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Kathmandu Saturday May 12, 2001 Baishakh 29, 2058.
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Garment woes
First it was carpets, and then garments and pashmina. If
statistics revealed by the Garment Association Nepal (GAN) are anything to go by, the
country’s largest foreign exchange earner is all set to meet the fate of hand-knotted
Nepali carpet. In the last four months, the total garment export dwindled by over five
percent. For an industry accustomed to annual growth rate of about 30 percent, this figure
does ring an alarm bell. Though it is too early to predict immediate doom for the garment
industry, the possibility of major decline cannot be ruled out. And this is one of the
sectors which our economy cannot afford to ignore. Obviously, the onus is on the
government to revive this mainstay of our struggling economy. The recession in this
crucial industry may fade away in a few months, but any superficial rebound should not
mean complacency. True, this disappointing performance has emerged for the first time in
several years. But at a time when the economy is rolling
at a steady pace for the second consecutive year, any slackness in the garment sector
cannot be treated with disdain. If the present trend continues, the trade deficit may
widen by an unprecedented rate.
Confronted with a series of pressing problems, the garment
industry has been going through testing times since last year. Frequent Nepal Bandhs and
strikes, fabrics imported from India, slack in US domestic demand for garments and the
economic slowdown there are some of the factors that can be attributed to the tumbling
Nepali garment export. To add to the woes, Sub-Saharan African countries
are slowly but surely emerging promising players in this trade in clothing, sending off
low-priced products to the US, the voracious consumer. With the cost of production higher
by 15 to 20 percent than in Africa and other South Asian countries, it is natural that
Nepal faces a shrinking international market. Moreover, the US is yet to scrap the quota
system and tariff provisions for importers of Nepali garments. Though it has revoked trade
barriers for countries with less than 1,500 US dollars per capita income, Nepal is waiting
in the wings to come under this liberal policy. Surprisingly though, the government is not
moving an inch towards bilateral negotiations. Despite mounting pressure from
entrepreneurs, the government is not gearing up to avail of this US facility. It is a pure
case of indifference on the part of the government. Unless Nepal gets duty free access to
the US market, which imports nearly 85 percent of our total garment export, the garment
industry will be fighting a losing battle. But the remedy does not just lie only on the
no-tariff front. The landlocked topography poses another challenge. Tariffs are
undoubtedly very high and add to that the high cost of transportation, the sustainability
of this industry becomes an uphill task. Given such a bleak scenario, developed countries
must step in to provide support for our international trade. Hopefully, the Koirala
government wakes up to protect this industry before it’s too late.
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