ASIATODAY.ID, MANILA — Bhutan is stepping up its climate resilience strategy with a $13 million financing package from the Asian Development Bank (ADB) to modernize urban infrastructure and expand affordable housing, positioning its cities to better withstand climate risks while supporting inclusive economic growth.
The financing package comprises a $5 million concessional loan, a $5 million grant from the Asian Development Fund (ADF), and a $3 million grant from the Japan Fund for Prosperous and Resilient Asia and the Pacific (JFPR), funded by the Government of Japan through ADB.
The funding will support the Inclusive and Resilient Urban Development Project, which targets Bhutan’s two largest urban centers—Thimphu and Phuentsholing—where rapid urbanization has increasingly strained infrastructure and exposed vulnerable communities to flooding, landslides, and inadequate housing.
A key component of the project focuses on Phuentsholing, Bhutan’s main commercial gateway to India. Recurrent flooding and infrastructure shortfalls have disrupted urban services and constrained economic activity in the strategically important border city.
“Bhutan’s cities are growing fast, and this project ensures that growth is safe, inclusive, and resilient,” said Sonomi Tanaka, ADB Country Director for Bhutan on June 27.
According to Tanaka, investments in essential municipal infrastructure, affordable housing, and stronger urban planning will create safer and more livable communities while reinforcing Phuentsholing’s role as a resilient cross-border gateway and expanding opportunities for low-income households.
The project will finance critical infrastructure within the Ammochhu Local Area Plan, including drainage systems, water supply, sewerage networks, roads, pedestrian walkways, and flood protection works.
These investments will complement the ongoing Phuentsholing Township Development Project, helping reduce infrastructure gaps, strengthen disaster resilience, and unlock future urban development opportunities.
The $3 million JFPR grant will also fund the construction of 56 affordable rental housing units for vulnerable households in Thimphu and Phuentsholing while supporting improvements in urban planning and land management.
Designed around Environmental, Social, and Governance (ESG) principles, the project includes measures to strengthen gender inclusion by creating employment and on-the-job training opportunities for women. At least 30% of the affordable housing units will be allocated to women-headed households.
ADB said the investment reflects its broader commitment to helping developing economies across Asia and the Pacific build greener, more resilient, and more inclusive cities capable of adapting to climate change while sustaining long-term economic growth.
For Bhutan, the financing represents more than an infrastructure investment. It is a strategic step toward building climate-smart cities, enhancing cross-border connectivity with India, and laying the foundation for sustainable urban development in one of the world’s most environmentally conscious nations. (AT Network)
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