Bhutan’s Digital Transformation Journey: Benefits, Issues and Challenges

Ansicht der Erde mit Verbindungslinien der Digitalität

The term 'digital transformation' signifies the pervasive integration of digital technologies and tools into the everyday functions of organizations and businesses to achieve their goals efficiently and effectively, and in a streamlined manner compared to traditional methods. The primary beneficiaries of digital transformation are the users, who benefit from enhanced convenience, accessibility and a personalized experience. For the private sector it provides opportunities to leverage technology to enhance client experience while driving growth and progress within and outside Bhutan, through the use of algorithms and data analytics to understand markets and preferences.

Bhutan's journey towards digital transformation began with the introduction of the internet in 1999, inadvertently opening the floodgates to a world of possibilities and opportunities. In the past two decades the evolution of service delivery has been rapid. Today, Bhutanese citizens can access services that are delivered end-to-end at the click of a button on their PCs or smartphones, and keep physical visits to service agencies at a minimum. This has led to a significant improvement in the efficiency and effectiveness of most government services such as the passport services whereby the application can be submitted online and the passport can be collected within a week’s time. Its digital transformation has been reinforced by the development of a robust digital infrastructure by the Royal Government of Bhutan, including a national fiber optic backbone, a high mobile penetration rate of more than 100% from 787,999 mobile subscribers, and a skilled IT workforce. This infrastructure has enabled the government to expand access to digital services, and businesses to adopt digital technologies. Bhutan is also among a few select countries with improvement in the E-Government Development Index (EGDI) in a higher category as per the UN eGovernment survey 2022 among the lower-middle-income countries and land-locked countries with improvement in the areas of telecommunications infrastructure, human capacity development and service provision, with the global E-Government Development Index average having increased overall from the past years. Bhutan moved to the High EGDI group in 2020.

Benefits of Integrated Service Delivery

Bhutan's digital services journey has transitioned from a fragmented landscape of individual agencies offering standalone services to a unified approach that seamlessly delivers services to citizens, businesses and government entities. The centralized citizen services portal has emerged as a cornerstone of this digital transformation, providing a single access point to a wide range of services. Additionally, the adoption of an integrated payment gateway has eliminated the need for citizens to visit offices for transactions, allowing them to conduct business from the convenience of their homes. Just recently, the citizen services portal was revamped with better features and a chatbox help, including clear instructions on what to do with all services and details pertaining to problem shooting. By consolidating services and streamlining processes, and increasing focus on digital transformation initiatives, Bhutan has achieved progress in several areas, especially in the area of ‘Access’ as per the Digital Readiness Index (DRI) published by the International Telecommunication Union (ITU). The DRI in 2023 is in the 'Emerging' category which is a marked improvement from the DRI placing Bhutan in the 'Low' category previously. In addition, the finding from an independent survey on the e-services provided by the Thimphu municipality agency suggests that the citizens were generally positive towards using the e-services provided by the agency in terms of system availability, usability, contact, reliability and responsiveness.  

A major push towards the development of a digital ecosystem was initiated through the massive Digital Drukyul Flagship (DDF) program, a key priority area in the 12th Five-year Plan with a total budget outlay of Nu. 3.132 billion. The annual report of the Department of Information Technology and Telecom (DITT) also pointed out that a project aimed at improving citizens’ satisfaction with public services through end-to-end Integrated Online Citizen Services and Integrated Online Business Licensing is expected to free up many productive person-days. The investment in integrating services has two-fold benefits whereby it reduces the workload of civil servants while easing the burden on the citizens.

The recent launch of the Identity System in Bhutan in October 2023 is expected to herald a new era of digital transformation, aiming to revolutionize various sectors, including commerce, finance and public service delivery. By enabling secure and seamless digital interactions between citizens, businesses and government agencies, the Identity System holds the potential to foster innovation, efficiency and empowerment. Moreover, the Identity System empowers citizens by providing them with control over their digital identities and facilitating secure and efficient interactions with various entities. This aims to promote transparency, accountability and trust in online interactions, empowering citizens to engage in economic activities and interact with government services with greater confidence. Citizens will have greater control over their personal data and the ability to manage their digital identities securely.

Issues and Challenges

Despite the remarkable progress made in digital transformation, Bhutan faces challenges that hinder its digital success. These challenges include, and are not limited to:

1. Infrastructure and Funding: For a small developing country, securing funding for Information and Communications Technology (ICT) development projects poses a significant challenge. Despite secured funding, sustaining these projects through proper maintenance and associated expenses also remains a critical concern, especially since the rapid pace of technological advancement requires robust research and development efforts, and continuous improvement of services using new business processes and technology. Continuous investment in such R&D programs, human resource development and creation of labs and exploration of newer technologies is needed continuously to remain agile and adaptive to technological advancements.

2. Internet Reliability: Bhutan has faced persistent issues with slow internet speeds and frequent outages (Kuensel, 2022). These issues significantly disrupt service delivery and hinder the widespread adoption of digital technologies.

3. Skilled Human Resources: Bhutan faces a shortage of skilled professionals in these fields, especially in the face of recent attrition of skilled, including ICT, talent. This gap can hinder the advancement of digital transformation initiatives.

4. Digital Literacy: Bhutan's ICT National Household Survey (2021), and other research findings, highlighted the need to strengthen digital literacy training programs to empower citizens to utilize digital technologies effectively and securely. As per the digital literacy program initiated by the government, the digital literacy rate stands at 49% (Bhutan Today). To ensure that all citizens can fully participate in the digital economy it will require innovative approaches to bridge the digital literacy gap. Bhutan's DRI scores for 'Skills' and 'Usage' are relatively low, indicating that there is a need to further improve digital literacy and the adoption of ICT by individuals and businesses.

5. Growing Cybersecurity Threat Landscape: The rapid expansion of the digital ecosystem, through its interconnected networks, systems and applications, generates a vast amount of data and simultaneously introduces growing cybersecurity risks. These risks can include unauthorized access to data, unauthorized modification of data and unavailability of systems/applications which could lead to information disorder or disruptions. A comprehensive strategy addressing these risks requires the involvement of stakeholders, including government, corporations, private organizations, businesses and individuals. Currently, GovTech is drafting guidelines for data management, legal gap assessments and frameworks for best practices for agencies handling citizens' information to safeguard personal data. 


Bhutan's digital transformation journey is indicative of its commitment to leveraging technology in order to foster a culture of innovation and improve the lives of its people. By embracing digital technologies and addressing the issues and challenges, Bhutan and its people are well-positioned to reap the benefits of digital transformation, driving progress and prosperity in the years to come.