KATHMANDU, July 3: Exports of readymade garments to the US over the first six months of 2009 have plummeted to half of what the country exported during the same period last year.
As buyers in the largest apparel market shift to cheaper suppliers, Nepal managed to export a mere 3.55 million dollars´ worth of garments to the US. Exports for the period stood at just 10 percent of the value Nepal exported in 2004, the final year of the quota regime in the international apparel trade.
Since then Nepal has witnessed a sharp drop in exports due to reasons such as eroding competitiveness in the international market and rising labor trouble and bandas which impacted production as well as delivery of orders on time.
With the problems of the industry remaining unchanged, exports in June 2009 alone dropped by as much as 80 percent over exports recorded in the same month last year.
According to statistics with the Garment Association Nepal (GAN), readymade garment exports to the US in June this year were valued at US$ 0.19 million, whereas exports in June 2008 were worth US$ 0.83 million. In June 2004, Nepal had exported garments worth US$ 5.16 million.
Exporters said that labor stirs and frequent bandas and strikes continued to sap the industry, disabling it from meeting delivery deadlines and catching fresh orders. Global economic slowdown and decline in consumption by US consumers that have surfaced in the wake of the global financial crisis have further aggravated the problems of the industry.
“The decline in lead price (supply rates) offered to exporters by global importers by 15 percent has mainly caused the figure to shrink,” said a GAN official, who elaborated that the reduced price has even prompted manufacturers to refuse orders.
Nepal´s garment industry, once the largest foreign currency spinning sector, has been in tatters since 2002, when the US pledged duty-free market access to competitors in sub-Saharan and Caribbean countries.
The facility made the production of those countries cheaper than Nepal´s by over 17 percent. Likewise, the phase-out of the quota system from January 2005 landed another blow on the industry. Industrial insecurity, labor stir and general strikes that increased in the following years caused massive closures in the industry, shrinking the number of industrial units to about a dozen from over 250.
Exporters still opine that the industry could bounce back if the US government pledges a duty-free entry facility to Nepal and the government here develops a garment processing zone in the vicinity of Birgunj, a step that could reduce transit transport cost by some 20 percent.
“That is why we have urged the government to lobby for the US Trade Bill, which promises the duty-free facility for 14 LDCs of Asia and the Pacific including Nepal,” said Uday Raj Pandey, vice president of GAN.
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