ADB Extends $15M Grants to Develop Micro, Small, Medium Enterprises in Bhutan
MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending two grants totaling $15 million to support the development of micro-, small- and medium-sized businesses in the Kingdom of Bhutan. ADB is providing a $6 million grant to establish an integrated policy, strategy and institutional framework for the development of micro-, small- and medium-sized enterprises. The grant will also enhance business laws and regulations to facilitate the operations of those enterprises, improve their access to market-based funding and strengthen business support infrastructure. The grant will be released in three equal tranches over a period of three years. Another $9 million grant will be used to extend credit to the smaller enterprises, supporting their development and facilitating program implementation. “Like other developing countries, limited access to financing is a major constraint in doing business. It is more so in Bhutan, particularly for micro and small businesses. The constraint is mainly due to extremely high collateral requirements and low banking intermediation,” said Chia-Hsin Hu, economist for the financial sector of ADB’s South Asia Department. The government has placed a high priority on private sector development, which mainly comprises micro-, small- and medium-sized enterprises. Bhutan is in the eastern Himalayas and landlocked between the People’s Republic of China and India. It has experienced steady gross domestic product growth averaging around 7% a year since the 1980s mainly on gains in the hydropower and its related sectors. The high growth has increased GDP per capita to nearly $1,300 in 2005 from $834 in the previous year. However, despite strong economic growth, poverty in Bhutan remains a social and economic issue, with an estimated 32% of the population living below the poverty line. “The economy depends on a narrow base for growth, raising serious concerns about the long-term prospects for economic development and employment in the country. Bhutan needs to diversify economic activity to generate employment, raise income levels for the poor and achieve stable, sustainable and broad-based economic growth,” said Ms. Hu. About ADB | 
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