July 1, 2026
THIMPHU – The Asian Development Bank (ADB) has approved a USD 13 million financing package to strengthen resilient urban infrastructure and expand affordable rental housing for low-income and vulnerable households, particularly in Thimphu and Phuentsholing.
The Inclusive and Resilient Urban Development Project comprises a USD 5 million concessional loan, a USD 5 million grant from the Asian Development Fund (ADF), and a USD 3 million grant from the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR), financed by the Government of Japan through ADB.
Rapid urbanisation in Bhutan has outpaced the development of new infrastructure and has exposed economically disadvantaged households to flooding, landslides, and substandard housing.
In Phuentsholing—Bhutan’s primary commercial gateway to India—recurring floods and infrastructure deficits continue to undermine urban services and economic activity.
“Bhutan’s cities are growing fast, and this project ensures that growth is safe, inclusive, and resilient,” said ADB Country Director for Bhutan Sonomi Tanaka. “By investing in essential municipal infrastructure, affordable housing, and stronger urban planning systems, we are helping to build safer, more liveable communities, while reinforcing Phuentsholing’s role as a resilient gateway city and expanding opportunities for low-income and vulnerable households.”
The project will improve core urban infrastructure in the Amochhu local area plan, including drainage, water supply, sewerage, roads, pedestrian walkways, and flood protection.
These investments will complement ADB-funded infrastructure under the Phuentsholing Township Development Project, while helping to reduce service gaps, strengthen resilience to natural hazards, and unlock additional urban development opportunities in Phuentsholing.
Through the USD 3 million JFPR grant, the project will provide 56 affordable rental housing units for vulnerable households in Thimphu and Phuentsholing.
It will also strengthen urban planning and land management, and support Phuentsholing’s development as a resilient cross-border gateway city.
The project incorporates strong measures to promote the protection of women and girls, including on-the-job training and employment opportunities for women in urban development. At least 30 per cent of affordable housing units will be allocated to women-headed households.
The ADF provides grants to the poorest and most vulnerable countries in Asia and the Pacific. Between 2021 and 2024, the fund helped 384,000 people emerge from poverty and generated around 500,000 jobs.