centre will
be the development of competencies in
the automation, control and protection
systems of a power station to reduce overt
dependency on OEMs. DGPC plans to enter
into a joint venture, with an internationally
renowned hydropower company, through
a strategic partnership to develop this
expertise and provide its services not only
to the country’s hydropower plants but also
to customers outside of Bhutan. The scope
could be expanded in future to include all
plant automation including SCADA and other
software/hardware integrated systems in its
portfolio to service other industries beyond
hydropower, load dispatch centers and
substations.
f. Power training institute
The success at diversification would largely
depend on the hydropower sector’s ability to
attract, train and recruit the best employees
from the market. Presently, most of the
reskilling is being done through training
programs and higher studies at institutions
outside of Bhutan. There is, therefore, a huge
opportunity for a training institute dedicated
to meet the requirements of the power sector.
Since entities such as DGPC and BPC are quite
conversant with the needs of the industry,
such a training institute could be placed
under them.
53
g. Energy market
With respect to investment in other renewal
energy, power tariff plays a crucial role. For
2017, India’s marginal tariff for solar power
was only INR 4.73/kWh and projected to
increase to INR 5.18/kWh unit by 2030, and
for wind it was INR 5.25/kWh and projected to
increase to INR 7.43/kWh by 2030. Whereas,
hydropower’s marginal tariff was INR 5.03/
kWh increasing to INR 8.87/kWh. However,
with the declining cost of generation of solar
and wind power, India recently announced to
build solar energy capacity to 100 GW and
wind to 60 GW by 2022. The success of India’s
renewable energy will only further enhance
the relevance of Bhutan’s hydropower to act
as a battery bank to the Indian grid system.
However, for the ‘battery bank’ to serve its
purpose throughout the year, the firm power
content must remain consistent at all times.
In this regard, the Hydropower Development
Strategy document already speaks about
projects to be developed through reservoir
schemes and mentions pumped storage
schemes. It will also be prudent for the Group
to invest in capacity development in pumped
54 ROADMAP 2030
storage scheme and pilot at least one such
project in the next 10 years.
Besides looking at serving as a battery bank,
for Bhutanese power to remain relevant, it
must be of low cost. Therefore, it has become
critical to discuss and finalise with RGoB to
increase role of DGPC from the project stage
itself in all projects developed under IG model.
h. Marketing hydropower human capital outside
of Bhutan
As DGPC and BPC become more proficient
in the operation and maintenance of their
generating and transmission assets, there are
interest groups outside of Bhutan who would
like to engage Bhutanese managers, engineers
and technicians in the O&M of their plants
and other assets. DGPC has recently deputed
a team for the O&M of a power plant in India
and there are opportunities to expand the
engagement from an individual engagement
to the organization itself outsourcing the
O&M of the plant. This could provide not
only employment but also generate revenues
for the company in future. It could also sell
Bhutan as a hydropower expertise resource.
 MILESTONES

• Master plan document for planning and construction of : 2019-2020

transmission and distribution lines

• Extend and sign long-term PPA with the industries : 2023-2025

• CoE for Transmission lines (design, construction and management) : 2020

• Hydropower Research and Development Center : 2025

(Consultancy in hydropower and transmission lines constructions in the region)

• Study for set-up of fabrication unit for transmission tower parts : 2024

• Center for secondary equipment integration for automation, : 2025

control and protection

• Power training institute : 2023

• Pilot a pumped storage scheme : 2026

POLICY INSTRUMENTS IMPACTING THE GROUP

1. DHI and DGPC to play an active role at the policy level for enabling supplies of
electro-mechanical and hydro-mechanical equipment either directly from electro
mechanical and hydro-mechanical facilities in Bhutan or through joint ventures
with others;

2. To engage Group companies in hydropower development pursued though Inter-

Governmental model; and

3. Fiscal incentives policy – for transmission tower parts.

55
Finance segment
As noted in sections above, the additional firm
power will be able to create 29 new HV and 29
new MV industries. Based on the investment
size realized for industries during Tala
plant’s commissioning, this translates into an
investment of about Nu. 20 billion, without
considering inflation, over the investment of
the existing industries.
Considering the requirement of foreign
exchange to buy the plant and equipment, Nu.
20 billion for establishment of new industries
will be too large for existing Bhutanese banks.
The large demand for capital will put huge
pressure on the foreign exchange reserves of
the country. The situation, therefore, opens
up opportunity for a non-banking financial
institution (NBFI) to provide the financing
required for industries that export and earn
foreign currency. These NBFIs will have to
rely on external commercial borrowings. In
addition to debt financing options, alternative
sources of equity financing should also be
explored. Setting up investment funds with
FDI partners is another viable option.
56 ROADMAP 2030
While DHI is in talks with RMA on setting up
of NBFI, lack of regulation on this front has
slowed down the process. DHI shall work with
RMA to provide all necessary support to make
way for such financial institutions.
The other big opportunity for the financial
segment is in digital payment. The benefits
of digital payments to the Bhutanese
financial sector and customers are in terms
of safety, accounting theft and associated
cost reduction, and transparency and audit
traceability. Having digital transactions
means having a well-organized and accessible
database of all transactions that may have
occurred for a business. This would be an
enormous tool to enhance transparency and
prevent fraud or mismanagement of accounts
for the Bhutanese and their businesses.
To the economy, it will serve as a cracking
mechanism for individual’s and businesses’
incomes, which ultimately will help improve
government’s tax revenue.
The system also helps the economy in
reducing the overall cost associated with
physical currency. As per a study conducted
by MasterCard, a country’s cash handling cost
is as high as 5% of its GDP. By that standard,
Bhutan’s cash handling cost works out to
Nu. 7.45 billion for fiscal year 2016-2017,
which is equivalent to ‘Finance and Insurance’
sector’s GDP contribution16 in 2016. For small
economies, like ours, digital system will bring
about enormous benefits.
RMA has already initiated digital system and is
seeking to digitalise all government payments
by the end of 2018. Further, it has plans to
incentivise financial institutions with a free
POS device for every POS device they invest in,
to go digital (or cashless). At the operational
level, BoB’s MBoB application has acted as the
trailblazer for the digital payment movement,
already making thousands of transactions
more convenient, and instantaneous. In
the coming years, MBoB’s model should be
followed and expanded upon, facilitating
interaction between different bank’s
platforms and enabling service integration
and transactions with all sectors of the
economy and non-domestic parties, as well.
To enhance the system, the group will have to
come up with a digital strategy that will serve
the overall economy and also help the policy
makers frame right policies and regulations.

MILESTONES
• Set-up a non-banking financial institute/investment bank : 2021

• Digital strategy for payments and transactions : 2020

• Group transactions and payments fully digitalised : 2019-2023

POLICY INSTRUMENTS IMPACTING THE GROUP

1. Regulation on Non-Banking Financial Institution (NBFI)

2. Fiscal and financial incentives policy – for digital transactions and payments

16
Finance and Insurance sector contributed Nu. 7.57 billion to the 2016 GDP

57
Transport segment
A spin-off of the transfer of an SOE like
Bhutan Post would be DHI’s involvement in
the public transport system. Through the City
Bus Service, a unit under Bhutan Post, DHI
could improve the public transport system
and provide reliable and affordable services
to the public. It would be an opportunity for
DHI to impact something that directly touch
people’s lives and promote DHI’s image and
branding. At present, the city bus service is
highly subsidised by the government and is
constrained by it to increase their fleet and
frequencies - two ways in which they could
greatly garner public’s trust in our public
transport system and would encourage them
to use it more. A reliable and affordable public
transport would also curb usage of private
vehicles and address the traffic congestion
issues in Thimphu, Phuentsholing and other
major towns. This in turn would reduce
import of private vehicles and thereby, reduce
import of fuels. Bhutan imported fuels worth
Nu. 720.98 million in 2002, which increased
to Nu. 7.53 billion in 2016. Moreover, if not
checked, it is estimated that vehicle numbers
in 2040 will be 10 times the total number of
vehicles in 2016. While the public transport
unit might not be a profit generating unit, the
socio-economic benefits and the benefits to
the overall economy would be enormous.
Besides, RSTA and other relevant stakeholders
such as MoWHS and Thromde offices
already have plans to improve the public
transport infrastructure and the transport
infrastructure in general. They have carried
out numerous studies to identify ways in
which travel distances and, hence, travel time
could be shortened through construction of
tunnels, viaducts, bridges and suitable mass
transit options. The Bhutan Urban Transport
System prepared by International Finance
58 ROADMAP 2030
Corporation (IFC) recommends creation of
urban villages, neighborhood nodes, urban
hubs in Thimphu and Phuentsholing, all of
which are neighborhood communities with
all the primary amenities and facilities. It is
likely that the government will go ahead with
these plans in the near future. However, the
government is constrained by the lack of
fund. Hence, DHI should gear up towards
making investments in the development of
the transport infrastructure in partnership
with the government or through public
private partnership (PPP) model. Under
CDCL, DHI will initiate a profit center for
construction of tunnels, either together with
DGPC Consultancy or on its own.
Moreover, in recognition of the rising fuel
imports and availability of clean energy in
Bhutan, the government also aspires to slowly
replace fuel powered vehicles with electric
vehicles, which is in line with Bhutan’s mission
to remain carbon neutral. However, there is
much to be done at the policy level, in term of
extending incentives for electric vehicles and
green infrastructure.
DHI will initiate ‘DHI Green Initiative’ to lead
the way in marketing electric vehicles (including
electric trains and trams) for mass transport and
personal vehicles. With the policies streamlined,
DHI would then look into setting up charging
stations for electric vehicles.
Under air transport, currently, Drukair
Corporation Ltd. is DHI’s only company
operating in this sector. Drukair’s fleet
consists of four aircrafts – three Airbus A319
and one ATR 42-500 aircraft. It operates to
10 international and 4 domestic destinations,
both including Paro International Airport. In
2017 alone, Drukair operated 4,903 flights
and carried 271,007 passengers. Recently,

the Department of Air Transport (DoAT) has
opened up a new taxiway, expanded boarding
lounge and will soon have bigger parking
space. These initiatives are done to enhance
the airport’s capacity. Additionally, Drukair
will get two new aircrafts (Airbus and an ATR)
by 2019-20, which were initiated to enhance
regional and domestic connectivity.
First, as the national flag carrier, Drukair sets
the first impression of brand Bhutan. Therefore,
DHI and Drukair will continue to place top
priorities on Safety, Standard and Services.
While Drukair shall always have Bhutanese
passengers on the top priority list, in
consideration of the increased year-on-year
Dumper moving limestone to crusher at DCCL
tourists arrival, the focus in selecting the
internal destinations and routes needs to be
on connecting markets that generate high
tourist arrivals to the country.
Hence, DHI will ensure all required frequencies
within the capacity of the aircrafts to provide
best connectivity to all Bhutanese, along with
the normal commercial considerations of load
factor and profitability, and at the same time
selecting routes that generate high tourist
arrivals to the country. The overall aircraft
utilization is targeted to increase by at least
15% every year.
With respect to air transport infrastructure,
Bhutan has only one international airport and
59
three domestic airports. Nepal, with similar
topography as ours, has about forty nine fully
functioning airports. Thirty-two of them are
airports with commercial flights while others
are made for occasional use and helicopter
landings. Paro Airport, given its features, is
not able to accommodate bigger aircrafts.
Further, if natural disasters strike and render
Paro Airport non-operational, the country
could immediately be cut off from the rest of
the world.
On the opportunity side, considering
inefficiencies of international airports (in
Nepal) and regional airports in Assam and
Bengal, Bhutan could serve as an international
hub for this region. There is a very good
opportunity to acquire customer airlines from
these airports.
DHI and Drukair will allow relieving the
civil aviation and air transport authorities
of the operational jobs, and let them focus
on regulatory issues, by setting-up airport
management company, ground handling
firms, catering firms and security and other
ancillary services.
As the 12th Five Year Plan also envisages
to take up Gelephu International Airport
initiative, DHI will work with the government
to engage in the construction and readying
investments for any related services, including
investments in electric mass transport system.

MILESTONES
• Set-up profit center for tunnel construction (CDCL) : 2020 – 2030
• Manage public transport/city bus service : 2021 - 2022
• Increase aircraft utilization : 2020 – 2030
• Engage in planning and management of international airports : 2021 - 2022
• Incorporate an airport management company and promote Bhutan : 2023
as the transit hub in the region

POLICY INSTRUMENTS IMPACTING THE GROUP

1. Rules and Regulation of RSTA, 2018
2. DHI to initiate discussion with the government on initiating construction of
public transport tunnels.
3. DHI to initiate discussion with the government on planning for and construction
of second international airport.

60 ROADMAP 2030
Telecom towers at BT Headquarters
Communication segment
Telecom
Under communication segment, Bhutan
Telecom, at present, is the only company
in the Group. As of date, the company has
established a new Core and IN (Intelligent
Network) in Thimphu and a Disaster Recovery
(DR) center in Kanglung, designed to ensure
undisrupted telecom service in the event of
major failures with either Core. The coverage
has been improved with the installation
of 4G nodes in all the dzongkhags and
satellite towns. Mobile connectivity has
also reached all the gewogs through 2G and
3G technologies. As per the Department of
Information Technology & Telecom (DITT)
Bhutan’s mobile penetration rate in 2017
was 92% with internet penetration of 75.44%.
This shows that Bhutan’s mobile has reached
near saturation limits. By June 2018, the
total registered mobile users increased to
699,819, with more than 393,643 (active)
in BT network. However, over the years, BT
has been witnessing a steady increase in the
mobile Average Revenue Per User (ARPU).
Mobile ARPU increased from Nu. 525 per
month or Nu. 17.5 per day in 2017 from Nu.
581 per month or Nu. 19.38 a day in 2018.
The increase in the ARPU has mainly been
due to the surge in data usage in last few
years. To meet ever-growing demand for data
bandwidth, the international bandwidth was
also upgraded from 6.2 Gigabit to 21 Gigabit.
The demand is projected to increase, as the 4G
technology has only been introduced in all the
dzongkhags in 2017 and the gewogs are still
to be extended with the technology. However,
technology itself will not serve the purpose
if the network is not reliable. Currently, there
is no redundant fibre link between the Cores.
Also, there is only a single physical connection
61
between Thimphu and Phuentsholing, and
Thimphu-Gelephu-Kanglung. There is a huge
risk of blackout if anything happens to the
existing fibre line. Similarly, availability of
the base stations is also very important and,
therefore, power redundancy is a must. At
present, stations are equipped with DG or
solar batteries, which at times takes a lot of
time to power the generators.
There are varying reports on Bhutan’s internet
speed and thus the exact speed is not known.
As per DITT’s quarterly report Bhutan’s average
mobile internet speed in 2017 was 4.23 Mbps
which is much below the global average
internet speed of 7.2 Mbps in 2017. Bhutan's
internet speed (both broadband and mobile)
is one of the lowest in Asia and in the world.
Higher internet speed will be achieved through
expansion of 4G and 3G technologies. This will
result in an increased data consumption and
thereby a higher revenue.
Considering that all core areas are now covered
with 4G technology, BT will start capitalising on
the data usage. To enhance the data usage, BT
will invest in providing the best internet speed
in the region with 99% reliability. With that the
ARPU will also be the best in the region within
the coming 2-3 years.
On the network’s performance, the KPIs
achieved are an overall average and there are
many locations where network performance
is much below the standard or the network
is not at all there. So, there is a need to track
network performance location-wise and
maintain the up-time within or better than
the industry standard for every location and
not an overall average. In Singapore, a global
leader in telecom services, the dropped
call percentage target is as low as 1%. The
performance of telecom companies like
Singtel is under 0.5%.
62 ROADMAP 2030
In order to gear Bhutan towards a Singaporean
telecom state, the vision is to maintain dropped
call percentage of less than 1% in every core
area. Further, BT will ensure that there is no
shadow zone between the core areas. Reliability,
however, will first have to be explored and met
from the existing infrastructure. All additional
will be based on the network masterplan, which
BT will develop immediately.
Digitalized Bhutan
The future of the world is digital and so is the
future of Bhutan. Currently, most Bhutanese are
digitally connected through mobile technology.
However, businesses in Bhutan are yet to go
digital. It could be attributed to the lack of
digital innovation (platform/products/services)
and required infrastructure (accessibility to
Internet and slow Internet speed). But in some
manner, Bhutanese innovations like MBoB and
B-Wallet, which are widely used applications,
have helped Bhutan head towards digitization.
Similarly, the government's service channel
Government to Citizen (G2C) has eased availing
of public services. So, the fact is that firms just
need to come up with innovative products and
services to enable digitization.
Given the small size and population of Bhutan
we can become digital like Estonia, the world’s
most digitalized country, if similar technology
aided by similar rules and regulations are put in
place. BT will have to catalyse the digitization
by providing infrastructure support, be it
in terms of increasing the Internet speed
or providing fast and reliable Internet and
telecom network. DHI, the shareholder, in
collaboration with relevant stakeholders such
as the BICMA & DITT will have to lobby policy
interventions to push for the implementation
of digital initiatives. However, together with
BT, BoB and TTPL, a digital strategy will be
studied and developed in the first year of the
Roadmap itself.
Consolidation of IT infrastructure
The other area that the sector might be able to
value-add is on consolidating the IT hardware
and software. In its first 10 years, DHI and
companies achieved efficiencies through
introduction of Enterprise Resource Planning
(ERP) applications and, thereby, streamlining
internal and business processes. However,
it required procurement and housing of IT
hardware in silos and also availing after-sale
services and annual maintenance contracts
(AMCs) individually. Similarly, there are also
companies where legacy systems/applications
are in need for updates and/or replacements.
Hence, consolidation of hardware, software
and data components remains an immediate
undertaking for the Group, or BT in particular,
to pursue.
DHI, in the last few years, initiated a project
on this front and consolidated the AMCs of
some of the applications. It brought about
huge savings to the Group. Considering
investments have already been made in
some of the required infrastructure (Data
Center for instance), DHI will set up a Center
of Excellence for IT at Thimphu TechPark
Limited. With it, TTPL will be removed from
Real Estate segment, and be the main driver
for group’s IT innovation. The CoE IT will
consolidate IT services and resources and also
replace all legacy systems in the companies.
Its scope will later be expanded to providing
specialized IT services like cyber security and
then managing them for the clients.
Further, the CoE IT, together with Bhutan
Telecom and BoB will lead Group’s
transformation into a fully digitalized state.
DHI desires for the CoE IT to fill up at least
80% of the new IT Park building space within
the Roadmap period.

MILESTONES
• Best Internet speed and ARPU in the region : 2022 - 2023
• 1% dropped call percentage maintained for all core areas : 2020 – 2022
• No shadow zone between core towns : 2020 – 2021
• IT hardware and software consolidated and services offered : 2020 - 2022
through cloud
• All legacy systems/applications updated/replaced : 2020 – 2025
• CoE IT or TTPL occupies at least 80% of the new techpark building: 2023 -
• Group fully digitalized : 2025

POLICY INSTRUMENTS IMPACTING THE GROUP

1. DHI to initiate discussion with the government on policy intervention, related
to incentives on digitalization

63
Construction and real estate segment
Construction and real estate sector has been
playing a vital role in the overall national
economy. According to National Accounts
Statistics 2017, the construction sector
sustained an accelerated growth of 12.31%.
The sector was the leading contributor to
the GDP growth for the past two consecutive
years, with 1.52% and 1.98% in 2015 and 2016
respectively. The sector accounted for 16.28%
of the GDP in 2016 which translates into Nu.
24,204 million. Furthermore, the total capital
expenditure outlay for the Royal Government
of Bhutan (RGoB) for the Financial Year
2017-2018 was Nu. 29.346 billion and the
construction sector had a huge share of 63%,
which translates to about Nu. 18.462 billion.
Within the sector 34.50% was government
construction and 65.50% private and public
corporations’ construction.
64 ROADMAP 2030
However, there is a huge deficit in supply
of skilled national work force. According to
PHCB 2017, there are 42,425 non-Bhutanese
residing in Bhutan, excluding tourists and day-
workers. Of the total, 93.4% are aged between
15 and 64 years, indicating that the majority
are of working age and are engaged in the
construction sector. The country’s labour
force participating rate (LFPR), however, is
assessed at 63.3%. The Ministry of Labour
and Human Resources (MoLHR), through
its TVET programs, is trying to introduce
professionally trained construction workforce
since 2003. The four TVET institutes, that
imparts trainings related to construction
industry, are producing about 690 graduates
annually, on an average.
Bhutan has been importing large quantity of
construction materials and labour force from
India every year. It results into huge outflow
of money, especially INR. Annually, RMA remits
close to Nu. 7 billion in Indian currency as
payments for the workers and Nu. 5.76 billion
for the construction materials. Some of the
major problems affecting the construction
sector are poor quality construction, low level
productivity and poor human resource skills. To
counter these challenges, we need to emphasize
on technology development, enhance
contractors’ capacity/skill development and
concentrate on human resources development
and management.
Construction of key components of
hydropower plants
CDCL has made head start in hydropower
construction having undertaken drift works for
Nyera-Amari DPR and through its engagement
in Tangsibji project. Considering Kholongchhu
project’s agreement, which requires interested
foreign investors/contractors to have local
partner, there is the need to enhance
CDCL’s capacity in hydropower construction
without delay. While DHI will work with the
government to engage CDCL in construction
of hydropower built through IG model, CDCL
will itself have to engage in construction of
key components and enhance its capacity.
Bridge and tunnel construction in the region
Considering its proven capacity in bridge
construction, DHI also plans to launch CDCL
into construction activities, particularly
bridges and tunnels, within the region.
Hence, DHI and CDCL will explore strategic
partnering with regional players initially to
acquire contracts, enhance skills and engage
in construction activities.
At home, DHI will have to identify and hand
over projects to CDCL, while CDCL will have to
bring in modern technologies and enhance its
skills and expertise. DHI and CDCL will work
with the Government and initiate construction
of tunnels and mega-bridges to reduce travel
times and decongest towns and cities.
Pre-fabricated construction materials
Considering the opportunities stated above,
DHI will initiate investments in manufacturing
of pre-fabricated construction materials
through CDCL, or through an independent
company, given its experience and initiative in
the area. Together with the initiative, the group
will emphasise on technology deployment
and enhancing skills of contractors and
workers. Through other Group companies like
WCCL and NRDCL, possibilities of wooden
pre-fabrications, panels and fittings, similar
potentials will be explored and initiated.
Home ownership
With construction time and cost reduced, the
Group will work towards promoting home
ownership across lower and middle-income
groups. For this purpose, DHI will initiate
takeover of NHDCL from MoF, as its mandate
complements the Group’s overall objective.
For concrete roads
DHI has already initiated R&D in cement
concrete roads with the College of Science
and Technology (CST). Based on the R&D
result, DHI will work with the Government on
the use of cement in construction of roads.
While the initiative will help reduce import
of materials for road construction, it will also
help enhance DCCL’s capacity.
Urban hubs, neighborhood nodes
In view of the critical need to decongest
Thimphu city, there are opportunities to take up
construction in urban villages, neighborhood
nodes and urban hubs. Likewise, there is need
also for a modern bus terminal in the capital
city. These construction activities could be
addressed through DHI co-location initiatives.
65
Phuntsholing Township Development Project
In the next five years or so, DHI would have
made about Nu. 5,400 million on investments
in the Project. Strategic and deliberate effort
needs to be put in by DHI to ensure demand
for the commercial space created at PTDP.
Although the economic gains from the project
is expected to be large for the country, DHI
will work out measures to ensuring the
vibrancy of the new township that will result
in financial gains.
IT Park expansion
TTPL has been able to function in a sustainable
manner and has provided employment to
many youths. Considering the success, the
66 ROADMAP 2030
present IT park capacity is under expansion.
In the next two years or so, this capacity is
planned to be fully utilised. Considering the
ground situation then, DHI will look at further
expansion opportunities and also look at
higher value Information Technology Enabled
Services.
DHI CO-Location
In order to provide better customer
experience and convenience, DHI has started
the construction of its first co-location centre
in Paro. Depending on its success, this model
will be replicated to at least 3 more areas in
the country.
 MILESTONES
• Construction of one of the main packages of hydropower project : 2025 – 2027
• Regional player in construction : 2026 - 2030
• Manufacturing unit for pre-fabricated construction materials : 2022 - 2023
• Home ownership : 2025 - 2026
• Complete R&D and implement cement use in road construction : 2019 - 2020
• Expand DHI Co-location concept to urban-hubs and : 2019 - 2020
neighboring nodes
• Transfer NHDCL from MoF to DHI : 2019
• PTDP project demand creation : 2022 - 2025
• IT Park and DHI Co-location expansion : 2020 - 2025

POLICY INSTRUMENTS IMPACTING THE GROUP

1. DHI to work with government (MoWHS) in relation to cement-concreting national
highways.
2. DHI to work with government on policy intervention to engage Group companies
in hydropower development pursued though Inter-Governmental model.

67
Manufacturing segment
Realizing the opportunities for new
investments that additional firm power
presents, DHI has already initiated investments
in manufacturing firms like pharmaceutical,
metallurgy and aluminum smelting.
The Group’s main focus for the coming
decade will be to boost new investments and
set up numerous new industries both within
the existing and new segments, such that the
total cumulative returns to DHI’s dividend
income is at least Nu 5,000 million starting
2021 until 2030 or Nu 2,297 million in 2030
alone.
68 ROADMAP 2030
With regard to existing manufacturing
companies, the Group plans to enhance
capacity use, and where required, invest in
their expansion.
Existing manufacturing units
Considering construction delays and cost
overrun, DCCL was capitalised at much higher
cost. Owing to that and the operational
teething problems, DCCL is yet to realize
positive bottom line. However, considering
the improvements it is now making, DHI
and DCCL plans to realize the returns as
projected in the DPR. DHI will continue to
explore synergy and opportunities to enhance
capacity use and increase sales.
Based on its raw material (rubber wood),
WCCL’s products wear a mark of high quality
and standard. To avoid shocks from external
environment (import of rubber wood) and
also to make WCCL products affordable and
available to lower and middle-income groups,
DHI and WCCL will increase the use of local
timber and enhance production capacities.
However, it will continue to promote
indigenous crafts in its products.
DHI will also continue to work with other
manufacturing units under its hold, in terms
of exploring synergy and enhancing their
capacities; working with the government and
streamlining policies; and servicing industries
with specialized services through CoEs.

MILESTONES
• DHI’s income from new investments in 2030 is at least Nu 1,500 M : 2020 – 2030
• Enhance capacity of existing manufacturing units : 2019 - 2030

POLICY INSTRUMENTS IMPACTING THE GROUP

1. Power allocation framework
2. Investment incentives (Fiscal and Financial Incentive policies)

69
70 ROADMAP 2030
INVESTMENTS IN RESERVED
SECTOR (RESOURCE SEGMENT)
Operating in reserved areas, SMCL and NRDCL
have been facing policy and regulatory issues
over the last few years.
Natural Resource Development Corporation
Limited
NRDCL’s primary mandate is to ensure
sustainable use of natural resources and to
keep them available, affordable and accessible
for judicious use in the best interest of the
nation and its people. The Executive Order,
2007 and the 2010 Guideline mandates NRDCL
to also collect sand and stone from riverbeds
and manage them. However, the Forest and
Nature Conservation Rules and Regulations
of Bhutan 2017 also allows private parties to
operate in this reserved area.
The main issue is over royalty payment. While
quarries approved by Department of Geology
and Mines (DGM) pays Nu. 400 per MT of
stones for export (as royalty and mineral rent),
DoFPS collects Nu. 50 per truck-load. There
is a huge revenue loss to the government.
There is a need to streamline the policy on
this front, which DHI has already initiated
discussions with relevant ministries.
Similarly, there are issues with DoFPS-
approved modality of timber extraction,
distribution and marketing. While NRDCL has
a huge responsibility of ensuring affordability
of construction materials, owing to restrictions
stated in the distribution modality, NRDCL’s
role has been reduced to extraction and
allocation of the materials to wood based
industries (WBIs). The end customers are at
the mercy of WBIs in terms of access to and
affordability of timber. DHI and NRDCL have
initiated numerous discussions with the
Ministry and DoFPS, and will continue to
attempt resolution of these issues.
Additionally, to fulfil its mandate and convey
to private saw millers how resources can be
optimized by reducing wastage in sawing,
NRDCL invested in a few saw mills, joinery
and seasoning kiln. Together with NRDCL
and WCCL, DHI will initiate investments in
pre-fabricated construction materials (mainly
doors, window frames and panel boards) to
bring about efficiency and cost reduction in
timber and timber products.
For sand, western Bhutan is dependent on
Wangduephodrang and Punakha for supply.
However, demand surpasses supply and
customers are often forced to buy from
other sources. While freight charges add to
the overall cost, DHI and NRDCL will initiate
uniform pricing of these materials in every
dzongkhag.
State Mining Corporation Limited
One of the primary mandates of SMCL
is to be the designate body to develop
strategic minerals as defined by MoEA and
to increase contribution from mineral sector
to the national economy besides creating
employment opportunities for Bhutanese.
At the same time, the Mineral Development
Policy states that allocation of all strategic
minerals shall be the prerogative of the RGoB,
which means that SMCL, as a state owned
enterprise, should enjoy the prerogatives
overall strategic minerals. Like hydropower,
mining sector too has as huge a potential in
boosting the nation’s economy.
71
In the coming years, leaseholds for gypsum,
coal and dolomite mines with private
companies will expire. DHI will liaise with
the government to acquire all three mines
preferably through direct allotment as these
are natural resources, ownership of which vests
with the people of Bhutan,. The other option
is also for DCCL to apply for captive gypsum
mine. Comparing the financials of the private
mining companies17, SMCL in its second year
of operation of a small coal mine itself has
performed at par with them and contributed
both income tax to the government and
dividend to DHI. Government’s revenue from
the private companies is limited to royalty and
income tax only. DHI and SMCL will contribute
dividends in addition.
17
Druk Satair, Jigme Mining and SD Coal Company
72 ROADMAP 2030
There are also other minerals like graphite
with proven deposit of 23 million tons,
and iron ore, that the Group could operate.
Particularly for iron ore, there is a high synergy
quotient in a Group company operating it.
There will be benefits to both DCCL and Druk
Metallurgy Limited.
However, there are issues surrounding policy
and clearances in allotting mines directly
to any party. As per the Mines and Minerals
Management Regulation, 2002, leasing of
mines are to be done on the basis of public
notification. DHI will actively pursue with
the government in bringing about clarity in
policy for the benefit of both regulators and
operators.
 MILESTONES
• Invest in pre-fabricated construction materials : 2022-2023
(timber and its products)
• Uniform pricing of sand, timber and stones across dzongkhag : 2019
• Explore gypsum, coal and dolomite mines for SMCL : 2020 – 2022
• Explore iron ore and graphite mines : 2022 - 2023

POLICY INSTRUMENTS IMPACTING THE GROUP

1. Timber Extraction, Distribution and Marketing modality
2. Forest and Nature Conservation Rules and Regulations of Bhutan, 2017
3. Mines and Minerals Management Regulation, 2002
4. Mines and Minerals Management Act 1995

73
INVESTMENT ABROAD
Under new investments, DHI is also mandated
to make investments abroad. The long-term
mandate of saving the national wealth for
future generation makes it imperative for
DHI to consider geographical diversification.
The Bhutan Future Fund has also been set
up to consciously set aside fund for future
generations and national exigencies. While
the first investment has already been made,
the investments are presently being pursued
passively through fund managers.
In the coming decade, DHI will enhance
its capacity to make investments abroad
independently by building in-house capacity
and expertise.
Further, through hydropower related
consultancies, the Group will drive
employment of Bhutanese workforce outside
Bhutan. DHI, DGPC and CDCL will have to
drive the initiative by acquiring projects,
contracts and consultancies outside Bhutan,
mainly in hydropower construction and other
construction related works.

MILESTONES
• Investment abroad directly without use of Fund Managers : 2024 - 2025
• Major employment drive outside Bhutan through Group’s projects : 2027 - 2030

POLICY INSTRUMENTS IMPACTING THE GROUP

1. RMA’s regulation on Investment Abroad

INVESTMENT IN NEW SEGMENTS

Bioprospecting
Bhutan is one of the 10 biodiversity hotspots
in the world endowed with thousands
of species of plants, microorganisms and
animals. However, very little effort is
being taken to systematically screen these
biodiversity resources for drug discovery and
other applications. At present, Menjong Sorig
Pharmaceutical Corporation Limited (MSPCL)
and Department of Traditional Medicine
(DoTM), Ministry of Health (MoH) are the
only players in the country. Further, out of
more than 3000 species, only about 400
medicinal plants are used in our traditional
medicines. Many other plants with potential
for new medicinal applications are used by
local healers and practitioners in different
parts of Bhutan for the treatment of different
conditions. All these hold immense potential
for value addition and new drug discovery
through bioprospecting.

74 ROADMAP 2030
If we do not recognize the potential of this
sector, we might lose out to other countries
who are actively engaged in biopiracy of
underdeveloped countries’ biodiversity and
exploitation of traditional knowledge of
such poor countries for their own economic
opportunities.
While transferring MSPCL under DHI may
help realize the future of natural medicines
and spa/cosmetic sector, the investment
in scientific bioprospecting will require a
more focused scientific approach whose
sole objective would be to discover new
therapeutic entities for existing and emerging
health conditions and diseases. Establishment
of such a bioprospecting company will enable
the systematic screening of our biodiversity
resources and facilitate the development of
biopharmaceutical industry in the country.
Hence, DHI will explore and initiate research
infrastructure and specialized bioprospecting
and production technology in the sector in
the coming decade.
Agri-business
Considering its contribution to GDP (16.52%)
and employment generation (58%), agriculture
and forest is still the most important economic
sector, involving the large majority of the
population. However, if not for the Koufuku
initiative, the Group’s contribution to the
sector is almost non-existent.
Koufuku International Limited has immensely
benefitted the farmers in the east. Everyday it
contributes more than Nu. 30,000 to farmers’
income from the milk it buys. However, in
the last three years, Bhutan imported an
average of more than Nu. 1.0 billion worth of
processed dairy milk products and packaged
milk from India alone. This itself presents the
dairy processing sector a huge potential for
growth. At the same time, government policy
is also favourable, with many investments and
support being pushed from their side, which
has seen the milk production in the eastern
Dzongkhags significantly increase in last
few years. For instance, Samdrup Jongkhar
75
dzongkhag alone produces more than 5,000
litres of milk every day, but owing to lack of
domestic market, it is being sold as raw milk
to the vendors across the border without any
value addition.
At the moment KIL is planning an Ultra High
Temperature (UHT) plant at Dewathang to
capture the domestic UHT packaged milk
markets. Similarly, there is significant milk
production in other parts of Bhutan and in
the next ten years expansion of companies
such as KIL can capture this potential for rural
development and revenue generation for the
government through the sale of value added
products.
Similarly, DHI will study and explore
opportunities in agriculture businesses to
benefit farmers and also reach organic agri-
products to people in towns and cities.
Tourism and hospitality
Tourism and hospitality is the second highest
revenue contributor to the government.
However, in this sector too, the Group’s
MILESTONES
• Initiate R&D and Investment in Bioprospecting and biopharmaceutical: 2025 -2030
• Initiate investment in Agri-Business
• Initiate investment in Tourism and Hospitality sector
76 ROADMAP 2030
involvement, which is only through Drukair,
is minimal. Considering the year-on-year
growth of tourist arrival, DHI will also explore
investment in this sector, particularly in areas
such as providing tourist infrastructure like
rope ways, water sports, developing camp
sites at exotic and remote places and high-
end relaxation/meditation centers. Presently,
DHI and DGPC have hydropower based eco-
tourism in the plan.
a. Hydropower based eco-tourism
Elsewhere in the world, hydropower projects
and their components, especially the
reservoirs that are created, become touristic
locations if the social and environmental
aspects are well addressed bringing in normal
tourists as well as trekkers. Reservoirs also
become fisheries and sporting places. It can
be combined with normal tourism.
Eco-tourism of the hydropower locations
could to be promoted while ensuring that
there are no safety and other concerns for the
plants. DGPC could initiate an eco-tourism
business around some its power plants.
: 2024 – 2025
: 2025 - 2026
INVESTMENT IN SPECIALIZED AREAS AND LATEST
TECHNOLOGIES
Bhutan missed out on opportunities to lead,
or at least, be at par with regional experts in
Information and Communication Technology
(ICT), when the IT revolution began in the late
1990s. Nonetheless, technology is advancing
at a pace much faster at an unprecedented
rate and, thereby, new opportunities
present themselves. In the coming decade,
DHI shall initiate R&D and investments in
latest technologies like Space and Satellite
technology, Artificial Intelligence (AI), Data
Analytics and Block-Chain Technology.
Data Analytics is the act of utilising consumer
and corporate data to create models and
generate better, strategic decision making.
Data Analytics will enable the service sector
of Bhutan to provide more customised and
streamlined products and services. It will
also enable companies in the manufacturing
sector to be able to fine tune their operations
MILESTONES
• Initiate R&D is specialized areas and modern technologies
and confidently make decisions critical to
production, market positioning and problem
solving.
Block Chain Technology is a type of
digital information distribution system
that will enable more stable and secure
information transfer and databases. This
has vast implications on the banking and
telecommunications sector for the security
and ease of access private information.
AI Technology is now engrained in almost
every single firm in the developed world,
to some degree or the other. Besides image
recognition, voice recognition and robotics, AI
has become a fantastic tool to solve numerous
problems. DHI could explore options to work
with Tech giants to be able to take up latest
modern technologies and develop capacities
while working with them.
: 2020 – 2025
77
 LEADING AND COMPLEMENTING
PRIVATE SECTOR
78 ROADMAP 2030
721
There is a misconception of DHI’s mandate
to lead and complement private sector
development among many stakeholders,
including Group companies. To a certain
degree, it is clear that DHI will not take
competition to the private sector in areas
where they are more efficient, or in operations
that are advantageous to the private sector, in
terms of size and benefits to the customers.
However, for the Group to lead and complement
private sector development, DHI’s role is to
engage in areas where private sector is unable to
meet efficiency, standard, quality and for setting
standards in transparency, business integrity
and ethical conduct. Further, to complement
the development of a dynamic private sector,
the Group’s role is to deliver its products and
services efficiently to the private sector, so they,
in turn, achieve efficiency in their operations.
Hence, the Group’s engagement in some of
the activities where private sector is already
an active player is a conscious decision, to lead
them by setting standards, achieving efficiency
and ultimately benefiting the end consumers.
For instance, the Centre for Excellence concept
has been developed with private sector at
the core, to provide specialized services to
our industries at much lower costs. Similarly,
initiatives under communications segment are
geared towards enhancing business processes
and communications at par with developed
nations. Also, Drukair is required to increase
MILESTONES
• Broad-based ownership of public companies
• Engagement of private sector in the Group works
through PPP model
• Work with government on streamlining policies and regulations
frequency and increase aircraft use to benefit
the hospitality sector.
In the coming decade, the Group proposes to
churn out entrepreneurs who can scale up their
businesses to greater heights. To promote and
encourage entrepreneurship and business
development through venture capital and
other required institutional support, a holistic
approach to entrepreneurship development has
already been initiated. It is mainly to promote
Cottage and Small Industries (CSI) in Bhutan.
The other initiative that DHI will pursue under
this is to encourage broad-based ownership of
public companies. As informed in sections above,
DHI will divest shares of some of its companies
in the non-strategic sectors through IPO. DHI
already engages private firms in its course of
business, especially in construction contracts,
where they are hired as contractors (e.g.
construction of substations), but in the coming
decade, DHI will also explore opportunities to
take up construction works in specialized areas
through Public Private Partnership (PPP) model.
Finally, under many of the segments, an
initiative to liaise with regulators and
independent agencies has been identified.
This is mainly to streamline policies and
regulations that will also benefit private
firms. DHI will work with the private sector
in this area too, to bring clarity in many of the
government policies and regulations.
: 2020
: 2024 - 2030
79
 REVENUE TO THE GOVERNMENT

63%
DIVIDEND
+
Income Tax and
Payment for Royalty Energy

80 ROADMAP 2030
For the 12th Five Year Plan, based on preliminary
projections, the initial total budget outlay was
estimated at Nu. 300 billion, out of which Nu.
185 billion is current expenditure and Nu 115.
billion capital expenditure. Domestic revenue
has been estimated at Nu. 251.23 billion, which
is double of the 11th Plan’s Nu. 251 billion
on account of commissioning of three new
hydroelectric projects. Donor grant estimates
linger at Nu. 54.42 billion, a decline from Nu. 68
billion in the 11th FYP. Fiscal surplus projection
stands at Nu 5 billion, a decrease of about 75%
over 11th FYP fiscal deficit of Nu. 19.8 billion.
However, based on the revised fiscal projection,
as of September 2018, the total domestic revenue
has been scaled down to Nu. 219.28 billion, from
Nu. 251.23 billion and donor grants have been
increased to Nu. 63.34 billion from Nu. 54.42
billion. The total outlay has been re-estimated
at Nu. 309.68 billion, out of which Nu. 193.56 is
current expenditure and Nu. 116.12 billion capital
expenditure. Hence, as against the fiscal surplus
of Nu. 5 billion in its initial projection, there will
now be a shortfall of Nu. 27 billion.
Starting 12th FYP and cumulative to fiscal year
2029/30, the total outlay has been projected
at Nu. 895 billion and the total resource has
been projected at Nu. 833 billion (internal
revenue of Nu. 729 billion and donor grants of
Nu 93.95 billion). Hence, a fiscal deficit of Nu.
62 billion has been projected for the entire
period. The Group will have to take this as an
opportunity to perform at its best and help
increase government’s internal revenue.
MILESTONES
• Finance the government’s entire current expenditure
• Increase Bhutan Future Fund to at least Nu. 30 billion
Similarly, the total outlay for the fiscal year
2029/30 has been projected at Nu. 94.83
billion, out of which Nu. 68.76 billion
accounts for current expenditure. However,
total resource has been projected at Nu.
88.39 billion, out of which Nu. 85.43 billion
accounts for internal revenue. It is estimated
there will be a fiscal deficit of Nu. 6.43 billion
even in that fiscal year. In fact, save for fiscal
year 2023/24, the first year of 13th FYP, it is
projected that Bhutan will face fiscal deficit
for the entire duration (until 2030).
The Group’s aim is to help government
achieve fiscal surplus for the entire period by
contributing higher revenues. Hence, as set
out in the destination statement, the Group’s
goal is to cover the government’s entire
current expenditure for fiscal year 2029/30,
which is Nu. 68.77 billion, and thereby help
achieve fiscal surplus for that year. The Group’s
contribution to the government revenue will
comprise (i) Dividends DHI remits to MoF, (ii)
DHI’s Income tax paid on standalone accounts,
(iii) Companies’ income taxes paid on their
standalone accounts and (iv) Payments made
by DGPC on account of Royalty energy.
Additionally, considering the requirement for
huge capital at times of national emergencies,
the Group had created the Bhutan Future
Fund, benchmarked on earnings from the
hydropower and mining sectors. The Group’s
second main goal under this thrust area is to
ensure growth of the fund.
: 2030
: 2030
81
 IN

82 ROADMAP 2030
If the Group achieves the objectives and
milestones set out in the document, what
would it look like?
While ambitious objectives and milestones
have been set out in this Roadmap,
financial projections have been made rather
conservatively. Where available, assumptions
were based on the figures and data used by
MFCC in their simulation and in the project
DPRs. In others, growth percentages were
based on performance of the industry over last
2-3 years, viz. performance of private mining
companies for last 2-3 years as reported in
RSEBL website. In certain areas, figures were
based on DHI’s expectations of the subsidiary
companies.
Hence, considering the simulation and
then comparing with government’s revised
fiscal projections, this final chapter seeks
to sketch a picture for the Group in 2030.
The presentation is made using the guiding
themes used at the beginning to align with
Mission, Vision and Destination statements.
83
PERFORMANCE EXCELLENCE

84 ROADMAP 2030
In 2030, all Group companies are well
organized. Their business processes are
streamlined and every one of them performs at
its peak. New companies are also established
on those same platforms.

At the products and services level, all

companies have the best performance KPIs
in the region. All services are fully digitalized
and delivered through online platforms and
mobile apps.

The financial performances of the companies

have improved primarily on account of
efficiency and productivity. As against its
competitors, the Group companies’ returns to
the shareholder are consistently higher.

At the Group level, all areas with high

synergy quotient have been merged and,
on that account, increased earnings before
interest, tax and depreciation (EBIT), at the
consolidated financial statement level, have
been realized.

The Group’s contribution to the government,

therefore, has increased and the compounded
annual growth rate is much higher than the
first 10 years.

85
HUMAN CAPITAL EXCELLENCE

86 ROADMAP 2030
With a research and training institute for CG
established, all board directors and senior
managements teams of the companies
have attended at least one round of CG and
leadership training at the institute.
DGPC’s nine Centre of Excellence provides
specialized services to the industries in
Bhutan and region. Similarly, the Druk Green
Consultancy and R&D Centre is a technically
competent consultant that provides
hydropower related consultancies in the
region and also acts in the capacity of owner’s
engineer in the construction of a hydropower
plant in the country. Together with DGPC, the
CoE for Transmission and Rural Electrification
has also ventured into consultancy services in
the region.
The CoE for IT has completed consolidation
of all IT infrastructure in the Group and has
replaced all legacy systems. The center has
also led the transformation of the Group in
digitalization and is now fully digitalized.
In construction, the power-training institute
and TVET graduates have replaced foreign
labourers and they are also engaged in the
construction of hydropower plants, tunnels
and other mega structures.
The Group has embarked on a path of latest
modern technologies and has started working
with tech-giants like Google, Facebook, NASA
and Tesla, in the field of Artificial Intelligence,
Cloud services, Space Technology and
Hyperloop transportation.
The Group also has competent Bhutanese
professionals to initiate and invest abroad,
without reliance on third party managers.
87
ECONOMIC TRANSFORMATION

Projected Groups remittance to

Ministry of Finance
2019-2030
(figures in Billion)

2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30
6,435 7,162 8,450 12,633 12,811 18,872 19,521 20,903 29,364 30,592 31,936 34,936
4,139 4,987 5,882 8,636 8,883 12,836 13,376 14,092 19,673 20,674 21,789 24,049
2,659 2,653 2,656 7,369 7,336 10,470 10,470 10,470 14,596 14,596 14,596 14,596

Tax
Dividend
Payment for Royalty Energy

88 ROADMAP 2030
Based on fiscal projections for the period
2018/19 to 2029/30, of the total budgetary
outlay of Nu. 895 billion, Nu. 607.47 billion
is the projected total current expenditure for
the entire period. The total internal revenue
is estimated at Nu. 729.02 billion. For the
entire period, the Group’s total contribution
(cumulative for 2018/19 – 2029/30) is Nu.
505 billion. The contribution is 69% of the
total internal revenue, up from 40% for the
first decade and 83% of the total current
expenditure, up from 50% for the first decade.
Likewise, the total outlay for the fiscal year
2029/30 is projected at Nu. 106.74 billion, out
of which Nu. 68.76 billion accounts for current
expenditure. The total internal revenue is
projected at Nu. 85.43 billion. In 2030, the
Group’s contribution to government’s internal
revenue is Nu. 73 billion, which is about 86%
of the projected internal revenue and about
107% of the projected current expenditure of
fiscal year 2029/30.
With respect to the share of dividend
contribution to DHI, the hydro segment (BPC
and DGPC) contributes Nu. 24,564 million
and the combined total contribution of the
non-hydro segments is Nu. 24,311 in 2030. It
86%
Internal
Revenue
100%
Current
Expenditure
means that DHI’s revenue is 53% from hydro
segment and 47% from non-hydro segment.
Similarly, under new investments, without
considering specific investments that are
initiated after detailed studies and analyses,
DHI has set up at least five manufacturing units.
Under resource segment, SMCL mines three
additional mines (Gypsum, Dolomite and Coal)
and WCCL and NRDCL have initiated ready-to-
assemble construction materials. The transport
and communication segment, DHI has one
IT firm/IT CoE catering to Group’s IT needs,
a transportation firm and the Group is fully
digitalized. Additionally, DHI has set up a non-
banking financial institution and is engaged in
construction of one of the main packages in
a hydropower project and tunnels for surface
transport. And finally, the Group overall
has Centers of Excellence in more than 11
specialized areas and at least two R&D facilities
that provide consultancies in hydropower,
transmission and other constructions.
Benchmarked on earnings from hydropower
and mining sectors, the Bhutan Future Fund
has grown to Nu 29.203 billion. Considering
interest earned, the Bhutan Future Fund is
more than Nu. 30 billion.
30 Billion
Bhutan Future
Fund
89
 DHI Chairman, Dasho Ugen Chewang and CEO, Dasho Karma Yezer Raydi

90 ROADMAP 2030
CONCLUSION
There is clear, broad consensus that the Roadmap will transform the
Group and, the Group will be the catalyst for economic transformation
of the country.

The Group now has the best opportunity it will ever have to transform
itself and contribute significantly to the economic transformation of
the country. We must build on the achievements of the last decade and
ensure that the envisioned future is attained.

There may be those who feel that the envisioned future is unattainable,
those who undervalue our resources and underestimate our
determination and commitment to the future of the Group. If we are
firm in our beliefs and have the willingness to strive for excellence, it
is possible for every company to attain world-class performance and
together, we can help our country attain its economic development
goal of becoming upper middle-income country by 2030.

The Roadmap provides detailed recommendations for moving forward,

and identifies hurdles that we seek to remove. We would like to urge all
the companies to implement the recommendations with full dedication
and commitment.

91
 ANNEXURES
Revised fiscal projections as on September 2018

Projected consolidated financial statement

92 ROADMAP 2030
Projected financial for DHI (Standalone)

Projected financial for DGPC

93
 4. Projected financials for BPC

Projected financial for BPC

94 ROADMAP 2030
 5. Projected financials for DCCL
Projected financial for DCCL

95
 6. Projected financials for SMCL
6. Projected financials for SMCL
Projected financial for SMCL

7. Projected financials for BTL & Drukair

Projected financialfinancials
7. Projected for BTL & Drukair
for BTL & Drukair

96 ROADMAP 2030
 8. Projected
Projected financialfinancials
for BOB for BOB
8. Projected financials for BOB

9. Projected
Projected financialfinancials for Other SOEs
for Other SOEs
9. Projected financials for Other SOEs

97
Acronyms
APG Assetz Property Group DPR Detailed Project Report
ARPU Average Revenue Per User DR Disaster Recovery
ATS Associated Transmission System EBIT Earnings Before Interest and Tax
BAS Bhutanese Accounting Standards EDP Economic Development Policy
BBPL Bhutan Board Products Limited ERP Enterprise Resource Planning
BDBL Bhutan Development Bank Limited EVI Economic Vulnerability Index
BDFL Bhutan Duty Free Limited FDI Foreign Direct Investment
BEA Bhutan Electricity Authority FY Financial Year
BEGIN Business Entrepreneurship Growth and FYIFPs Five-Year Investment and Financing Plans
Innovation FYP Five Year Plan
BFAL Bhutan Ferro Alloys Limited GDP Gross Domestic Project
BHSL Bhutan Helicopter Services Limited GNH Gross National Happiness
BHSL Bhutan Hydropower Services Limited GNI Gross National Income
BICMA Bhutan InfoComm and Media Authority GPMS Government Performance Management
BITC Bhutan Innovation and Technology Centre System
BLL Bhutan Lotteries Limited GST Goods and Service Tax
BNBL Bhutan National Bank Limited HAI Human Asset Index
BOB Bank of Bhutan HRT Head Race Tunnel
BPC Bhutan Power Corporation IFC International Finance Corporation
BTL Bhutan Telecom Limited IG Inter-Governmental Model
CAGR Compounded Annual Growth Rate IN Intelligent Network
CDCL Construction Development Corporation IPO Initial Public Offering
Limited KIPL Koufuku International Private Limited
CEO Chief Executive Officer KPI Key Performance Indicator
CG Corporate Governance LDC Least Developed Country
CG Code Corporate Governance Code LFPR Labour Force Participating Rate
CoE Centre of Excellence MFCTC Macroeconomic Framework Coordination
CSI Cottage and Small Industries Technical Committee
CST College of Science and Technology MSPCL Menjong Sorig Pharmaceutical
DCCL Dungsam Cement Corporation Limited Corporation Limited
DG Druk Green MTPA Metric Tonnes Per Annum
DGPC Druk Green Power Corporation NBFI Non-banking Financial Institution
DHI Druk Holding and Investments Limited NHDCL National Housing Development
BiZAP Business Acceleration Program Corporation limited
DITT Department of Information Technology & PHCB Population and Housing Census of Bhutan
Telecom NRDCL Natural Resources and Development
DoAT Department of Air Transport Corporation Limited
DoFPS Department of Forest and Park Services SCADA Supervisory Control and Data Acquisition
DoTM Department of Traditional Medicine PCAL Penden Cement Authority Limited
DPL Dungsam Polymer Limited PMS Performance Management System
DPP DHI-Private Sector Partnership POS Point Of Sale

98 ROADMAP 2030
PPA Power Purchase Agreement SNBL Shin Nippon Biomedical Laboratories
PPP Public Private Partnership Limited
PTDP Phuentsholing Township Development SOE State Owned Enterprise
Project STCBL State Trading Corporation of Bhutan
RICBL Royal Insurance Corporation of Bhutan Limited
Limited TTPL Thimphu TechPark Limited
RMA Royal Monetary Authority TVET Technical and Vocational Education and
RoC Register of Companies Training
RSEBL Royal Securities Exchange of Bhutan UHT Ultra High Temperature
RSTA Road Safety and Transport Authority WBIs Wood Based Industries
RTM Round Table Meeting WCCL Wood Craft Center Limited
SMCL State Mining Corporation Limited WEF World Economic Forum

99
 Druk Holding & Investments
P.O. Box 1127, Motithang, Thimphu, Bhutan
Tel: +975 2 336257/58 Fax: +975 2 336259
www.dhi.bt