In a move that could reshape its economic landscape, Bhutan has announced the establishment of a new Special Administrative Region (SAR) in Gelephu, strategically located along its border with India. The announcement, made by King Jigme Khesar Namgyel Wangchuk during his National Day speech on 17 December, signals Bhutan’s intent to revitalize its economy by leveraging its geographical position to bridge South and Southeast Asian markets.
Mint explores what this means for Bhutan and the wider South Asian region, with a special focus on India’s role in this ambitious endeavour.
What exactly did the Bhutanese king announce?
In his address, the Bhutanese monarch revealed plans for developing a 1000 sq km area into “Gelephu Mindfulness City.” This proposed economic hub, adjacent to India’s Assam, aims to attract foreign investment. Additionally, in a change for the traditionally reclusive country, the King has announced plans for Gelephu to serve as a vital link in a larger economic corridor connecting South and Southeast Asia.
He emphasized the strategic location of Gelephu, projecting it as a gateway that could yield substantial benefits from improved connectivity and collaboration.
How does India fit into these plans?
India’s role in Bhutan’s ambitious economic project is crucial. The success of the Gelephu SAR largely depends on enhanced connectivity, and India’s commitment to improving infrastructure links is key.
The King in his speech said, “I am also pleased to share that during my recent visit to India, the Government of India expressed their full commitment to improve and expand the major roads leading to Bhutan. They also pledged to connect two or three of our border towns with railway lines.”
Bhutan’s ruler has visited India twice this year with a focus on economic ties. He met with leading industry figures like Gautam Adani and political leaders such as Assam’s chief minister Hemanta Biswa Sarma.
What is the impetus behind this?
Bhutan’s pivot towards a more outward-looking economic policy is driven by a series of challenges. The impact of the pandemic on tourism, rising public debt, and increasing youth unemployment have necessitated a fresh approach. The Bhutanese leadership recognizes the need for attracting more foreign investment and forging stronger global ties to rejuvenate the national economy.
What are the strategic implications?
This economic opening also brings into focus Bhutan’s evolving international relationships, particularly with its two giant neighbours, India and China. While India remains a key ally, the lure of Chinese investment and development aid is influencing Bhutan’s foreign policy considerations. The establishment of the Gelephu SAR could signify a nuanced shift in Bhutan’s diplomatic stance, balancing its traditional ties with India against the potential economic benefits of closer relations with China.
Bhutan has announced the establishment of a new Special Administrative Region (SAR) in Gelephu, near its border with India, in a move aimed at revitalizing its economy. The proposed “Gelephu Mindfulness City” is a 1000 sq km economic hub that aims to attract foreign investment and serve as a crucial link in a larger economic corridor connecting South and Southeast Asia. India’s role in this project is crucial, as improved connectivity and infrastructure links are key to the success of the Gelephu SAR. Bhutan’s pivot towards a more outward-looking economic policy is driven by challenges such as the impact of the pandemic on tourism, rising public debt, and increasing youth unemployment. This economic opening also brings into focus Bhutan’s evolving relationships with India and China, as it balances its traditional ties with India against the potential economic benefits of closer relations with China.
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