Thimphu Tech Park's Ambitious Goal: Becoming the Global Center of Excellence in IT

Thimphu TechPark (TTP) stands as the primary hub for IT development within the Kingdom of Bhutan. Nestled in the Eastern Himalayas, Bhutan is renowned for its robust environmental conservation policies and its distinctive approach to development, emphasizing Gross National Happiness.

thimphutechpark.bt

TTP represents Bhutan's inaugural IT Park initiative, championed by the Department of Information Technology & Telecom under the Ministry of Information & Communications, with support from the World Bank. This pioneering project came to fruition through collaboration between Singapore's Assetz Property Group and Druk Holdings & Investments, the Royal Government of Bhutan's commercial arm. The groundbreaking ceremony for TTP took place on May 18, 2010, with construction ultimately concluding on April 30, 2012.

On May 7, 2012, Thimphu TechPark commenced its operations. Presently, the park hosts a data center, a selection of domestic companies, and seven international IT/ITES enterprises, including Scan Cafe from the USA, ZOOP from Canada, SELISE from Switzerland, MultiRational from Australia, Southtech from Bangladesh, Bid Ocean from Canada, and Data Scientists from Australia. These companies collectively employ over 700 individuals within the IT Park. Moreover, TTP boasts an incubation center, providing Bhutanese entrepreneurs access to furnished workstations and affording foreign firms the opportunity to pilot their operations and explore the potential presented by Bhutan.

Thimphu TechPark, Bhutan’s First PPP Project

Thimphu TechPark had its origins as a project established through a Public Private Partnership (PPP) under the Private Sector Development Project (PSDP) umbrella, with the support of the World Bank. Its inception can be traced back to 2008, although the initial concept document dates back to 2006. Notably, it marked the first-ever PPP Project undertaken in Bhutan. The PSD Project encompassed three key components: the development of ICT Park Infrastructure (Thimphu TechPark), a Skills Development Programme that trained 1,300 young individuals in the ICT and Information Technology Enabled Services (ITES) sector, and efforts to strengthen the financial sector through ICT Investments, including the establishment of the Inter-Bank Electronic Fund Transfer Clearing System (EFTCS). The overarching goals were to bolster productive employment in Bhutan by promoting enterprise development in the ICT/ITES sector, enhancing ICT skills, and improving access to finance. In 2008, the Royal Government of Bhutan (RGoB) secured a grant from the International Development Association (IDA) to fund the PSD Project.

Subsequently, the Department of ICT & Telecom within the Ministry of Information and Communications initiated a bidding process for the Design, Build, Finance, Own, Operate, and Transfer (DBFOOT) of the ICT Park in Babesa, Thimphu, using the PPP model. Druk Holding and Investments (DHI) of Bhutan and Assetz Property Group (APG) of Singapore entered into a joint venture agreement and submitted a bid for the project. However, DHI eventually assumed full ownership of TTPL and retained the same acronym when APG withdrew, transferring its shares to DHI on October 29, 2014.

The primary objective of the ICT Park project was to attract foreign companies to establish subsidiaries there, thereby creating employment opportunities for Bhutanese youth and stimulating Bhutan's budding ICT industry. To achieve this, the Project Implementation Agency Team, with support from the World Bank, conducted promotional visits and roadshows outside Bhutan in 2010 and 2011. There were high hopes of securing a major company like Wipro, Genpact, or Infosys as the anchor tenant once the ICT Park was completed. When this did not materialize, the local press, particularly The Bhutanese, was critical, labeling the ICT Park a "White Elephant" in a front-page article on January 5, 2013. It expressed skepticism, stating, "The management is optimistic, but with little or no commercial takers, the country’s first ICT Park remains vacant."

thebhutanese.bt

Despite these challenges, the dedicated management team, led by the author of this paper, remained optimistic and persevered. The ICT Park gradually but steadily improved in terms of occupancy and vibrancy from 2012 to 2015. By early 2016, the park reached full occupancy, with approximately 700 Bhutanese youths employed in various foreign companies. Positive coverage in the Bhutanese media, including The Bhutanese, became more common from that point onward.

Thimphu TechPark also played a crucial role in addressing concerns about the reliability and affordability of the Internet in Bhutan. Initially, Bhutan had only one International Internet Gateway in Phuentsholing. To address concerns that this would not be sufficient to attract potential investors to the ICT Park, a second gateway was established in Gelephu on March 26, 2012. However, this did not completely alleviate concerns as both gateways passed through Siliguri, India. Dialogue was initiated with India and Bangladesh to explore the possibility of opening a third International Internet Gateway at Samdrup Jongkhar, connected to the submarine cable landing station in Cox's Bazaar via India, providing true redundancy and improving connectivity.

Thimphu TechPark also facilitated the establishment of the First Internet Exchange Point, connecting various Internet Service Providers (ISPs) in Bhutan, which was formally launched on January 8, 2019. This helped keep domestic traffic between domestic ISPs within the country, enhancing Internet speed for users. The presence of international companies at Thimphu TechPark also contributed to instilling professionalism among Bhutanese ISPs, addressing issues of lax customer service. The government pledged subsidies to reduce connectivity costs for companies at the ICT Park, but foreign investors continued to press for further reductions. This pressure, along with public discussion and media exposure, led to the first substantial revision of Internet leased line rates in Bhutan, as highlighted in Table 1 in a study conducted in March 2014.

Thimphu TechPark’s Socio-economic Impact

In a time when Bhutan is grappling with the daunting issue of youth unemployment, Thimphu TechPark has emerged as a beacon of hope. The youth unemployment rate has been steadily climbing since the close of 2010, reaching 15.7 percent in 2018, up from 12.3 percent in the previous year. The government has considered the option of sending young people to work abroad, including destinations like Japan, Kuwait, and the UAE, as a short-term solution. However, this approach is not beneficial for both the youth and the nation in the long run.

www.bbs.b

As illustrated in Figure 2, Thimphu TechPark has consistently offered employment opportunities to more than 600 Bhutanese individuals over the past four years.

The number of Bhutanese youth graduating from colleges has been on a continuous rise since 2001, thanks to increased enrollment facilitated by free education. Nevertheless, our economy's ability to generate job opportunities has not seen a corresponding increase.

While the annual count of college graduates among the youth has stabilized at approximately 3,000, our economy can only accommodate employment for about one-third of these graduates.

The companies within the ICT Park employ a substantial number of young people and are heavily reliant on markets outside Bhutan. They contribute significantly to the country's foreign exchange earnings, estimated at several million USD annually, which has a profoundly positive impact on a nation that relies on imports. Additionally, these companies bring the advantages of exemplary management practices and technical expertise. The ICT Park has also played a pivotal role in influencing policy decisions regarding technology adoption and facilitating Foreign Direct Investment in the ICT sector.