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Kathmandu Friday May 11, 2001 Baishakh 28, 2058.
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Garment exports tumble for first
time in years
By Bhaskar Sharma
KATHMANDU, May 10 - Plagued by a multiplicity of
causes, the garment industry, which had been achieving double digit export growth in the
past, has for the first time registered a negative growth rate.
Statistics released by the Garment Association -
Nepal (GAN) today show that garment export to the United States (US), which absorbs 85 per
cent of the total Nepali garment exports, slumped more than 5 per cent in the first four
months of 2001 as compared to the corresponding period last year. The figures also show
that in the month of April alone, exports tumbled by 33 per cent in comparison to the same
corresponding period last year.
The export figures to the US for the first four
months of 2000 and 2001 respectively stands at US $ 74.6 million and US $ 70.8 million
respectively. The total exports to the American market in 1998, 1999 and 2000 stood at US
$ 106, 126 and 178 million respectively.
Though the aggregate slump may not appear big, it
is significant since the garment exports in the past grew annually by almost 30 per cent.
"For a sector that has enjoyed good growth throughout, the present decline is
depressing. A drop by 5 per cent in four months is worrisome," says Uday Raj Pandey,
General Secretary of GAN.
Entrepreneurs are not just worried over the current
slump. Even more worrisome is the expected performance of the industry in the next few
months. Says Pandey, "The industry’s performance in the next few months can be
easily determined by the number and volume of orders that we get now. And since the orders
have literally slump presently, the future seems bleak."
With the latest signs of strain in the garments
sector that has been the mainstay of the Nepali foreign exchange earner, it is not just
the entrepreneurs who are worried. Says Ram Yadav, a worker in a local garment factory,
"There are a lot of workers in this industry. If this sector faces problem, then what
will we do bhai(brother)."
The cause of the latest export dwindle,
entrepreneurs say, is many, including the recent series of violence and bandhs, and the
slowdown of the American economy. However, the major cause is the shift in the preference
of American importers to import garments from the Sub-Saharan African countries over
Nepali garments.
The US government last November had revoked the
quota system and tariff barriers for the Sub-Saharan African countries completely opening
up its markets. In addition, it had also widened the market access for most Caribbean
garment manufacturers.
"Most of the orders that come to Nepal have
now been pulled by the African countries to which the US government recently opened its
markets," says Kiran Sakha, a garment entrepreneur.
Though the businessmen have been pressuring the
government to ask the US for granting the same facility, nothing has so far been done.
Without duty free access to the American markets, Nepal’s garments would be at a
disadvantaged position. Presently US importers pay upto 21 per cent in duties while
importing garments from Nepal. Furthermore, the cost factor of Nepali garments, primarily
due to its landlockedness is also proving detrimental.
The cost of production of Nepali garments is 15 to
20 per cent higher than other South Asian and African countries. Since the government is
not providing any facility to enhance the industry’s competitiveness in the
international arena, it would be hard to achieve a sustained growth in the long run, says
Jay Prakash, another entrepreneur and Secretary of GAN.
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