Garment exports plunge by half

KATHMANDU, Sept 6 - The readymade garment industry is continuing to lose its hold in the US with exports to the world's largest apparel market plunging by another 49 percent during the first eight months of 2008.Statistics of the Garment Association of Nepal (GAN) shows that Nepal's garment sales to ...

Deteriorated labor relations, eroding competitiveness and massive diversion of international orders continued to batter Nepali exports, said GAN vice president Uday Raj Pandey.

“The latest economic slowdown, which has pushed many of Nepal's regular buyers into bankruptcy, has exacerbated our problem,” he added.

A monthly breakdown of GAN's export data shows that shipments to the US suffered the most in recent months.  In January 2008, exports had dropped by 2 percent compared to January 2007, while in August 2008, they slipped by a whopping 62 percent compared to the same month last year.

Nepal dispatched a mere US$ 0.69 million worth of garments in August compared to US$ 1.83 million recorded in the same month last year.

The Nepali garment industry has been fast losing its US market since 2002 when it began providing duty-free market access to Sub-Saharan and Caribbean countries, Nepal's major competitors.

The facility pulled buyers away from Nepal to more competitive suppliers. The industry suffered a further blow when the quota system in global apparel trading was phased out in 2005.

“As a cumulative impact of both internal and external factors, Nepal's garment exports to the US today are worth a mere one-tenth of what they used to be in 2003,” said Pandey.

With business shrinking, the number of garment manufacturing units has dropped to barely a dozen from over 200 units previously. Over this period, some 50,000 workers, more than half of them women, lost their jobs, while the industry itself lost investments worth Rs 4 billion.

However, recent positive indications from the US about providing duty-free facility to Nepal has raised hopes of a revival, said exporters. Presently, the US charges customs duty at the rate of about 18 percent on Nepali apparels.

'The government now must push strongly to have the bill passed so that Nepal can get that facility,” said Pandey.

Pointing out that setting up a Garment Processing Zone (GPZ) was an appropriate solution to the labor problem and higher cost of production -- two major factors that have been limiting the potential of the industry -- he urged the government to seriously implement the program of developing a Special Economic Zone including a Garment Processing Zone (GPZ) in Birgunj.