Paintings and woodwork of the phallus have been integral to the belief system of the people of Bhutan for several centuries. It is said to bring good luck. According to locals, the symbol of the erect penis started from the Chimi Lhakhang monastery not very far away from Punakha, the former capital of Bhutan. It is said that people in urban areas are shying away from using the symbols at home, though it's still a rage in the countryside.
A 2014 story in the Washington Post 'Bhutan takes a second look at phallus worship' says:
Bhutanese believe the “scandalous” yet integral image aids in fertility, offers protection from evil and dispels malicious gossip. Now, Bhutan’s phallic worship is getting a second look. The age-old tradition is being reconsidered — to preserve its rich narratives, as artistic inspiration and as a tool for religious belief. In fact, the phallic symbol is suddenly again in vogue, contrary to the popular belief that modern Bhutanese are discomfited by the graphic paintings of an erect penis.A Thimphu-based freelance journalist told journey basket a brief story on how the phallus symbol came to be regarded as sacred in the Himalayan nation: "There was a holy man named Lama Drukpa Kunley who lived in the 15th century. Also known as Divine Madman, his unique way of curing ills and bringing good luck and prosperity was to have sex with women. He had sex with every woman in the village."
Paro is a small touristy town with an airport; it's about an hour drive from the capital Thimphu. Resorts start to appear from where the town limit ends abruptly. A wide road said to be centuries old cuts the main market into two halves. Paro is perhaps one of the most picturesque places in Bhutan, with an eclectic mix of the old and new.
The Tiger's Nest or Taktsang Palphug Monastery is the highlight of Paro. The structure is solid rock carved out of a cliff, some 3,000 metres above sea level.
The Old Man's Beard tree of the genus Usnea, which looks similar to the Spanish Moss, grows only in places where the air is clean. Locals also believe this tree purifies the air around.