Bhutan

BHUTAN

LOCATION, SIZE, AND EXTENT
TOPOGRAPHY
CLIMATE
FLORA AND FAUNA
ENVIRONMENT
POPULATION
MIGRATION
ETHNIC GROUPS
LANGUAGES
RELIGIONS
TRANSPORTATION
HISTORY
GOVERNMENT
POLITICAL PARTIES
LOCAL GOVERNMENT
JUDICIAL SYSTEM
ARMED FORCES
INTERNATIONAL COOPERATION
ECONOMY
INCOME
LABOR
AGRICULTURE
ANIMAL HUSBANDRY
FISHING
FORESTRY
MINING
ENERGY AND POWER
INDUSTRY
SCIENCE AND TECHNOLOGY
DOMESTIC TRADE
FOREIGN TRADE
BALANCE OF PAYMENTS
BANKING AND SECURITIES
INSURANCE
PUBLIC FINANCE
TAXATION
CUSTOMS AND DUTIES
FOREIGN INVESTMENT
ECONOMIC DEVELOPMENT
SOCIAL DEVELOPMENT
HEALTH
HOUSING
EDUCATION
LIBRARIES AND MUSEUMS
MEDIA
ORGANIZATIONS
TOURISM, TRAVEL, AND RECREATION
FAMOUS BHUTANESE
DEPENDENCIES
BIBLIOGRAPHY

Kingdom of Bhutan

Druk-Yul

CAPITAL: Thimphu (Tashi Chho Dzong)

FLAG: The flag is divided diagonally into an orange-yellow field above and a crimson field below. In the center is a wingless white Chinese dragon.

ANTHEM: Gyelpo Tenjur, beginning "In the Thunder Dragon Kingdom, adorned with sandalwood."

MONETARY UNIT: The ngultrum (n) is a paper currency of 100 chetrum. There are coins of 5, 10, 25, and 50 chetrum and 1 ngultrum, and notes of 1, 5, 10, and 100 ngultrum. The ngultrum is at par with the Indian rupee (r), which also circulates freely. n1 = $0.02207 (or $1 = n45.317) as of 2004.

WEIGHTS AND MEASURES: The metric system is the legal standard, but some traditional units are still in common use.

HOLIDAYS: King's Birthday, 1113 November; National Day, 17 December. Movable Buddhist holidays and festivals are observed.

TIME: 5:30 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Bhutan, a landlocked country in the Himalayan mountain range, has an area of 47,000 sq km (18,147 sq mi), extending 306 km (190 mi) ew and 145 km (90 mi) ns. Comparatively, the area occupied by Bhutan is slightly more than half the size of the state of Indiana. It is bordered on the e, s, and w by India and on the n and nw by China, with a total boundary length of 1,075 km (668 mi). The capital city of Bhutan, Thimphu, is located in the west central part of the country.

TOPOGRAPHY

Bhutan is a mountainous country of extremely high altitudes and irregular, often precipitous terrain, which may vary in elevation by several thousand feet within a short distance. Elevation generally increases from south to north. The mountains are a series of parallel northsouth ranges. The loftiest peaks, found in the Himalayan chain that stretches along the northern border, include Kula Kangri (7,554 m/24,783 ft) and Chomo Lhari (7,314 m/23,997 ft). Great spurs extend south from the main chain along the eastern and western borders. In the rest of the country are mainly ranges of steep hills separated by narrow valleys. Bhutan is drained by many rivers flowing south between these ranges and for the most part ultimately emptying into the Brahmaputra River in India.

CLIMATE

Because of the irregular terrain, the climate varies greatly from place to place. In the outer foothills adjoining the Indian plains, rainfall ranges from about 150300 cm (60120 in) a year; the forests are hot and steaming in the rainy season, while the higher hills are cold, wet, and misty. Violent Himalayan thunderstorms gave rise to Bhutan's Dzongkha name, DrukYul, which translates as "Land of the Thunder Dragon." Rainfall is moderate in the central belt of flat valleys (which have an elevation of 1,1003,000 m/3,50010,000 ft). The uplands and high valleys (above 3,700 m/12,000 ft) are relatively dry. There is less rainfall in eastern Bhutan. In general, the mountainous areas are cold most of the year. Temperatures there average 4°c (39°f) in January and 17°c (63°f) in July.

FLORA AND FAUNA

Dense jungle growth is characteristic at altitudes below 1,500 m (5,000 ft). Above that height the mountain slopes are covered with forest, including beech, ash, birch, maple, cypress, and yew. At 2,4002,700 m (8,0009,000 ft) are forests of oak and rhododendron. Above this level, firs and pines grow to the timber line. Primulas, poppies (including the rare blue variety), magnolias, and orchids abound.

The relative abundance of wild animals is attributed to the Buddhist reluctance to take life. In the lower parts of southern Bhutan, mammals include the cheetah, goral, sambar, bear, and rhinoceros; in the higher regions are snow deer, musk deer, and barking deer. Game birds include pheasants, partridges, pigeons, and quail.

ENVIRONMENT

The most significant environmental problems in Bhutan were soil erosion and water pollution. The erosion of the soil occurs because 50% of the land in Bhutan is situated on mountainous slopes which are subject to landslides during the monsoon season. Other contributing factors are overcutting of timber, road construction, and the building of irrigation channels. The nation has about 95 cu km of renewable water resources, but only 86% of all city dwellers and 60% of people in rural areas have pure drinking water.

The Manas Game Sanctuary is located along the banks of the Manas River in southeastern Bhutan. According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 21 types of mammals, 18 species of birds, 1 species of amphibian, and 7 species of plants. Threatened species included the tiger, snow leopard, Asian elephant, and wild yak.

POPULATION

The population of Bhutan in 2005 was estimated by the United Nations (UN) at 970,000, which placed it at number 151 in population among the 193 nations of the world. In 2005, approximately 4% of the population was over 65 years of age, with another 40% of the population under 15 years of age. There were 103 males for every 100 females in the country. According to the UN, the annual population rate of change for 200510 was expected to be 2.5%, a rate the government viewed as too high. The government lauched a campaign with the slogan "Small Family, Happy Family" to encourage broader use of contraception and lower the fertility rate, especially among adolescents. The projected population for the year 2025 was 1,432,000. The population density was 20 per sq km (53 per sq mi).

The UN estimated that 21% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 5.83%. The capital city, Thimphu (Tashi Chho Dzong), had a population of 35,000 in that year, and Phuntsholing had an estimated population of more than 18,000.

Some 93% of the population was rural in 2001. The laboring population is not gathered into towns but lives in the country-side in the vicinity of fortresses called dzongs. A dzong, the official center of a region or district, often houses substantial numbers of Buddhist monks. Many place names incorporate the word dzong, which means "castle-monastery."

MIGRATION

Bhutan opposes immigration and forbids the entry of new settlers from Nepal. Since 1959, when about 4,000 Tibetan refugees entered Bhutan, the border with Tibet has been closed to immigration. By 1980, most of the refugees had become citizens of Bhutan; the rest migrated to India. The border between Bhutan and India is open, and citizens of Bhutan are free to live and work in India. The net migration rate for 2005 was estimated as zero. The total number of migrants residing in Bhutan in 2000 was 10,000.

ETHNIC GROUPS

The Bhutanese are mainly of Tibetan stock, and are also known as Buotias; they account for approximately 50% of the population. The Ngalop (also called Bhote) are people of Tibetan origin who live in northern and western Bhutan; the Sharchop inhabit the eastern regions and also have ethnic affinities with the people of China's Tibetan region. Aboriginal or indigenous tribal peoples live in villages scattered throughout Bhutan and account for approximately 15% of the population. The Ngalops, Sharchops, and the indigenous tribal people are collectively known as Druk-pas. The remaining peoples are Nepalese settlers (about 35% of the population), living mostly in the south. These include a group known as the Lhotsampas. Some 85,000 were expelled to Nepal in 199293, and about 5,00015,000 more moved to India.

LANGUAGES

Four main languages are spoken in Bhutan. The official language is Dzongkha, a Tibetan dialect spoken mainly by Ngalop in the northern and western parts of the country. Bumthangkha, an aboriginal language, is spoken in central Bhutan, while Sharchopkha is spoken in eastern Bhutan. Both of these are used in primary schools in areas where their speakers predominate. The Nepalese largely retain their own language, Nepali.

RELIGIONS

About 75% of the Bhutanese practice Buddhism and about 25% practice Indian- and Nepalese-influenced Hinduism. While the law provides for religious freedom, Drukpa Kagyup, a branch of Mahayana Buddhism, is the state religion, and the law prohibits religious conversions. The Drukpa (people of the dragon), introduced from Tibet in the 12th century, dominates the collective life of the Bhutanese through a large clerical body estimated at more than 6,000 lamas or monks, centered in 8 major monasteries (dzongs ) and 200 smaller shrines (gompas ) scattered throughout the land. This sect incorporates both the ideology of the classical Buddhist scriptures and the indigenous pre-Buddhist animistic beliefs called Bon. The Ningmapa school of Mahayana Buddhism is also practiced, primarily in the eastern regions. The royal family practices a combination of Drukpa Kagyup and Ningmapa Buddhism. Most Ngalops are of the Drukpa Kagyup school; they hold a majority of positions in the government. The Sharchops are primarily of the Ningmapa school.

Among Hindus, the Shaivite, Vaishnavite, Shakta, Ghanapath, Paurinic, and Vedic schools are all represented. There are still a few Bon priests and followers in the country and there are small numbers of Christians, with worship practices generally limited to the family home.

The law provides for freedom of religion, but this right is some-what limited in practice. Proselytizing is prohibited and all religious organizations must have a license from the government in order to build a new place of worship. There have been reports of government discrimination against the Hindu Nepalese.

TRANSPORTATION

Traditionally, Bhutan's communications have been mostly with Tibet, through several strategic mountain passes. Most travelers continue to journey on foot or mounted on hardy ponies bred to withstand great altitudes and steep slopes. Goods are transported by porters or on pack animals. Many of the rivers are still crossed by native cantilever bridges of excellent construction.

Prior to the 196166 development plan, there were no surfaced roads in Bhutan. Since then, a network of roads and suspension bridges has been built by India. In 2002, there were about 3,285 km (2041 mi) of roads, including about 1,994 km (1,239 mi) of surfaced roads. Of the 186 suspension bridges projected in the 198187 economic plan, 102 were completed by 1985. There is bus service linking Paro Dzong and Tashi Gang Dzong with Indian border towns. In 2004 there were two airports, only one of which (as of 2005), had a paved runway. The national air carrier, Druk Airlines, began operations in 1983 with regular flights between Calcutta and Paro Dzong, the site of Bhutan's main airfield. In 2001, 35,100 passengers were carried on scheduled domestic and international flights.

HISTORY

Little is known of the history of Bhutan before the 17th century. Buddhism was originally introduced from India in the 8th century, although the Buddhism of today's Bhutan is very much Tibetan in character. The forebears of the Bhotes (or Bhotias) came from Tibet, probably in the 9th century, when Tibetans invaded the area and met little resistance from the indigenous Tephu tribe. In the middle of the fifteenth century, Shabdung Ngawang Nangyal, a Tibetan lama exercising temporal as well as spiritual power, united the country and built most of the fortified villages (dzongs ). His successors in power established a dual system, separating the temporal ruler (Desi or deb raja) and the spiritual ruler (Je Khempo or dharma raja).

The first recorded contact with the West occurred in 1772, when the British East India Company repelled a Bhutanese invasion of the princely state of Cooch Behar in India; they concluded a peace treaty two years later. During the 18th century and most of the 19th, British efforts to open trade with Bhutan proved futile, with the Bhutanese frequently attacking the relatively level areas of Assam and Bengal along their southern border. In 1865, the British finally defeated the Bhutanese, and Bhutan formally accepted a British subsidy of r50,000 a year, which was dependent upon their keeping the peace.

With British approval, Ugyen Dorji Wangchuk became the first hereditary king in 1907, replacing the temporal ruler. In 1910, the Punakha Treaty was concluded between the British Indian Government and Bhutan, under which British India agreed explicitly not to interfere in Bhutanese internal affairs, while Bhutan accepted British "guidance" in handling external mattersa role independent India assumed after 1947. A formal IndoBhutanese accord concluded in 1949 reaffirmed and amplified the earlier Punakha Treaty. Besides increasing Bhutan's annual subsidy to r500,000 and returning to Bhutan 83 sq km (32 sq mi) of territory around Dewangiri (wrested by the British in 1865), it made India responsible for Bhutan's defense and strategic communications, committing India to avoid interfering in Bhutan's affairs and affirming Bhutan's agreement to be "guided by the advice of" India in foreign affairs.

In 1959, China published maps of the Himalayan frontier with South Asia that showed as Chinese part of the territory claimed by Bhutan; Chinese representatives also asserted that Bhutan belonged to a greater Tibet. In response, Indian prime minister Jawaharlal Nehru warned that an attack on Bhutan would be deemed an act of war against India. Fighting between India and China in neighboring border regions in the fall of 1962 did not violate Bhutan's borders, although survivors from Indian army units decimated east of Bhutan straggled back to India through Bhutan.

In April 1964, the long-time prime minister, Jigme Dorji, was assassinated, revealing fissures among the ruling elite. The plotters who were caught were executed, including the deputy commander of the army; others fled to Nepal. In the 1960s, Bhutan's advance toward modernization and the end of its insularity were accelerated by economic plans prepared and underwritten by India.

Relations with Nepal have grown difficult since the late 1980s, due to a dispute with Nepal concerning Bhutanese refugees of Nepalese descent. The mostly Hindu "Nepali Bhutanese," comprising approximately a third of Bhutan's population, were granted citizenship in 1958. However, Bhutan changed its citizenship laws in the late 1980s, making the Nepali Bhutanese illegal immigrants. In 1990, the Bhutanese government expelled 100,000 Nepali Bhutanese, who fled to refugee camps in eastern Nepal. In 1993, Bhutan and Nepal established a Joint Ministerial Level Committee (JMLC) to address the issue of ethnic Nepalese refugees.

Nepalese activism, spearheaded by the Bhutan People's Party based in Nepal, continued through the early 1990s. It resulted in violence from both sides, and brought charges of violations of human rights against Bhutan's security forces. In 1996, "peace marches" of refugees from Nepal into Bhutan were met by force, and the marchers were deported by the Bhutanese police. The following year, the National Assembly adopted a resolution (later discarded) that prohibited family members of ethnic Nepalese refugees from holding jobs in the government or armed forces. The government also began resettling Buddhist Bhutanese from other regions of the country on land vacated by the refugees. In 1998, Foreign Minister Jigme Thinley took office with a mandate to settle the refugee issue. Although Bhutan and Nepal originally agreed in principal that the refugees be divided into four categories (1) bonafide Bhutanese; (2) Bhutanese émigrés; (3) nonBhutanese; and (4) Bhutanese who have committed crimes in Bhutan, the question of what to do with the more than 100,000 refugees living in the camps in Nepal remained unresolved.

At the 10th JMLC round of talks held in December 2000, negotiators created a Joint Verification Team (JVT) to interview and verify the status of the Bhutanese refugees, but by the 11th round of JMLC talks held in August 2001, the verification process was moving at a rate of only 10 families per day. In addition to the JMLC talks, Foreign Secretary Level talks (FSLT) were held in November 2001, at which differences between the Nepali and Bhutanese positions on the issue of categorization of the refugees were clarified: Nepal proposed to reduce the four categories to two (Bhutanese and non-Bhutanese), a plan that was rejected by Bhutan.

In October 2003, the Nepalese and Bhutanese governments agreed to repatriate approximately 70% of the refugees from the first of the seven camps to undergo the verification procedure. However, following an incident where refugees at one of the camps injured three Bhutanese inspectors, progress came to a halt in December 2004.

There have also been tensions between Bhutan and India's northeastern state of Assam. Two separatist groups from Assamthe United Liberation Front of Asom (ULFA) and the National Democratic Front of Bodoland (NDFB)maintain well-entrenched bases in Bhutan. The separatist Kamatapur Liberation Organization (KLO) from West Bengal state is there as well. Bhutan refrained from taking direct action against the Indian separatists for fear of retaliatory attacks on its nationals, but in late December 2002, the Bhutanese government announced it would use military might to remove the separatists from bases within its borders. The Assam government has blamed Bhutan for the rise in militancy in the region, and welcomed the government's decision to launch a military response.

Reforms introduced by King Jigme Singye Wangchuck in June 1998 mark a milestone in Bhutan's political and constitutional history. Continuing his efforts toward modernization, the king issued a royal edict relinquishing some of the monarch's traditional prerogatives and giving a greater role in Bhutan's administration to elected government officials.

On 3 December 2002, the king of Bhutan issued a first draft of a constitution for Bhutan including the option of impeachment of the king by a two-thirds majority of the National Assembly. The draft was scheduled to be discussed in the country's 20 districts before presented for ratification; the final document was released in March 2005. A referendum, which had not been scheduled as of 2006, would allow the citizens final approval.

Bhutan in June 1999 took major steps toward modernization, legalizing television and the Internet. The first Internet cafe opened in Thimphu in 2000 and the country's first university opened in 2003. A January 2005 agreement with India provided Bhutan the opportunity to link to Indian railways to Southern Bhutan. There is no internal rail system in Bhutan and foreigners are not permitted to travel to many of its areas in an attempt to minimize the effects of tourism on the local culture.

GOVERNMENT

Bhutan is an absolute monarchy, ruled by a hereditary king, the "Druk Gyalpo," who governs with the aid of a Royal Cabinet and a National Assembly (the Tshogdu). As of 2006, the king was Jigme Singye Wangchuck, who has ruled since 1972. In the past, the king appointed members to a Royal Advisory Council and to a Council of Ministers. Following the political reforms of 1998, however, these two councils were combined to form the cabinet. Th is body consists of six ministers elected by the National Assembly, six advisors also elected by the National Assembly, a member nominated by the king, and two representatives of the clergy.

The unicameral National Assembly (established in 1953), known as the Tshogdu, consists of 154 members. Of these, 37 are appointed by the king to represent government and other secular interests; 105 are elected to threeyear terms by groups of village headmen, who are, in turn, elected by a onefamily, one-vote system; and the remaining 12 are chosen by the lamas acting in concert. The Tshogdu meets twice a year at Thimphu, the capital (previously known as Punakha). Candidates file their own nominations. The assembly is charged with addressing the king on matters of national importance. It also enacts laws and approves senior government appointments. A simple majority is needed to pass a measure and is conducted by secret ballot. While the king may not veto legislation, he may return bills for further consideration; the king generally has enough influence to persuade the assembly to approve legislation he considers important or to withdraw proposals which he opposes. Since 1969, it has become a more active, independent influence on government policy through its power to overrule bills proposed by the king or his advisors.

During the 1960s, King Jigme Dorji Wangchuk (r.195272) was a prime mover behind political and administrative changes that took the country in the direction of constitutional monarchy. When Crown Prince Jigme Singye Wangchuk assumed the throne upon his father's death in July 1972 and was crowned in June 1974, he continued his father's policy of sharing authority with the Council of Ministers and the National Assembly. In 1998, the king announced ambitious political changes that moved Bhutan further down the road towards a true constitutional monarchy. He relinquished his role as Head of Government and assigned full executive powers to a cabinet consisting of ministers and advisors to be elected by the National Assembly (in reality, the National Assembly chooses from a list of nominees proposed by the king, who also retains authority relating to security issues). The Council of Ministers, a subgroup of the cabinet, elects one of its members on a rotational basis to serve a oneyear term as chairman. It is this official who is the Head of Government. As part of his reforms, King Jigme Singye Wangchuk also introduced legislation by which any monarch would have to abdicate in favor of his hereditary successor if the National Assembly supported a vote of no-confidence against him by a two-thirds majority. And in December 2002, the king issued a draft for a first constitution for Bhutan; it was debated in the country's 20 districts before being officially presented in March 2005. As of 2006, no ratification referendum had been scheduled.

POLITICAL PARTIES

The government discourages political parties and none operate legally. Freedom of speech, the press, assembly, association and workers' rights are restricted by the government, and judicial processes are based on tradition rather than written criminal or civil procedure codes.

An opposition group known as the Bhutan State Congress (BSC) composed mainly of ethnic Nepalese has long maintained its headquarters in nearby India; other such groups, all very small and headquartered in either India or in Nepal, include the People's Forum for Democratic Rights and the Students' Union of Bhutan. A militant opposition group, operating under the banner of the Bhutan People's Party (BPP) and affiliated with the Bhutan National Democratic Party (BNDP) in Nepal, was founded in 1990 in Siliguri, India. It claims to represent the interests of the thousands of ethnic Nepalese who have migrated (or been forced to flee) from farming areas of southern Bhutan. Allegedly supported by the Communist Parties of India (CPI) and Nepal (CPN), the BPP was responsible for demonstrations in September 1990 in Bhutan; it has charged the Bhutan government with human rights violations and "ethnic cleansing" in the area.

BPP tactics in 1991 and 1992 included hit-and-run terrorist raids into Bhutan, burning schools, census and land records, and health facilities and attacking ethnic Bhutanese (as well as loyal Nepalese) in national dress; BPP activists also organized camps for the tens of thousands of refugees in southern Nepal. In 1992, Bhutan government policy toward the terrorist attacks stiffened, with arrests and long prison sentences meted out to captured BPP activists. The conflict continued throughout the 1990s. On 9 September 2001, BPP leader R. K. Budhathoki was assassinated, weakening the BPP. The BPP in October 2002 requested that Bhutanese authorities dispense justice in the case.

LOCAL GOVERNMENT

The country is divided into four regionsEast, Central, West, and Southeach administered by a governor appointed by the king. As of 2002 there were 20 districts (dzongkhas ) under the supervision of district commissioners (dzongdas ), who are appointed by the Royal Civil Service Commission and are responsible for law and order. Districts are further subdivided into blocks (gewog ), of which there are 202 in the country. As part of the king's efforts to encourage decentralization in decision-making, in 1991 the government began a program to establish Block Development Committees. This project allowed people to plan and implement development projects within their respective blocks (in the 1980s, a development plan was organized for the districts). The success of the district and block development programs encouraged citizens to form other types of associations, such as school management boards, village health development committees, and associations for different agricultural products, such as apples and potatoes, for example.

JUDICIAL SYSTEM

The legal system is based on English common law and Indian law. Local headmen and magistrates (thrimpon ) hear cases in the first instance. Appeals may be made to a six-member High Court (also known as the Royal Court of Justice), established in 1968. From the High Court, a final appeal may be made to the king. Judges are appointed for life by the king. Criminal matters and most civil matters are resolved by application of the 17th century legal code as revised in 1957. Precedence is not used in the delivery of justice. Questions of family law are governed by traditional Buddhist or Hindu law. Minor offenses are adjudicated by village headmen. Criminal defendants have no right to court appointment of an attorney and no right to a jury trial. Under the 1979 Police Act, police need a warrant to arrest a person and must bring the detainees before a court within 24 hours of arrest. Bhutan does not accept the compulsory jurisdiction of the International Court of Justice.

In keeping with the policies of modernization being pursued in Bhutan, the government formed a special committee in 1998 to review the country's laws and propose changes in the legal system. One of these changes saw the creation, in April 2000, of a Department of Legal Affairs to investigate and prosecute criminal and civil cases against civil servants. This department was predicted to be the likely forerunner of a fully fledged Attorney General's office or a Department of Justice. In 2001, a Civil and Criminal Procedure Code was enacted by the National Assembly, as a way of strengthening and reforming the legal system.

In addition, in 2003, the king approved the establishment of a five-member National Judicial Commission to oversee the appointment of judges and other judicial staff. The government prohibits collective bargaining, unions, and strikes. Capital punishment was abolished in 2004 and a new penal code was established in August of that same year.

Bhutan is a member of many international organizations including the United Nations.

ARMED FORCES

The armed forces consist of the Royal Bhutan Army, the National Militia, the Royal Bhutan Police, body guards, and a paramilitary force. The army is trained and equipped by India. In 2001 military expenditures were $9.3 million, or 1.9% GDP.

INTERNATIONAL COOPERATION

Bhutan became a UN member on 21 September 1971; it participates in several specialized agencies of the UN, such as the FAO, ICAO, IDA, IFAD, IMF, ITU, UNESCO, the World Bank, UNIDO, and WHO. Bhutan is an observer in the WTO. The country also belongs to the Colombo Plan, the Asian Development Bank, the SACEP, and G-77. In addition, Bhutan is a member of the Nonaligned Movement and was a founding member of the South Asian Association for Regional Cooperation (SAARC). Bhutan is part of the South Asian Free Trade Agreement (SAFTA). In February 2004, Bhutan joined the Bangladesh, Indian, Myanmar, Singapore, and Thailand Economic Cooperation Forum (BIMSTEC). In environmental cooperation, Bhutan is part of the Convention on Biological Diversity, the Kyoto Protocol, the Nuclear Test Ban Treaty, and the UN Convention on Climate Change.

ECONOMY

Bhutan, a tiny Himalayan kingdom with a geographic size that is about half that of the state of Indiana, has one of the smallest and poorest economies in the world. Nevertheless, international lending authorities such as the International Monetary Fund (IMF) were optimistic about the country's growth potential for the first decade of the 21st century. The IMF projected that GDP would grow as much as 20% in 2006/07 and that growth rates for the rest of the decade would remain at a healthy 910%.

About 90% of its labor force subsists by farming or forestry. Much of the country consists of rugged, mountainous terrain, which has made development of roads, utilities and other infrastructure difficult. Bhutan depends heavily on neighboring India for migrant labor, foreign aid, and trade.

Until the early 21st century, Bhutan was largely sealed off from the rest of the world. The kingdom banned television and kept foreign travel to a minimum. This situation changed after 1998, when King Jigme Singye Wangchuck, who has ruled Bhutan since 1972, began taking steps to devolve power and shift the country's governance toward one of constitutional monarchy. A new constitution was unveiled in March 2005. Although it had not been approved by referendum as of 2006, it calls for universal suffrage, a two-party electoral system, and a mandatory retirement age of 65 for the king. Many observers praise the steps as measures that will pave the way for more contact with outsiders and economic development.

As of the early 2000s, Bhutan was becoming less isolated. Foreign travelers, who are environmentally conscientious and capable of spending as much as $200 a day, can visit the country. Cable television and the Internet are permitted, and the country shows potential in hydropower and further tourism development. However, Bhutan contains to keep a tight grip on development. Any economic program is only allowed to proceed if it is in keeping with the country's environmental and social traditions.

Agriculture and forestry together make up 45% of the country's GDP. Although the government has relaxed the emphasis on maintaining food self-sufficiency that characterized its most isolationist decade, 1988 to 1998, the country supplies most of its food needs through the production of grains, fruits, some meat, and yak butter. Services, with tourist-related business comprising a major share, account for a further 35% of GDP. By the mid-1970s, tourism had surpassed the sale of postage stamps as the chief source of Bhutan's limited foreign exchange revenue. In turn, since the completion the first mega hydroelectric project in 1988, power exports have become the leading source of a more comfortable hard currency position. Industrial production makes up about 10% of the country's GDP.

A series of five-year plans, initiated in 1961 and financed primarily by India, have begun to improve transportation, modernize agriculture, and develop hydroelectric power. Realization of several hydroelectric and industrial projects during the 1980s helped increase industry's share of the GDP, and helped overall GDP grow 7.3% annually during 198590. A slowdown in government project investment in the early 1990s caused GDP growth to stabilize at an average of 3%, although an upturn in economic activity brought the rate back up to 6% by 1995 and to 7.3% by 1998. In 1999, real GDP growth dropped to 5.5%, but recovered to around the long-term average of 6% in 2000 and 2001. GDP was at 5.3% in 2003, according to the US Central Intelligence Agency (CIA), but the rate was projected to climb to more than 7% in 2004 and 2005 by the International Monetary Fund (IMF).

Bhutan's extensive forests, mineral resources, and swif-trunning rivers offer great potential for future development, although preservation of the country's environment continued to rank high among the government's priorities. Concern over the environment has also led the government to impose a strict set of regulations on tourists, although they are no longer subject to strict quotas that in the past held tourists to 2,500 to 4,000 a year, and banned individual tourism altogether. In 2002, tourism had climbed to about 7,000 visitors a year.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Bhutan's gross domestic product (GDP) was estimated at $2.9 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $1,400. The annual growth rate of GDP was estimated at 5.3%. The average inflation rate in 2002 was 3%. It was estimated that agriculture accounted for 45% of GDP, industry 10%, and services 45%.

LABOR

About 93% of the economically active population consisted of agricultural workers in 2002, with 5% employed in services and the remaining 2% in industry and commerce. There is a severe shortage of skilled labor. The salaried labor market is predominantly in government service. Most of the industrial sector consists of home-based handicrafts and privately owned small or medium-scale factories producing consumer goods.

As of 2002, Bhutan had a government-set minimum wage of approximately $2.50 per day, which provided a decent standard of living for a family. The workday was set at eight hours per day, with one hour for lunch. In addition regular leisure days are required and overtime work is paid at a time-and-a-half rate. Although there is no minimum age for employment, the age of 18 was established "in all matters of the state." However, minors under the age of 18 frequently work in agriculture, perform chores on family farms and in shops during holidays and after school. While unions are not illegal, collective bargaining or the right to strike are not authorized by the law. Labor regulations do not provide a worker with the right to remove themselves from hazardous conditions without jeopardizing their employment. The government provides free medical care to workers and compensation in the event of partial or total disability, or in the case of death.

AGRICULTURE

Only about 3.5% of the land area, comprising 165,000 hectares (408,000 acres), was used for seasonal and permanent crop production in 2002. In 2003, agriculture contributed about 33% to GDP, and engaged 94% of the economically active population. Nonetheless, Bhutan's near self-sufficiency in food permitted quantities of some crops to be exported to India, in exchange for cereals. Since there is little level space available for cultivation, fields are generally terraced. Stone aqueducts carry irrigation water. The low-lying areas raise a surplus of rice; in 2004, output of paddy rice was estimated at 45,000 tons. Other crops include wheat, maize, millet, buckwheat, barley, potatoes, sugarcane, cardamom, walnuts, and oranges. Part of the crop yield is used in making beer and chong, a potent liquor distilled from rice, barley, and millet. Paper is made from the daphne plant, which grows wildly. Walnuts, citrus fruits, apples, and apricots are grown in government orchards.

Agricultural holdings are restricted to 12 hectares (30 acres) per family; almost all farm families own their own land. Since the mid-1960s, the government has established demonstration farms, distributed fruit plants, and implemented irrigation schemes. High-yielding varieties of rice, wheat, and corn seeds have been introduced.

ANIMAL HUSBANDRY

Yaks, cattle, and some sheep graze in the lowland forests and, during the summer, in the uplands and high valleys. In 2004 there were an estimated 372,000 head of cattle, 41,000 hogs, 20,000 sheep, and 30,000 goats. Draft animals that year included 28,000 horses, 18,200 donkeys, and 9,900 mules. Meat production in 2004 was estimated at 6,900 tons, 74% of it beef. Wool has been in short supply since its importation from Tibet was stopped by the government in 1960; sheep breeding is therefore encouraged. In 2004, 1,080 tons of cattle hides were produced.

FISHING

The government has established a hatchery and started a program of stocking Bhutan's rivers and lakes with brown trout. Freshwater fish are found in most waterways. The total catch was 300 tons in 2003.

FORESTRY

About 64% of Bhutan's land area was covered with forests in 2002. Although lack of transportation facilities has hampered forest development, timber has become a major export. Roundwood production in 2003 totaled 4.5 million cu m (160 million cu ft), about 99% of which was used for fuel.

MINING

The mineral industry of Bhutan was small and dominated by the production of cement, coal, dolomite, and limestone, and was insignificant to its economy. Estimated production totals, in metric tons, for 2004 were: limestone, 288,000; dolomite, 275,000; cement, 170,000; gypsum, 56,000; quartzite, 55,000; ferrosilicon, 20,000; and talc, 3,900. Marble and slate were quarried for use as a dimensional stone; production totals in 2004 were estimated at 4,000 and 9,000 sq m, respectively. Dolomite has constituted an important export to India since 1960, and almost all the ferrosilicon output is exported to India. For centuries, silver and iron have been mined in Bhutan for handicrafts. Deposits of beryl, copper, graphite, lead, mica, pyrite, tin, tungsten, and zinc have also been found. A graphite-processing plant was established at Paro Dzong.

ENERGY AND POWER

Electric power was introduced in Bhutan in 1962. By the mid-1980s, six hydroelectric and six diesel power stations were in operation. The 336-MW Chukha hydroelectric project, in south-western Bhutan, was completed in early 1987 and is connected to the Indian power grid; the project was funded by India, which is to receive all the electrical output not used by Bhutan. As of 2002 the major hydroelectric project under construction was the 1,020 MW Tala plant, slated for completion in 2004/05. In 2002, Bhutan's electric power generating capacity totaled 0.442 million kW, of which 0.430 million kW was hydroelectric and 0.012 million kW thermal. In that same year, Bhutan produced a total of 1.880 billion kWh of electricity from hydroelectric sources and only 0.001 billion kWh from thermal sources. In 2002, electric power consumption totaled 0.277 billion kWh. Bhutan suffers frequent power outages and shortages.

INDUSTRY

The US Central Intelligence Agency (CIA) describes Bhutan's industrial sector as "technologically backward." However, great strides have been made in the country's hydroelectricity sector in the early 21st century. Most industrial production is craft-based, with homespun textileswoven and embroidered cottons, wools, and silksbeing the most important products. Other Bhutanese handicrafts include daphne paper; swords; wooden bowls; leather objects; copper, iron, brass, bronze, and silver work; wood carvings; and splitcane basketry.

Larger development projects such as road building and hydro-electricity projects rely on financing from Indian investors, as well as Indian migrant laborers. The building of new power projects, however, also has led to growth in the transport and construction sectors, including a number of local cement operations. The country's first cement plant was completed in 1982 in Penden, a border town, by India, to which the bulk of its output is exported. Bhutan's first mega power plant, the 336-MW Chukha hydroelectricity project (CHEP), came on line in early 1987, having been first agreed to as a turnkey operation with India in 1961, on what has become a standard arrangement of 60% grant and 40% concessional loan. 70% of the power generated by the CHEP is exported to India, and by 1996 export receipts were sufficient to produce a trade surplus with India. It is estimated that only about 3% of Bhutan's hydroelectric potential has yet tapped, and even less of its industrializing potential.

The decade following the opening of the Chukha facility (198898) saw government resistance to industrialization. However, in 1988, in conjunction with the country's sixth economic plan (19871992), the Bhutan Development Finance Corporation was established to promote small-and medium-scale businesses. A second cement plant was established in Nanglam by the late 1980s, and another, in 1995, in the same town, by an Indian investor, along with several manufacturing plants producing carbide, particle board and other products destined for the Indian market.

A major project funded by India known as the 1020 MW Tala Hydroelectric Project was begun in 1998. It was expected to become fully operational in 2006, and with it, growth rates in GDP of 20% were anticipated. Plans for the even more ambitious Sunkosh Multipurpose Project (SMP), with installed capacity envisioned at 4,060 MW, were developed by the India's Central Water Commission in 1997. It is expected to take 10 years to complete. Two other projects that have been submitted to government of India for consideration are a 360 MW plant at Mangdue Chu and a 870 MW plant at Puna Tsangchhu.

There are a large number of small, privately owned sawmills throughout Bhutan since most of its domestic energy actually comes from firewood, not electricity. A sawmill with a furniture-making unit has been established in Thimphu. Industrial estates have been set up at Phuntsholing and Geylegphug, and the ninth five-year plan (200206) called for five to be located around the country.

Besides cement, there is a narrow range of other manufactures exportedferro-alloys, calcium carbide, processed foods, and particleboardwhich tend to rely on energy-and capital-intensive methods and expatriate labor. Bhutan Ferro Alloys Ltd., which makes ferrosilicon and exports to India and Japan, began operations at a new plant at Pasakha in April 1995. Calcium carbide is produced at several private dolomite-mining operations, as well a private and joint public-private limestone mining operations. It is likely that with the emphases in the ninth five-year plan on commercial and private sector development as means of achieving economic self-sufficiency and generating employment, manufacturing will continue to grow.

SCIENCE AND TECHNOLOGY

Royal Bhutan Polytechnic College, founded in 1974 in Deothang, offers courses in civil, mechanical and electrical engineering. The Royal Technical Institute in Phuntsholing offers courses in electronics, mechanics, and motor mechanics. Sherubtse Degree College, founded in 1983 in Tashigang, offers science courses.

DOMESTIC TRADE

About 90% of the population is employed in agriculture. Home-made handicrafts, cement, and food processing are the primary industries. Retail sales are carried out mainly in small, local bazaars. Bartering is common at the local level, with grains, butter, and cloth being the principal commodities of exchange, although Indian and Bhutanese currencies are increasingly being employed.

Indian traders sell imported articles and buy a number of handicraft items for export to India. The ninth five-year plan (200206) for the first time envisions plans for each of Bhutan's 201 localities or geogs. Through this approach, the government hoped to enhance rural connectivity and economic activity while putting a check on rural to urban movement.

FOREIGN TRADE

Bhutan's external sector has been almost exclusively oriented toward trade with India. With the completion in 2002 of the second hydroelectric power project financed by Indiabuilt largely with Indian migrant labor and designed to deliver the majority of its power outputs to IndiaIndia's dominance in terms of exports was about 85.6% in 2004. Import sources, however, have become increasingly diversified. In 2000, for instance, the main export destinations were India (94%) and Bangladesh, and the main import sources were India (77%), Japan, United Kingdom, Germany, and the United States. By 2004, the statistics on exports destinations revealed shifts, to India (85.6%), Bangladesh (6.7%), and Japan (4.3%). Imports that year came from Germany (41.8%), India (35.5%), Japan (9.2%), and Austria (4.3%).

Bhutan's merchandise trade balance has been persistently negative, although for three years, 1996, 1997, and 1998, the country registered a surplus in its trade with India due to the combination of power exports and the lack, until 1998, of major construction projects. With the start of construction on the Tala Hydroelectric

Country Exports Imports Balance
World 116.0 182.1 -66.1
India 109.5 136.0 -26.5
Bangladesh 4.9 0.7 4.2
Nepal 0.6 0.6
United States 0.6 0.5 0.1
Japan 0.1 6.1 -6.0
Netherlands 0.1 0.2 -0.1
Other Asia nes 0.1 0.7 -0.6
() data not available or not significant.

Project (THEP) in 1998, scheduled to be online with a 1020 MW capacity in 2006, Bhutan has incurred large and increasing trade deficits. As a percent of GDP, Bhutan's trade deficit increased from a low of 4.3% in 1996 to 40% by mid-2000 and 90% in 2004. The 2004 trade deficit was estimated at $188 million for 2004/05 by the IMF, with $123 million project for 2005/06.

Bhutan's principal exports include electric power (to India), cement, cardamom, timber, gypsum, dolomite, coal, handicrafts, fruit, vegetables, precious stones, spices, ferrosilicon, calcium carbide, particle board, some preserved food, alcoholic beverages, yak tails for fly whisks, and yak hair. The country's principal imports are fuel and lubricants, grain, machinery and parts, vehicles, fabrics, and rice.

The government has been trying to increase Bhutan's presence on the international trade scene in recent years. To this end, Bhutan joined the IFC in December 2003, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) in February 2004 and held its first WTO working party meeting in November 2004. The IMF also noted that the financial sector was being upgraded through a series of measures in mid-2005.

BALANCE OF PAYMENTS

The IMF reported in 2005 that while steady inflows of aid helped Bhutan maintain a surplus in balance of payments. Although a trade deficit persists, the IMF calls the country's fiscal position "sustainable."

Foreign reserves grew in 2004 and 2005, and covered more than 18 months of import costs as of mid-2005.

The IMF reported that in 2003/04, Bhutan's exports totaled $158 million, while imports totaled $245 million, resulting in a trade deficit of $73 million. Imports were projected to outpace exports in 2004/05 and 2005/06, as Bhutan brought in equipment and additional supplies in efforts to bring the Tala power plant on line by 2006.

BANKING AND SECURITIES

Bhutan's central bank is the Royal Monetary Authority, established in 1982 to manage currency and foreign exchange. There are in addition four other major financial institutions. The Bank of Bhutan was founded in 1968 as a joint venture with India. A second commercial bank, the Bhutan National Bank (BNB), was established in 1997 as a public corporation, though the government retains 51%. The BNB's operations are computerized and it is connected with major foreign banks, unlike the Bank of Bhutan, which still uses handwritten ledgers. The Bhutan Development Finance Corporation (BDFC) was set up in 1988 to finance small and medium enterprises. The small Royal Bhutan Stock Exchange (RBSE) currently trades about 13 companies.

In 2001 there was a reduction of interest rates in all lending categories and on large deposits. There are no ATMs, and banking hours are mostly restricted to 9 am to 1 pm Monday to Friday, and 9 am to 11 am on Saturday, but there are some "evening banks" in Thimphu and Phuentsholing with hours between 1 to 5 pm Wednesday and Sunday, 1 to 3 pm on Monday, and closed on Tuesday. Gross foreign currency reserves reached $300 million in 2001. The International Monetary Fund reports that in 2001, currency and demand depositsan aggregate commonly known as M1were equal to $107.2 million. In that same year, M2an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual fundswas $227.1 million.

INSURANCE

The Royal Insurance Corporation of Bhutan (RICB), founded by royal charter in January 1975, is the only insurance company in the kingdom and covers all classes of insurance. The government owns 39.25% while private and public shareholders own 60.25%. The RICB's 2000 shareholder are comprised primarily of civil servants and members of the business community. The Royal Insurance Corporation of Bhutan has reinsurance arrangements with ten companies in India, Japan, Thailand, Hong Kong, Nepal, Bangladesh, and Germany.

The use of insurance, however, is limited. In 2001, there were 15,259 policy holders of general insurance, and only 4,650 holders of life insurance, the latter figure up from 114 in 1975. Within the terms of its own business, the RICB has had a steady growth in profit and assets over its 27 years of operation, but it also manages, under a Memorandum of Understanding (MOU) with the government, the rural house insurance scheme which it operates as a social welfare program in accordance with the terms of the MOU. In 2001, the rural house insurance scheme covered 31,172 permanent rural houses and 21,407 semipermanent houses for fire, earthquake, flood, landslide, and storm, all of which are common events in Bhutan. The scheme was revised in January 2000 to give compensation of n100,000 (about us$2,150) for a permanent house with an annual premium of n150 (about us$3.23), and n40,000 (about us$860) for a semipermanent house with an annual premium of n60 (about us$1.30). Claims have increased considerably since the revision. In 1999, under the previously less generous scheme, claims were n2.425 million (about us$52,000) against premiums of n1.77 million (about us$25,312), where as by 2001 claims had risen to n11.292 million (about us$243,000) against premiums of n5.98 million (about us$128,000). The ratio of claims to premiums improved somewhat, from 2:1 in 1999 to 1.89:1 in 2001.

PUBLIC FINANCE

The largest category of annual current expenditure is public works, which presumably includes the maintenance of monasteries. Most of the annual budget deficit is covered by grants from India and from the UN and other international agencies. By 1996, Bhutan had achieved self-sufficiency in current expenses, thanks primarily to revenues from the Chhukha power project, Bhutan's largest hydro-electric plant.

The US Central Intelligence Agency (CIA) estimated that in FY95/96 Bhutan's central government took in revenues of approximately $146 million and had expenditures of $152 million. Revenues minus expenditures totaled approximately -$6 million. Total external debt was $245 million.

The International Monetary Fund (IMF) reported that in 2004, the most recent year for which it had data, central government revenues were n10,158.3 million and expenditures were n11,274.8 million. The value of revenues was us$224 million and expenditures us$249 million, based on an official exchange rate for 2004 of us$1 = n45.317 as reported by the IMF. Government outlays by function were as follows: general public services, 25.2%; public

Revenue and Grants 10,158.3 100.0%
     Tax revenue 3,092.5 30.4%
     Social contributions
     Grants 4,973.6 49.0%
     Other revenue 2,092.2 20.6%
Expenditures 11,274.8 100.0%
     General public services 2,839.6 25.2%
     Defense
     Public order and safety 538.3 4.8%
     Economic affairs 3,807.9 33.8%
     Environmental protection
     Housing and community amenities 771.7 6.8%
     Health 1,220.7 10.8%
     Recreational, culture, and religion 183.2 1.6%
     Education 1,913.4 17.0%
     Social protection 0.0%
() data not available or not significant. f = forecasted or projected data.

order and safety, 4.8%; economic affairs, 33.8%; housing and community amenities, 6.8%; health, 10.8%; recreation, culture, and religion, 1.6%; and education, 17.0%.

TAXATION

The corporate income tax (CIT), excises taxes, taxes on real estate income, and nontax revenues (particularly power tariffs on the export of electricity to India) were the main sources of domestic revenue in 2001. The power tariff, at Bhutan's insistence, was doubled to r1 (about $0.028) per unit on 1 April 1997, and then raised 50% to r1.5 (about $0.034) per unit 1 July 1999. The business income tax (BIT) accounted for only about 5% of revenue in 2001 because of the weakness of the private sector. In January 2003, the government introduced a personal income tax (PIT) for individuals with taxable incomes above n100,000. The PIT is expected to raise only n110 million (or about 1%) of the 200103 budget of n11,184.6, but at this stage the government considers the social benefits of the PITreducing income disparities and instilling a sense of responsibilityto be more important than its revenue contribution. In July 2002, the government launched the Pension and Provident Fund Plan, a scheme converting the social security system to a pension plan to provide retirement benefits for civil servants, corporate employees, and the armed forces

External assistance continued to provide the bulk of Bhutan's development budget, but since 1996 domestic revenues have covered current expenses. In 2001, domestic revenues also covered a portion of the capital budget. A major goal of the ninth five-year plan (200206) is the increase of domestic revenue through taxes. In 200203, it is projected that for the first time tax revenues will exceed nontax revenues. Tax revenues are expected to come to 12% of GDP and nontax revenues to 8% of GDP.

CUSTOMS AND DUTIES

Under the Indo-Bhutanese Treaty of 1949, goods pass from one country to another without payment of customs duties. Bhutan currently has observer status with the World Trade Organization (WTO). In 1999, the WTO accepted Bhutan's application for accession. However, as of December 2002, Bhutan had not provided the WTO with the required memorandum on its foreign trade regime, the next step in the process of negotiating an accession. In 2002, the government identified a site in Phuentsholing for the construction of a dry port to expedite export and import formalities and revised some of its more restrictive import rules.

FOREIGN INVESTMENT

The CIA notes that Bhutan's isolationism hampers foreign investment. The kingdom's policies on industrial licensing, trade, labor, and finance are often overly detailed and subject to change.

Foreign investment comes primarily from India, and is carried out within the context of Bhutan's special relationship with India. Bhutan's first two five-year plans in the 1960s were 100% financed by India. Since then, Bhutan has relied on an increasingly diverse set of countriesAustralia, Austria, Finland, Denmark, Japan, the Netherlands, Norway, Canada, Switzerland, Germany, Italy, New Zealand, Italy, New Zealand, Sweden, South Korea, South Korea, the United Kingdom, and the United Statesand multilateral institutionsthe United Nations (UN), the World Bank, and the Asian Development Bank (ADB)to provide capital on a concessional basis, though India remains the dominant source.

On private foreign investment, the government's stance is that foreign direct investment (FDI) it is becoming increasingly necessary to meet the country's employment and self-sufficiency goals. FDI is now permitted in certain sectors, including tourism where joint ventures with international hotel and resort chains are being pursued.

ECONOMIC DEVELOPMENT

One of Bhutan's greatest challenges will be creating jobs for its growing population of youths. Much of the educated workforce has been employed traditionally by the public sector; however, the IMF encourages the nation to encourage more private-sector development to avoid the potential of unemployment. Progress in this respect, however, may be slow. Bhutan lacks railroads, helicopters, domestic airlines, and modern conveniences like automated teller machines. What hydroelectricity it produces is mainly for export. In addition, Bhutan embarked on its ninth five-year plan in 2002 with a goal of seeking "gross national happiness," not gross national income, and while this strategy is in keeping with the country's Buddhist traditions, it does risk an economic crisis down the road. Bhutan's leaders remain cautious about future development; they have emphasized a maintenance of culture and protection of environment over modernization.

Bhutan also faces a public debt that was nearly as large as its entire GDP in late 2004/5. Much of the debt resulted from investments in hydropower, and is expected to be paid off through revenue that will come from exporting electricity to India.

Despite Bhutan's growth in the early 21st century, poverty in the country remains high. The nation conducted its first Poverty Analysis Report in 2004, and found that 32% of its population was living below the poverty line, which the IMF has tagged as a concern. Many of those who fall below the poverty line are residents of Bhutan but, because they are not ethnic Bhutanese, are not recognized as citizens of the kingdom. More than two-thirds of the population lacks electricity, though a rural electrification effort was scheduled to bring electricity to the full country by 2020.

Structural reforms since 1998 showed promise of further moving Bhutan into a more modernized economy. The ninth fiscal year plan (200206) promised a continuation of the same moderate progress, with more intensive rural development. The prospect was for Bhutan to continue to proceed at its own restrained pace.

SOCIAL DEVELOPMENT

There is no national social welfare system, although the government implemented a modest maternal and child welfare program in the early 1980s, including family planning. The sick, indigent, and aged are cared for within the traditional family structure.

Bhutan's culture does not isolate or disenfranchise women. Dowry is not practiced, and land is divided equally between sons and daughters. Girls receive nearly equal educational opportunities, and, while accorded a lower status than boys, they are cherished because they are the ones who care for parents in old age. As of 2004 women made up approximately 30% of the workforce. Polygamy is legal, but only with the consent of the first wife. The law clarifies the definition of sexual assault and imposes harsh penalties. There is no societal pattern of spousal or child abuse.

A pattern of discrimination against the minority Hindus of Nepalese origin exists. Nepali is no longer taught in schools, and national dress is required for official occasions. While this policy has lead to the cultural repression of Hindus, it has also contributed to a growing number of Nepalese obtaining employment in the public sector and in government.

Although there were some improvements in 2004, human rights are restricted by the government. The king exercises control over the government, security forces, and the judiciary. Abuses include violence against Nepalese refugees and arbitrary arrest and detention.

HEALTH

Bhutan suffers from a shortage of medical personnel with only 65% of the population having access to any form of medical care. In 2004, there were an estimated 5 physicians, 23 nurses, and 56 midwives per 100,000 people.

The average life expectancy in 2005 was only 52.7 years. The infant mortality rate was 100 per 1,000 live births for that year. Approximately 38% of children under five were underweight. It was estimated that 2% of married women (1549 years) were using contraception. The fertility rate was reported as 5.2 per woman in 1999.

Immunization rates for children up to one year old were: tuberculosis, 81%; diphtheria, pertussis, and tetanus, 79%; polio, 77%; and measles, 82%. Although smallpox has been wiped out, malaria, tuberculosis, and venereal disease remained widespread. Bhutanese refugees in the eastern Nepal region have high rates of measles, cholera, tuberculosis, malaria, diarrhea, beriberi, and scurvy. The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 100 people living with HIV/AIDS in the country.

HOUSING

Though a small number of urban settlements have been developed over the past few years, most of the population (80%, 2001 est.) lives in rural areas, many on small family farms. It is, however, expected that the urban population will grow by about 50% over the next two decades, an estimate that has the Beninese government taking a harder look at options for new and improved housing construction and utility services. As of 2002, the housing shortage has been most serious in urban areas, where most housing is rental property. It was estimated that in Thimphu alone, 600 new dwellings would need to built each year in order to keep up with rapid population growth. In 2002, about 10% of the residents of Thimphu were living in hut villages and squatter settlements.

The Municipal Act of 1999 was established to decentralize control of housing and utilities, resulting in greater service and improved plans for the future. As part of the government's socio-economic development policy, all homeowners are eligible for assistance through subsidized timber purchases and group fire insurance. The government has also established the National Committee on Human Settlements to oversee projects for urban development.

Traditional houses are built of stone set in clay mixed with small stones and made into blocks or layers. Roofs are gently inclined and formed of pine shingles kept in place by heavy stones. As of 2000, 80% of urban and 60% of rural dwellers had access to improved water supplies, while 65% of urban and 70% of rural dwellers had access to sanitation services.

EDUCATION

A modern educational system was introduced in Bhutan in the 1960s. Prior to that, education was provided only by monasteries. In the interim, more than 340 schools and institutions of higher education have been established, including over 150 community schools to serve remote rural areas. However, many of these schools have no sanitation facilities, electricity, or drinking water, and students may have to walk several hours a day to get to them. A growing number of children are attending school, but over 50% still do not attend.

Primary schooling covers a seven-year course of study followed by two years of junior high. This is followed by either a general secondary program (four years of high school) or a technical course of study (three years at a technical center). In 2001, about 88,000 students were enrolled in primary schools and 26,000 were enrolled in secondary schools. The student-to-teacher ratio for primary school was at about 38:1 in 2003; the ratio for secondary school was about 34:1. Efforts have been made to improve the education of women, and girls account for 45% of primary school enrollment. However, the overall literacy rate for women is still very low and lags far behind that for men.

Bhutan's estimated rate of adult illiteracy for the year 2000 stood at 52.7% (males, 38.9%; females, 66.4%). The official language is Dzongkha (written in the Tibetan script). However, English is widely used.

In 1991, Bhutan had 209 schools altogether, including 22 monastic schools, schools for Tibetan refugees, and six technical schools. There was at the highest-level one junior college, two teacher training colleges, and one degree college which was affiliated to the university at Delhi in India. Many teachers from India are employed in Bhutan.

LIBRARIES AND MUSEUMS

The largest library in Bhutan is the National Library at Thimphu. This library boast of having one of the largest collections of Mahayana Buddhist literature in the world and also features a collection of over 10,000 xylographic or wood block prints. Jigme Dorji Wangchuck Public Library in Thimphu was the only public library in the country in 2005. Most of this library's 15,000-book collection consists of donated books from countries such as the United States. The vast majority of the books are in English. Located in Konglung, Sherbutse College Library holds 22,000 volumes. The National Institute of Education in Samtse, founded in 1968, holds 12,000 volumes, and the Royal Institute of Management in Thimphu holds 5,000 volumes. The Center for Bhutan Studies Library in Langjophakha has about 2,470 books. The India House Library contains about 7,000 volumes.

The National Museum of Bhutan opened to the public in 1968 at Paro Dzong, in a seven-story 17th-century fortress, featuring religious art objects reflective of Bhutan's unique Northern Buddhist culture, as well as historical objects. Some monasteries have valuable collections of Buddhist manuscripts and art objects.

MEDIA

International postal service was inaugurated in 1963; there are direct postal, telex, and microwave links to India. Telephone service is said to be very poor. In 2003, there were 25,200 mainline phones in use throughout the country. In 2005, there were an estimated 22,000 mobile phones in use.

In 2005, there was only one radio station, operated by the government-owned Bhutan Broadcasting Service (BBS). It includes broadcasts in Dzongkha, Nepali, English, and Sharchop. From 1989 to 1999, the government had imposed a ban on private television reception. Television broadcasting was reintroduced to the country in 1999. The same year, the government allowed for the licensing of cable companies. In there were three main television stations, one sponsored by BBS and two cable stations. In 2004, there were about 15,000 cable subscribers. Druknet, the nation's first Internet service provider was also established in 1999. By the end of 2003, there were about 15,000 subscribers, including Internet cafés in three major cities. In 1997, the country had an estimated 11 radios per 1,000 population.

A weekly government-subsidized newspaper, Kuensel, publishes simultaneous editions in Dzongkha, English, and Nepali, with a total circulation of about 15,000 as of 2004. This is the nation's only regularly published newspaper. Indian and other foreign publications are also available.

There are no legal provisions for the right of free expression in Bhutan; the government is said to restrict criticism of the King and government policies of the National Assembly.

ORGANIZATIONS

The Bhutan Chamber of Commerce and Industry is in Thimphu.

There are about 125 youth organizations throughout the country, which are affiliated through the Bhutan Youth Welfare Association (BYWA), established in 1985. The objectives of the BYWA are to preserve and promote the cultural and religious heritage of Bhutan and its national integration through the representation of youth to governmental authorities. Youth groups include Youths and Students Alliance for Human Rights and Democracy in Bhutan (YSAHRDB) and the Youth Organization of Bhutan, both of which focus on interests of peace and human rights. Scouting programs are available through Bhutan Scout Tshogpa. There are also sports associations representing several different pastimes, including tennis, tae kwan do, badminton, and track and field.

The National Women's Association of Bhutan is one of the few nongovernmental organizations officially registered in Bhutan. Other women's organizations, such as Bhutan Women and Children Organization and Refugee Women and Children Welfare Society have formed in exile. All of these are focused on the promotion human rights.

TOURISM, TRAVEL, AND RECREATION

In 1974, Bhutan opened its door to tourists, but strict entry regulations, the remoteness of the country, and relatively limited transportation facilities have restricted the number of visitors. Tourists may only enter as a member of an established tour group. An approved visa along with a valid passport is required of all visitors to enter Bhutan. The beautiful Thimphu, Paro, and Punakha valleys, with their many monasteries, are accessible to tourists. Visitors may also enjoy the intricate weavings found in high eastern mountain regions; kayaking down the Mochhu; or the archery competitions held during festivals.

In 2003, there were 6,266 foreign visitors, including over 2,500 visitors from Europe. There were 1,239 hotel rooms with 2,366 beds, and an occupancy rate of 25%. Travelers stayed an average of eight nights.

In 2004, the US Department of State estimated the cost of staying in Bhutan at $96.

FAMOUS BHUTANESE

Jigme Dorji Wangchuk (192872) instituted numerous social reforms during his reign as king of Bhutan. He was succeeded by his son Jigme Singye Wangchuk (b.1955).

DEPENDENCIES

Bhutan has no territories or colonies.

BIBLIOGRAPHY

Basu, Gautam Kumar. Bhutan: The Political Economy of Development. New Delhi: South Asian Publishers, 1996.

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