Tashi’s rising economic power in Bhutan

By Ron Gluckman

Dasho Topgyal Dorji
Dasho Topgyal Dorji

He’s probably the richest man in one of the world’s smallest, least-developed nations, and no wonder. Bhutan, the tiny Himalayan kingdom long closed to the world, is opening for business, and Dasho Topgyal Dorji has plunged into practically every market. He has steered his family’s Tashi Group into hotels, banking and construction. It brews beer and bottles Coca-Cola KO +1.49%. Its TashiCell is one of two providers in one of the last nations to allow mobile service.

Tourism is booming–Bhutan welcomed fewer than 25,000 visitors just four years ago and now gets 100,000 annually–and Dorji is in the middle of that, too. Last month he relaunched his Tashi Air, Bhutan’s first privately owned airline, with service to Bangkok via Kolkata. Tashi-owned hotels include luxury properties run by Singapore’s Como Group and India’s Taj Group, as well as its own Druk Hotels in the capital of Thimphu and in Phuntsholing, the southern border town where Tashi is based.

An unconventional executive, the 48-year-old Dorji arrives for a meeting at his Uma Resort in his Hummer–the only one in Bhutan, he claims. He wears sneakers and jeans, his hair long and wild. He looks more like a biker or river rafter than a top tycoon. (Or a royal. His family used to rule the Haa Valley, 115 kilometers from Thimphu, and he retains the title Lord Precious Jewel.) In fact, sucking a cigar, he relates how he rides a Harley motorcycle and enjoys shooting river rapids in an aluminum boat that can challenge even the roughest water. “It’s where I get my adrenaline rush these days,” he says.

His late father, Dasho Ugen Dorji, started the business in 1959, importing rice and spices from India. Dasho Topgyal, the oldest of three brothers, was quick to seize new opportunities as Bhutan opened up to more investment and trade. Tashi now has more than 40 companies and 3,000 employees. All of these companies are unlisted, except for a tiny Indian food processor, and in such a small market it’s difficult to value them and put a number on Dorji’s and the family’s net worth. But observers say no one in Bhutan has built a more successful business. “Among Bhutanese companies Tashi Group is the 800-pound gorilla; it’s the leader in many industries,” says Kenneth Stevens, managing partner in Bangkok for Leopard Capital, which plans to raise $20 million and launch a Bhutan investment fund early next year.

Emerging markets always produce powerful, well-connected tycoons who move into newly deregulated industries, grab local franchise and licensing rights from brand-name multinationals, and position themselves to take full advantage of their country’s sudden growth.

Dorji fits this template in many ways–he’s certainly well connected, part of a family that has produced kings, prime ministers and governors. But he’s also different, more entrepreneurial and innovative than some similar figures in Cambodia, Vietnam, Myanmar and elsewhere. “Tashi is widely regarded as a very modern and forward-thinking group,” says Stevens. “For foreign investors Tashi is likely to be on the shortlist of potential partners to work with or set up a joint venture.”

Largely agrarian and long eschewing development, Bhutan didn’t even allow tourists until 1974. For decades one of Bhutan’s main exports was postage stamps. It was the last nation to get phone service, in 1974, and among the last to get television and the Internet, in 1999. In this Shangrila wealth wasn’t measured in GDP but GNH–gross national happiness.

Tucked among the world’s highest mountains, and landlocked between India and China, Bhutan has fewer than 800,000 people. GDP was only $1.75 billion last year. But the pace of development has accelerated since 2006, when the king–Dorji’s cousin–announced plans to abdicate, draft a constitution and hold elections. The prime minister, Tshering Tobgay, elected in July, said on a visit to India in September that his new government will focus on the economy, putting GDP ahead of GNH for the first time. “Our economy is still very small, but we are rich in our culture, traditions and environment,” says Dorji. “In some ways we are already the richest country in the world.”

Trade with India, Bhutan’s main ally and biggest source of foreign exchange, is growing fast. Already India takes all of Bhutan’s excess hydroelectric power. Bhutan plans to ramp up production dramatically by 2020, and Dorji wants a bigger piece of the action. Tashi now builds roads and does other auxiliary construction work for the power projects, but he aims to grab more business by winning contracts to order, procure and possibly even install some equipment. “This is a huge business opportunity,” he says. “We’re bringing in more professionals and learning. Eventually locals should be more capable of doing work like tunnel-building and powerhouses.”

While Tashi began by shipping goods from India to Bhutan, now products move in both directions. Bhutan Brewery, started in 2006, already commands 80% of the domestic market with its Druk beer, so the next opportunity for growth is India. “Probably 40% of our beer goes to India now, and that’s where we really have room to expand,” says Dorji. The same goes for Tashi’s agricultural and industrial products. “Our philosophy is not to go beyond the subcontinent. This is where we are confident. The largest market for us is to the south [India], where we have a lot of advantages. We are close and have free trade.”

Like other members of this kingdom’s elite, Dorji was dispatched to India for boarding school. From age 5 he studied at the Jesuit St. Joseph’s School in Darjeeling, then did part of high school and college in New England in the U.S. “My father wanted me to learn discipline,” he says. “I was young. I was adventurous.”

As a boy he was always more interested in sports–he played soccer and later lacrosse–than his studies or the family business. But by the late 1980s, as Tashi moved into metal alloys and chemical processes, he went to Norway for an advanced degree in metallurgy. He worked for two years in the field before returning to Bhutan in 1991.

Today Dorji’s work to build Tashi is intertwined with his effort to boost Bhutan. “The Bhutan brand is already well established,” he says. “Everyone associates Bhutan with an unspoiled environment.” But he adds that the brand is an undermobilized asset. At this early stage as an emerging economy, the country’s needs are daunting–training, investment, management. “Young people are motivated and enthusiastic, but they have little exposure to the outside world,” notes Norman Luxemburg, an American who manages a pair of high-end Uma resorts built by Tashi. “The Bhutanese are eager learners. What they really need is more experience and opportunities.”

Many criticize Bhutan for regularly putting the brakes on growth. Take tourism. Consultants from McKinsey surveyed the sector and recommended scrapping the minimum tourism fee of around $200 a day to expand growth to maybe a million visitors annually, according to Thuji Nadik, managing director of the Tourism Council of Bhutan (the report itself has not been made public). Instead, Bhutan chose the opposite course and raised fees to as much as $250 a day.

On the other hand, the government is spending nearly $1 billion to build Education City on 400 hectares outside of Thimphu. The long-term goal is to attract global institutes and 25,000 or more students, says Phub Tshering, secretary-general of the Bhutan Chamber of Commerce & Industry.

A companion effort aims to build high-end hospitals and wellness centers. “We could become a regional center, like Switzerland,” he says. “Diversification is important, but we realize the difficulties. The reality is, we want to do what other Asian countries have done in 30 to 35 years but in 5 years.”

Speed has never been in great supply in this land of yaks and robed herders. But as the country moves from isolation to engagement, Dorji and others like him will have to lead the way. “We have many tycoons,” says Lyonpo Khandu Wangchuk, a former prime minister and current minister of economic affairs. “Tashi is probably number one, but others are catching up. Change is coming fast. We are committed to gross national happiness, but GNH doesn’t exclude material growth.”

This story appears in the November 18, 2013 issue of Forbes Asia.

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