Trade Facilitation

Description

According to the World Bank Logistics Performance Index (LPI) (2012) which measures countries’ trade logistics efficiency, Bhutan, a land-locked country (which typically makes trade facilitation more difficult), was ranked 128th out of 155. This means that the country’s performance is slightly below the averages of comparable income and regional groups, its strongest indicator is the timeliness with which goods meet market destinations but the figure is lower than comparable income and regional groups. According to data collected by the World Bank Doing Business Report (2013), exporting and importing a standard container of goods requires 38 days in Bhutan, while countries in the region take less on average by being 33 days for exporting and 34 days for importing.

However, Bhutan lags in trade and transport related infrastructure, and efficiency and effectiveness of customs and other border procedures. The freight rates for transport in Bhutan are higher than in the region as a whole. Other inefficient factors in the transport industry raise transportation costs including, and include a lack of adequate transport and logistics services, the poor conditions of the road network resulting in long travelling times, low and unbalanced cargo volumes, and the low level of containerization that increases handling costs. Moreover, Bhutan’s customs legislation and practices are not aligned with modern practices such as those outlined in the Revised Kyoto Convention. Among 11 domestic agencies that are currently involved in entry/exit clearance of goods, some of them are present at border crossings and stations. There is no integrated clearance workflow and information sharing among different agencies is limited (ADB 2013). High pressure on border infrastructure exists particularly in Phuentsholing where the majority of import and export traffic occurs (UNDP 2012).

Logistics Performance Index (LPI): Country Comparison
Logistics Performance Index – Evolution