The Ministry of Economic Affairs defines cottage–scale as those industries, whose initial fixed capital investment is less than Nu. 1m and employing up to 4 people; and small-scale as those undertakings employing up to 19 people with fixed capital investment ranging from Nu. 1 to 10 m.
You must have a good business idea. Ideally your business idea should be in an industry you have knowledge about and it should involve something you do better than anyone else. Your business should reflect your strengths and goals. Above all, it should be something you are passionate about and is something that fills an opportunity gap you have identified. You should then prepare a proper business plan.
Business Plan is a written document outlining goals and objectives of proposed business with steps necessary to achieve those goals within specific period of time. As they say, “when you fail to plan, you plan to fail”. You do not need to create a complete and complex business plan at the start. However, when you need to convey your business ideas and models to financiers, investors and potential partners, you may need a formal business plan. If you are unsure, you can seek help from friends, consultant or approach a relevant government agency such as the Department of Cottage and Small Industry or the Regional Office of Economic Affairs.
Any Bhutanese who is 18 years of age and above can legally own and operate an industry. An industry can be a factory that produces and manufactures goods or a unit that provides essential services. Trading businesses like retailing and wholesaling of goods is not considered an industry.
Yes, you are required to obtain an industrial license (small scale) or Registration Certificate (for cottage scale Industry) from the Regional Office of Economic Affairs. The license for small scale industry can be accessed/obtained from www.g2c.gov.bt if your fixed capital investment is more than 1 million and registration certificate for cottage scale industry can be accessed/obtained from www.g2b.gov.bt if your business total fixed capital investment is less than 1 million.
Please contact your nearest Regional Office of Economic Affairs, or the Department of Cottage & Small Industry or the Economic Development Officers in your Dzongkhag. Any officer there will be able to advice you on what are documents and/ or clearances that are required. Some industry may require clearances from other agencies such as the National Environment Commission, Bhutan Agriculture & Food Regulatory Authority or Dzongkhags/Thromde, etc. depending on the type of business activity. Also, you can visit website like www.g2c.gov.bt and www.g2b.gov.bt and upon selecting activity you will see what sector clearance is required for proposed activity.
At the time of application, please make sure to have valid security clearance certificate and depending on the type of business activity, you may also need to have soft copy of sector clearance and business plan.
If all the required information, documents and clearances are submitted, the license/registration certificate will be issued within a working day.
The cost of the license will depend on scale of your business. If it is a cottage-scale, there is no cost for registration certificate (for both registration and renewal but late renewal penalty of Nu. 20 is applicable).
If your scale of business is small, you will pay a sum of Nu. 3,100. However, for bar license, contract license, tour operator business license and entertainment licenses fee depend as per activity.
All types of business activities are allowed in the country with the exception of the following;
- Activities that violate any relevant laws of the country,
- Activities that threaten national security and public order,
- Activities that have harmful effects on public health, environment and Bhutanese morals and culture,
- Arms, ammunitions and explosives,
- Production of hazardous chemicals,
- Activities based on imported waste,
- Production, display and sale of pornographic materials,
- Gambling and betting,
- Tobacco and tobacco-based products
The government provides many fiscal and non-fiscal incentives to cottage and small industries; like tax holiday for certain number of years, import duty exemption on machines, equipment, primary raw materials and primary packaging material, preferential buying by government and focused capacity development programs and supports.
Depending on the priority of an industry, its viability and location, you may be able to lease government forest reserved land or government land for a fixed period. Depending on the availability, you could also apply for plots in one of the existing industrial estates and service centers.