Thimphu: Bhutan is considering pursuing a free trade agreement (FTA) with Malaysia as it sees strong potential to expand exports by 2027 or 2028. Bhutan has started trading in food products and automated components for computers and electronics with Malaysia and aims to export ferro-silicon, cement, and several mineral-based products, including lime and gypsum.

According to BERNAMA News Agency, Bhutan initially wanted to pursue an FTA with Malaysia but had to divert due to other priorities, stalling the process for a year. Currently, Bhutan does not have formal diplomatic relations or an established trading framework with Malaysia. The potential timeline for establishing such a framework is projected around 2027 or 2028.

Despite the geographical limitations that pose challenges to deepening hydropower or energy cooperation with Malaysia and ASEAN member countries, Bhutan remains optimistic. Hydropower is Bhutan’s biggest export, and the government aims to supply beyond its neighboring countries, though bein
g landlocked makes it difficult to expand beyond India or Bangladesh. Improved connectivity through an agreement with Thailand may eventually help Bhutan integrate into the global supply chain and export to other ASEAN countries.

Bhutan is hopeful for more trade engagements with Malaysia, fostering opportunities that bring the countries closer and support sustainable, mutually beneficial growth. Bhutan is also considering the possibility of importing Malaysian-made electric vehicles (EVs), though this involves issues such as customs duties and tariffs, which fall under the Environment Commission Department and the Revenue and Customs Department. However, Bhutan’s strong environmental commitments may lead the government to welcome EV imports.

Trade between Malaysia and Bhutan has seen significant growth, recording a 201.0 percent increase. Malaysia’s total exports to Bhutan have risen to RM12.4 million year-to-date, while imports from Bhutan totaled RM100,000. Malaysia’s major export products to Bhutan in 20
24 included electrical and electronic products (E and E), optical and scientific equipment, chemical and chemical-based products, and transport equipment. Key imports from Bhutan include E and E products, agricultural goods, chemical and chemical-based products, and processed food.