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Landlocked Bhutan has managed to keep its coronavirus cases contained so far, but the pandemic will still have far-reaching economic and societal spillover effects. As of May 20, Bhutan has reported twenty-one confirmed cases of COVID-19, the disease caused by the coronavirus.

Most early cases were foreigners or recent returnees from affected countries, mainly in the Middle East. The country’s first confirmed case was reported on March 5. After recovering, the patient flew home to the United States on March 13 and was followed on April 20 by his partner, Bhutan’s second patient. Bhutan has so far seen very little evidence of community transmission.

On March 22, Bhutan sealed its land border with India and one week later curbed public gatherings, travel, and business. On March 30, the government mandated a twenty-one-day quarantine for anyone arriving from abroad.

Healthcare in Bhutan is largely public-funded, and the government has borne the costs of testing, medical facilities, and quarantines. The Ministry of Health produced a preparedness and response document that details the healthcare sector’s capacities in terms of surveillance, early detection, control and prevention, response, and recovery.

Surya Valliappan Krishna
Surya Valliappan Krishna is associate director of projects and operations at Carnegie India.

The government has also developed a contact-tracing app called Druk Trace. All offices, businesses, and transportation hubs are mandated to display the QR code generated by the contact-tracing app, and all individuals using these services are required to scan the code. A manual log is kept by service providers and offices for those who do not have smartphones.

Bhutan has created a national COVID-19 response fund to ease the financial stress on citizens, as well as a high-level task force to focus on infection control, the economy, and security. The Royal Monetary Authority announced a series of measures aimed at helping businesses and citizens, including by providing working capital, waiving interest on loans, and issuing microloans for agriculture. The crisis is likely to disrupt many sectors vital to Bhutan’s economy, such as hydropower plants, agricultural exports, and tourism. The World Bank estimates that Bhutan’s real GDP growth rate will drop to 2.2–2.9 percent, down from its pre-crisis estimate of 6.5 percent.

Bhutan has devised a four-stage COVID-19 alert system and is currently in stage three, which denotes confirmed cases without evidence of secondary transmission. Compared to other countries in South Asia, Bhutan appears to be keeping the crisis under control.

Surya Valliappan Krishna is a senior project coordinator and development manager at Carnegie India.


Interview with Dr. Tandi Dorji, Minister of Foreign Affairs of Bhutan

How does Bhutan perceive the role of international institutions in combating this pandemic?

The coronavirus does not recognize national boundaries, nor does it discriminate based on gender, race, creed, or social status. It is a pandemic that has affected the whole world. Therefore, containment and response measures must also be international in nature. No nation can fight the pandemic alone. The past few months have highlighted that global solidarity and international cooperation are crucial in fighting this common enemy of humankind, which has not seen a crisis of such scale and impact in decades.

International institutions like the United Nations and its specialized agencies, particularly the World Health Organization (WHO), have to play a critical role in the response. This role includes setting norms and regulations, mobilizing resources, mustering technical know-how for researching and developing drugs and vaccines, and managing the supply chains for medical test kits and personal protective equipment. International financial institutions must redouble their efforts to help poor and vulnerable countries cope with the adverse impacts of the pandemic on their healthcare systems, economies, and populations. International cooperation is also crucial for getting economies back on track after the pandemic and planning for the long-term recovery.

Given that South Asia is the most densely populated region in the world, what are the opportunities and challenges for the South Asian Association for Regional Cooperation (SAARC) amid this pandemic?

The most significant opportunity for SAARC is to promote greater cooperation among its members, which have a chance to build greater trust and confidence as they fight the shared threat of COVID-19. The SAARC leaders’ video conference on March 15 and the launch of its COVID-19 emergency fund are good examples.

This is also a chance for SAARC to demonstrate its renewed relevance through new initiatives like a common telemedicine framework, which would be highly beneficial for all members. Existing mechanisms such as the SAARC Disaster Management Center and the SAARC Development Fund could be strengthened.

The current situation could also help promote intraregional trade and economic integration. The SAARC members can remove technical barriers and make the movement of goods and services easy and free in areas affected by COVID-19.

A lack of resources and inadequate healthcare infrastructure remain two of the biggest challenges. In addition, highly porous borders and cultural habits of citizens accustomed to living in close proximity in multigenerational households make it difficult to implement health safety measures such as social distancing and self-quarantining. Further, most countries in the region are facing the added burdens of poverty, food and water scarcity, and other diseases that mainly affect societies’ most vulnerable groups.

In Bhutan, the hydropower, tourism, and agriculture sectors are key contributors to GDP. Given that there are likely to be delays in the completion of hydropower projects, fewer tourists, and a drop in agricultural exports (mainly to India), what are the implications of COVID-19 for Bhutan’s economy?

A slowdown in overall economic growth is inevitable. The 6–7 percent GDP growth target in the country’s Twelfth Five Year Plan (2018–2023) is expected to drop to 4–5 percent growth if the situation does not improve soon. More precise economic forecasts are difficult to project, given the high level of uncertainty surrounding the spread of the virus and the impacts of national, regional, and global containment measures.

As elsewhere, tourism was the first sector of Bhutan’s economy impacted by the pandemic. The service sector accounts for 43 percent of GDP, of which tourism and associated services such as hospitality and transportation comprise about a third. Early forecasts, considering only the impact on that sector, predict a deceleration of growth in 2020. The real impact, however, could be far greater, given that both actual data and forecasts do not capture the informal economy or secondary impacts such as those from supply chain disruptions.

Preventive public health measures such as closing schools, institutes, and recreational venues have led to a significant decline in economic activity. Physical distancing measures are also lowering overall demand for many goods and services. The construction sector, a traditional driver of growth for Bhutan, relies heavily on imported labor and raw materials and thus is experiencing disruptions due to the closure of most entry points into the country.

While the tourism sector and government coffers will lose substantial foreign exchange earnings, the government’s key concern is addressing the needs of citizens who have lost their jobs and livelihoods, especially if the present situation escalates or is prolonged.

There are opportunities for freed-up laborers to move into the agricultural and construction sectors. Investments in automation, mechanization, and wage support may be crucial to helping these sectors attract and retain a young workforce. Containment measures have also boosted demand for innovative technology-based solutions in education, e-commerce, and delivery services.

Given that Bhutan is increasingly reliant on India, how might the lengthy lockdown and the rapidly evolving situation in India impact Bhutan?

India is Bhutan’s largest and most important trading partner, and the two economies are closely linked. As Bhutan’s closest neighbor, India is important both as a source and market for its trading goods and commerce. Moreover, as a landlocked country, Bhutan must route its third-country imports and exports through India, which provides it with unhindered access to transit hubs.

India’s prolonged lockdown will impact Bhutan’s trade, commerce, and industries. India is the biggest market for several of Bhutan’s exports, including electricity, dolomite, ferrosilicon, and semi-finished products. If India imposes restrictions on imports and on the use of its transit facilities, Bhutan’s export-driven industries will struggle to sustain themselves due to a lack of market access. Moreover, Bhutan’s manufacturing and construction industries would be adversely affected, since they largely rely on India for raw materials and labor. Small and medium-sized enterprises would also be impacted, as the majority of commodities and essential items sold in Bhutan are imported from or through India. And the livelihoods of people, particularly those with lower incomes, will be further hurt if the current economic situation leads to inflationary pressures.

If there is a significant increase in COVID-19 cases in India and the lockdown is extended, there would be further disruptions to the supply of essential commodities. However, given the ties of friendship and cooperation between the two countries, India will likely facilitate the flow of goods to Bhutan, as it has for essential goods and medicines since the lockdown began.

Given that Bhutan’s healthcare system is largely public-funded, how is the government evaluating the role of national and international private healthcare in helping tackle the crisis?

Few healthcare systems around the world are equipped to handle pandemics, as many countries’ experiences with COVID-19 have already shown. Containing the coronavirus requires rapid responses and national, regional, and global cooperation.

While Bhutan is a developing country confronting its first modern pandemic, its constitution mandates the provision of free healthcare for all its people, and the country is in a better position than many of its regional neighbors thanks to its successful containment of local transmission so far. The private healthcare system is nascent, with only a handful of private selective diagnostic centers in the capital. There are private pharmacies, but the state provides most essential and lifesaving medicines for free.

As in many countries, the most pressing concern for Bhutan is the global shortage of essential medical supplies such as testing kits and personal protective equipment. But strong regional and international cooperation should provide sufficient resources.

In Bhutan, we are fortunate to have the visionary leadership of His Majesty The King during such a crucial time. Since the start of the COVID-19 outbreak, His Majesty has always emphasized that Bhutan’s priority must be to prevent community transmission at all costs. Therefore, we enhanced our containment efforts by starting screening processes at the points of entry and setting up quarantine facilities at hotels and isolation facilities at health centers for everyone entering Bhutan. All expenses for quarantine are borne by the state. With these proactive efforts, all the positive cases in the country were detected in the quarantine facilities, greatly reducing the risks of local and community transmission.

Furthermore, in terms of human resources, in addition to the 225 doctors that we currently have, the government has identified private individuals with health backgrounds, private health workers and doctors, as well as retired doctors to stand by should the COVID-19 situation worsen in Bhutan and require reinforcement. The Ministry of Health has also trained volunteers, law enforcement and military personnel, and Desuung (Bhutan’s volunteer service force) in basic health interventions so that they can be deployed to carry out screening and surveillance processes at points of entry.