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Why the 'happiest place on earth' wants more money from tourists

Bhutan is the world's only carbon negative country in the world, and is often described as the happiest place of earth. It now wants tourists to pay more to enter. But why?

Bhutan wants only 'high value, low volume' tourists.

After an unprecedented halt in tourism due to the Covid-19 pandemic, the Himalayan kingdom of Bhutan has resumed the reception of tourists, but with a slight change in its tourism policy.

The new policies adopted by the government of Bhutan regarding the tourism sector are related to the Sustainable Development Fee (SDF). This Sustainable Development Fee has been one of the key elements of the Bhutanese foreign policy in order to manage the inflow of tourists inside its international borders. According to the Bhutanese ambassador to India, Major General Vetsop Namgyel, adopting the measure of this development fee has been one of the most significant tools towards saving Bhutan’s economy from the challenges posed by the pandemic.

While the restrictions related to Covid-19 were relaxed, new measures were put in place regarding the SDF. The Tourism Levy Bill 2022 passed in the Bhutanese Parliament hiked the fixed rate of SDF from $65 to $200. Not only this, later on, another major change was that with the reopening of its borders to tourists from around the world, Bhutan has also levied a Sustainable Development Fee of 1,200 Indian rupees for those coming from India. This rate is for tourists coming from India, Bangladesh and Maldives. In order to understand the potential implications of such a policy on the tourists coming to Bhutan, first we need to look into what exactly is the Sustainable Development Fund.

The Daily Fee for Tourists

The Sustainable Development Fees is levied by the government of Bhutan upon incoming tourists. This particular policy is very unique to Bhutan and the rationale behind this fees is to promote the idea of 'high value, low volume' tourism. Now, this is a very interesting idea considering the economic structure of Bhutan. The revenue generated from this Sustainable Development Fee goes directly into funding the social welfare, developmental activities, environmental conservation and the infrastructural development for the tourists as well. It is also important to consider that the issues of social welfare as well as cultural and environmental preservation are significant tenets and central pillars to the Bhutanese economic and social development which talks about 'Gross National Happiness' and not just gross domestic product (GDP).

The policy of the SDF was levied by the Bhutanese government on the influx of tourists coming in from all the countries except for India, Bangladesh and Maldives. Even initially, when the SDF had a fixed rate of about $250 on the peak tourist season and $200 on the off-season for tourists from all parts of the world, there was an exemption from this particular rule- owing to the friendly relations shared by India and Bangladesh, the Indian tourists were exempted from paying this particular fee. Now the question remains, why did the Bhutanese government eventually impose an SDF on the Indian tourists as well?

This brings us back to the policy change in question. While the Indian tourists, as well as those from Bangladesh and Maldives did not have to pay the fees that the other tourists paid, the Bhutanese economy had to subsequently bear the brunt of this policy.

The Challenge of Mass Tourism

To put the Bhutanese SDF policy change after the Tourism Levy Bill 2022 into a clearer context, the tourists coming in from any other part of the world were now expected to pay a minimum of $200 on a daily basis. The Sustainable Development Fee (SDF) is to be paid daily and hence even a slightest hike in the price would matter. Now, in this particular case the fee suddenly rose to $200 from $65. On another perspective this $200 fee translates to about 16,000 Indian rupees. Now, these tourists were expected to pay an SDF worth 16,000 Indian rupees daily while those coming in from India did not pay anything. Gradually, and expectedly this created an unprecedented hike in the Indian tourist population within Bhutan. This became a little contradictory to the central policy of 'high value, low volume' tourism in Bhutan. This created further challenges for the average Bhutanese in terms of coping with this mass influx.

This challenge of mass tourists on the roads of Bhutan disrupted the daily life balance and also eventually led to resource shortages. In an effort to keep up with the pressures created from this massive inflow, necessary resources like water had to be allocated to these tourist destinations by being diverted from household usage. Bhutan saw a huge construction boom of hotels and tourism infrastructure but it moved away from its policy of maintaining 'high-end and high-value' tourism. The reason was to meet the growing demands. The population density in the average Bhutanese cities eventually grew to unprecedented levels and this also disrupted the culture-centred and environment focus Bhutanese way of life.

SDF on Indian Tourists

The result of this challenge was that the government eventually decided to levy an SDF of 1,200 Indian rupees on the Indian tourists as well. While this particular policy does not indicate any change in the diplomatic relationship between the two countries, it is reflective of the need of the Bhutanese state to preserve its culture and maintain its high-end tourism infrastructure. This is all the more needed for this state because tourism occupies a major chunk of the economic structure for Bhutan. However, in the long run this change is likely to bring down the quantum of tourist inflows from India to Bhutan and would also be instrumental in mitigating the infrastructural and resource crisis created in Bhutan overtime.

The Bhutanese jounalist Tenzing Lamsang explained the situation and the rationale for the SDF in this way: "Bhutan was being sold as a destination cheaper than most mass tourism sites in India like Goa, Manali, Darjeeling [tourist spots in India] etc by some Indian tour operators. The result was a mass inflow of tourists which Bhutan was unable to cope with. Greedy landlords were throwing out families in Thimphu and other places to convert apartments into hotels. Traffic jams got much worse. Trash was dumped by tourists everywhere including holy sites. Bhutanese could no longer visit the holiest of monasteries in peace but had to contend with tourists. Thimphu already has water shortage, sewage, trash issues but all of them got much worse. Residents did not get drinking water on time but hotels had water for swimming pools. Bhutan has narrow mountain roads and suddenly these were full of tourist vehicles and bikers. It was becoming less safe to drive for both locals and inexperienced tourist vehicles. There were accidents and some deaths too. There was a huge construction boom of hotels and budget hotels which jacked up land and apartment prices in major urban areas in Bhutan. Today most Bhutanese cannot even dream of owning a home in urban areas due to these prices. We were being locked into a mass tourism trap."

The SDF is designed to fix this situation.

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