Contents

Part Two
EXPORTING FROM BHUTAN

I. EXPORT POLICY, REGULATIONS AND PROCEDURES

General

In order to generate hard currency, the Government of Bhutan has introduced measures to increase exports to third countries. (Trade with India is conducted in Indian rupees, which are nonconvertible.) The Ninth Five-Year Plan emphasises export earnings growth, through diversification of products and markets, and the integration of Bhutan into the multilateral system. The Tenth Plan, to start in 2009, will maintain this emphasis.

The agreement on trade and commerce between India and Bhutan provides for duty-free, quota-free trade. Goods in transit (through India) between Bhutan and third countries are not subject to Indian customs duties. India accounts for 95 % of Bhutan’s exports; of this, almost 50% is electricity.

Between Bhutan and Bangladesh (the second largest trading partner), a five-year tariff concession agreement has been in place since May 2003. This replaced the 1980 trade agreement. 

Under SAPTA, SAFTA and BIMSTEC, many Bhutanese exports will enjoy preferential access to regional markets. (See Part One). Bhutan can also access developed countries' preference schemes. The Trade Development Office of the Ministry of Trade and Industry provides information and assistance in accessing markets around the world: www.trade.gov.bt. Tel: +9752325588.

Approvals, Permits, Licences, Restrictions, Quotas

Any individual or firm with a valid trade or industrial licence can undertake exports. No separate export licence is required. Export permits, however, are required for restricted/prohibited items; these include religious artefacts such as statues, books and paintings, and antique items. 

Exports of excisable goods must be approved by the Ministry of Finance, and the exporter must inform the Excise authorities in writing 24 hours before removing the goods from the factory or warehouse.

Exports are valued 'free on board' (FOB) at the exit point. No quotas are imposed.

Restricted and Prohibited Exports

• Animals and plants classified as endangered species and their parts and products
• Antiques such as zee (cats eye) and any other items as specified by the Royal Government
• Prime and sawn timber and semi-finished wood products
• Narcotic and psychotropic drugs and substances
• Any other goods which are restricted or prohibited by any laws in force.

Source: Sales Tax, Customs and Excise Act of the Kingdom of Bhutan 2000, Ministry of Finance.

Other Export Requirements, SPS, Technical Standards

Exports of agricultural goods must have a phytosanitary certificate issued by the quality control and regulatory services of the Ministry of Agriculture. 

Bhutan Agriculture and Food Regulatory Authority (BAFRA)
POB: 252
Tel: (975 2) 327031/325790
Fax: (975 2) 327032 
Email: karma_d@moa.gov.bt (Executive Director: Mr Karma Dorji)
Website: www.moa.gov.bt/agency

For processed goods, only limited standards testing and conformity assessment services are available locally at present, but efforts are underway to expand such services. Please contact:

Standards & Quality Control Authority (SQCA)
Ministry of Works & Human Settlement
Thimphu, Bhutan
Website: www.sqcd.gov.bt

Standardization & Documentation Division (SDD)
Tel: (975)-2-326843/326905/328298
Telefax: (975)-2-323712
E-Mail: stdunit@sqcd.gov.bt/ crinzin@sqcd.gov.bt

Technical Monitoring Division (TMD)
Telefax: (975)-2-323712 
E-Mail: temd@sqcd.gov.bt

Material Testing & Research Division (MTRD)
Tel: (975)-2-325104
Telefax: (975)-2-327759
E-Mail: mtrd@sqcd.gov.bt/wangchuk_tashi@sqcd.gov.bt

Alcoholic beverages

Exports of alcoholic beverages to India are regulated by the 'Rules on the Sales Tax, Customs and Excise Act' of the Kingdom of Bhutan, 2000, as follows: 

• The exporter shall apply for an export permit to the Regional Revenue and Customs Office (RRCO) at least 24 hours prior to the time of the export. This application is submitted with an original copy of the permit issued by the concerned excise authorities of India authorising the import.

• The RRCO shall issue a permit to export alcoholic beverages.

• The exporter shall make a security deposit of Nu 200,000, which will be refunded or adjusted against any liabilities upon successful completion of the export contracts.

• The exporter is also required to deposit with the RRCO the vending/bottling fees for the consignment to be exported.

• The exporter shall submit the landing certificate of the consignment to the RRCO within 60 days after the date of export.

II. EXPORT CHARGES

Since July 2002, exports are duty-free. For exports to India or third countries, the Department of Revenue and Customs collects fees for sealing and strapping goods, containers and vehicles as described below:

Exports of excisable goods to India are not subject to excise duty.

Fees for liquor exports are as follows:

• Vending fee: Nu 6 per dozen bottle of 750 ml.

• Bottling fee: Nu 10 per dozen bottle of 750 ml. 

III. SETTLEMENTS OF BILLS, LETTERS OF CREDIT

The Bank of Bhutan and the Bhutan National Bank provide export credits at an interest rate of 13% p.a. (at January 2007). Export credits comprise: 

1. preshipment credits to purchase inputs and goods to be exported, and to finance transportation, packing and insurance costs and charges;

2. postshipment credits: to cover the financial gap before receipt of payment for exports (made against the value of the exported goods).

IV. EXPORT DOCUMENTATION