Bhutan, sandwiched between India and China, has remained largely untouched by modern influences, with a limited number of foreign visitors allowed each year. Television arrived in 1999 and the internet a year later.
The kingdom will also formally adopt a constitution later this month and plans to hold parliamentary elections in 2008.
"For the quality of life we enjoyed during his rule, we are ever grateful to him," said Goling Dorji, a businessman in Samdrup Jongkhar, a Bhutan town on the border with northeast India.
"We can't forget what he has done for the happiness, peace and tranquility of our country."