Garment exports plunge

Garment exports plunge
eKantipur.com, 6-Oct-07

Hit by political instability, the tarai unrest, labor stirs and eroding competitiveness, the country's garment exports to the US in the first nine months of 2007 dropped to nearly half of what it was during the same period last year.

According to the Garment Association Nepal (GAN), the cumulative export of Nepali garments to the world's largest apparel market during the period was valued at US $21.91 million, whereas it totaled US $40.98 million during the same period last year.

A breakdown of the monthly export data shows that the export of Nepali readymade garments recorded a decline throughout 2007. In September alone, exports plummeted by one-third of the volume recorded during the same month last year. In September this year, Nepal exported US $2.17 million worth of readymade garments. The figure was US $3.29 million during the same month last year. The biggest declines were recorded in January, February and May when exports fell by more than half of that recorded during the corresponding months last year.

GAN officials attributed the drop to the loss of orders mainly due to internal problems particularly labor stir, frequent strikes and bandas along the highways.

Entrepreneurs said most of their manufacturing units remained closed during the period due to labor unrest, and even those who managed to overcome the problems were operating with a meager volume of orders.

“As vehicles transporting the raw materials and delivering the finished products have not been able to move, timely delivery has been hampered affecting receipts of new orders,” said a GAN official. According to the official, the industry has received fewer orders for the new seasons as well, even for Christmas when demands generally soar.

Over the period, the industry has dropped to second position from being the largest foreign currency earning export industry. Employment in the industry has also dropped to 5,000 persons from over 50,000 in the past.

Entrepreneurs charged that the government had been largely ignoring their demands for providing support to the industry, like developing a garment processing zone and lobbying for preferential market access in the major markets. Experts, meanwhile, attributed the lack of modernization in the industry and market diversification initiatives on the part of entrepreneurs as being critical factors behind the current gloom in the industry.