National 8 (Spotlight Weekly)

Exporters' Expectations

One way the world's sole superpower could help crush the Maoist insurgency is by opening up its market to more Nepalese exports, particularly readymade garments

By SANJAYA DHAKAL

Nepalese readymade garments : Hit by insecurity

For a battered and frustrated lot of Nepalese garment manufacturers, Prime Minister Sher Bahadur Deuba's visit to the United States and his scheduled meeting with President George W. Bush, brought a glimmer of hope.

The deteriorating security situation in the country, brought about by rising terror and violence, and the subsequent worsening of the business environment have forced garment industries to pull down their shutters one after another.

More and more overseas importers of Nepalese readymade garments have begun to cut down on their demands and shipment requests.

As the United States is the largest importer of Nepalese readymade garments, the dwindling demand there has cast an ominous spell over the industries here. "Mostly, it is because of the security situation that American importers are canceling orders for our products," said Udaya Raj Pandey, general secretary of Garments Association of Nepal (GAN).

Pandey provides a clear example how the security situation affects business, which, in turn, could fuel the insurgency. "Exports mean business, which means employment. Lack of exports therefore means more unemployment, which in turn creates the environment for a worsening of insurgency."

In its heyday, two or three years ago, Nepalese garment producers used to export products worth around Rs 14 billion ó mostly to the United States. Now, garment industrialists say, export has dwindled by more than 47 percent. "At its peak, we use to provide employment to around 70,000 people. That is now down by more than 20,000," said Pandey. He emphasized that garment employees mostly comprised unskilled and uneducated masses, who risk being exploited by sinister elements.

Any negative impact on the garment industry is bound to trigger a similar impact on ancillary industries, such as firms producing threads or buttons. According to Pandey, even during its heyday, Nepalese garment exports accounted for less than 0.01 percent of total US imports. "If they only allow us to double our exports, they won't feel it a bit. But here we could double everything, including employment," said Pandey.

Pandey said a delegation of garment industry entrepreneurs had met Prime Minister Sher Bahadur Deuba and his advisers and had briefed them about the need to raise their concerns before with the US President and senators. "We would like to be liberated from quota and duty restrictions like some countries in Sub-Saharan Africa and Caribbean region are," he said.

In fact, during his visit to Nepal in January, US Secretary of State Colin Powell had replied positively when asked about the need to raise quotas for Nepalese garments. "Nepal is at something of a disadvantage as a developing nation with a need for a relief of our quotas. And it is competing with other nations that have gained some relief and that are closer to our shores, so that the cost of transportation is a lot less so that's a double hit," Powell had said during the visit.

Besides, helping Nepal increase exports is in the US interest as well. The United States is leading a global war on terrorism and US officials have conceded that terrorism in Nepal could be overcome through security as well as economic measures. They have said creating job opportunities for people in the insurgency-hit areas could bar rebels from exploiting them. "So, we are hopeful that this time the US would listen to our pleas," said Pandey.

He, however, added that there was a need for constant lobbying. "Our embassy in Washington DC should constantly engage in lobbying legislators there. Otherwise, our efforts could go in vain."

Economic assistance from countries like the United States is especially important at this juncture when the nation is burdened by rising security expenses and the business and industrial environment is reeling from violence. A daily newspaper recently reported that Nepal is set to achieve less than one percent of Gross Domestic Product (GDP) growth rate in the current fiscal year ó the lowest in 18 years.

It reported that according to preliminary estimates by the Central Bureau of Statistics (CBS), GDP growth rate for fiscal year 2001/2002 has tumbled to 0.76 percent against a projected growth rate of 2.5 percent. The numbers, which are yet to be unveiled officially, show a marked decline from last year's 4.71 percent growth rate. Two years ago, Nepal's GDP grew by 6.14 percent.

Nepal Pakistan Trade Ties

Officials from the private-sector business federations of Nepal and Pakistan recently met in Pakistan and expressed concern over the lack of growth in the bilateral trade volume. Binod Bahadur Shrestha, first vice-president of the Federation of Nepalese Chambers of Commerce and Industry, and Iftikhar Ali Malik, president of Federation of Pakistani Chamber of Commerce and Industry met at the first meeting of the recently formed Joint Business Council and discussed ways to increase bilateral trade.

The meeting concluded that Nepal could export cereals, pulses, pashmina, jute, tea, perfumed oils and herbal products, whereas Pakistan could export rice, fish, dry fruits, fertilizers, vehicles, garments and machines. The business leaders of the two countries also agreed that bilateral trade could go up if they could make use of the existing Fulbari route.

The meeting held discussions on the South Asian Free Trade Area provisions and agreed that there was a need to bring down custom barriers in the region. They also recognized the possibility of joint venture investment in various industries.