Bhutan, the second nation to do so, recognized the newly independent Bangladesh in 1971, and diplomatic relations were established in 1973. Bangladesh was the only country other than India with which Bhutan had diplomatic relations at the time and, in the view of some foreign observers, perhaps the only country with which India would have allowed Bhutan to develop bilateral relations. For Bhutan, however, the step was an important symbolic move that provided a new trade outlet as well as another access to the sea. Water and flood control, a major multilateral issue involving the great Himalayan watersheds that run through China, Bhutan, and India into flood-prone Bangladesh have been perennial concerns between Thimphu and Dhaka.

Bhutan, with its sizeable Nepalese minority, has been particularly cautious in its relations with Nepal in deference to Indian sensitivities. In 1969 the Nepal-Bhutan Friendship and Cultural Society was established in Kathmandu to facilitate good relations, but formal diplomatic ties were not established until 1983, the same year SAARC was founded. Given the ethnic unrest among Nepalese in Bhutan, at the request of the Nepal-Bhutan Friendship and Cultural Society, the Bhutan-Nepal Friendship Association was formed in 1989 to help defuse tensions.

Data as of September 1991