Nepal: Garment export to US records 46 pc plunge

According to the statistics of Garment Association Nepal (GAN), Nepali readymade garment exports valued mere US $ 22.92 million over the first 10 months of the year, whereas it was US $ 42.41 million in the same period last year.

Breakdown of the monthly export data shows that exports to the largest apparel market slid by about 31 percent to about US $1 million in October 2007. It was a decline for 15 straight months, said GAN officials. Entrepreneurs attributed the decline to fast losing of orders over the past one year due mainly to internal problems such as labor stir and tarai unrest.

They said most of the manufacturing units still remain closed due to internal problems. Even those who have managed to overcome the problem are also operating with meager orders.

The decline in export has dragged the industry down to the second position from the largest foreign currency earning export of the country. And entrepreneurs said lack of committed support from the government and the parties in resolving labor stir and providing investment friendly environment has forced the industry to spiral downwards.

Nepali readymade garment industry has been going through a declining trend since 2002, when it lost to Sub-Saharan and Caribbean competitors, after the US provided duty-free market access to those countries.

The industry received another blow after the quota system in global trading of textiles expired in 2005.

As a result, Nepali readymade garment export, which totaled to US $136.49 million in 2001, rapidly shrunk to US $47.77 million in 2006.

During the period, the number of manufacturing units dropped to about one and a half dozen from over 4 dozen units. The number of workers employed in the industry also slipped to mere about ten thousand from over 60,000, according to GAN.

GAN officials said that the government, despite making various commitments, has not created a favorable industrial environment whereby they could inject fresh capital and resume closed units.

They argued that development of garment processing zone (GPZ) in the vicinity of Birgunj, which has a railways link with Kolkata port, would have reduced their cost of manufacturing and enabled them become competitiveness in the international market.

The government has committed for developing GPZ from three years ago. However, the program has not materialized so far.