Where have all the garments gone?

Where have all the garments gone?
Republica, 23-Feb-2010
Mallika Shakya

Ms. Shakya is Postdoctoral Research Fellow at Oxford Department of International Development/Contemporary South Asia Studies

Many tourists and Non-Resident Nepalis (NRNs) returned this winter to yearn for bygone tranquility and a rustic rural charm. An industry ethnographer, I came to see what happened of an industry that once employed over 150,000 Nepali men and women, and made a third of our total exports.

Alas! The hustle and bustle of garment cutting, sewing, washing, packing and trucking seems now to have halted forever. Apparently, not a single piece of garment got exported from Nepal to the United States in the past few months. No more clusters of sari-clad women will now squat in winter sun to ‘finish’ sewn clothes while sharing gossips about gods and demons and in-laws; there will be no hurried setting-up of assembly lines; no more shop floor gaffs on whether Nepali gods are more powerful than Indian in protecting their wailing industry from being annihilated.

The industry is simply gone with the wind. Nepalis are known for their enduring abilities to let go and move on, and I am doubtful if there will be any digging of its garment past. A stubborn researcher, I say we need a post-mortem.

The policy myths about how it was a losing battle even before it started raises more questions than answers: The first myth about the Nepali garment industry is that it is an ‘Indian’ industry and hence Nepali policymakers need not worry about its misfortunes.

Yes, many Indian capitalists and workers crossed the border in the 1970s as the US passed a bill under Multi-Fiber Arrangement (MFA) that allowed it to buy less from bigger countries China and India so smaller countries like Nepal could have a market share. In the following three decades, however, Nepalis have learned and mastered the skill of garment-making such that Indians owned less than 10 percent of the garment factories in 2001.

Bemoaning India has been a popular Nepali basibiyalo but where is the acknowledgement when a massive Nepalisation does take place right under our nose?

The second myth is that, post-MFA, it is a lot more expensive to manufacture garments in Nepal than, say, in Bangladesh, let alone in China. And it takes longer to import inputs and export outputs from Kathmandu – a daylong drive from the nearest port. Why should Nepal subsidize an industry that has no comparative advantage?

True, but let us not equate costs and time with competitiveness which is a lot more complex phenomenon. Take the example of Thailand vs China – it costs almost twice as much to produce in Thailand than in China yet a major garment buyer Nike continues to source from the Thai factories.

Why? China is all about large scales and fast assembly lines but Thailand availed itself to a new production method ‘lean manufacturing system’ (following Toyota production model) that allows Nike earn more brownie points on labor and product standards, and hence the profit mark-ups. What Nike seeks from the Thai government is some help with the public goods needed for lean manufacturing, e.g., workers’ training and regulations for maintaining the certification of standards.

The third and fourth myths have to do with this ever elusive notion of ‘market’. Few garment factories closed down in Nepal for shortage of purchase orders or rejection from buyers. Several closed because their production could not make it to the port – thanks to never-ending bandas in Kathmandu and Tarai.

Many more closed because the new labor unions would not let them run production. The so called MFA was only a tip of the iceberg—the industry wasted away to the State indifference, donor cynicism and a complex apparatus of political aggression at all levels.

The fifth myth is that there is very little value added in garment-making. Really? Employing 150,000 workers for the whole decade should surely count more than the alternatives now pursued by the businessmen made redundant from the garment industry, i.e. to indulge in real estate speculation or retailing of luxury goods to sponge on remittance money.
Bygones. Let us not whine over spilled milk.

It is understandable that subsidizing is not a solution. Economists in Nepali and donor ministries seem too busy beautifying macroeconomic theories of how the ‘market’ knows best even if that means turning a blind eye on glaring evidence. Not much has been said about the whole saga of market failures that have to do with the micro foundations of competitiveness – public goods like skills, information, technology, innovation, physical infrastructure, and the overall business environment.

The garment businessmen have now moved on to new areas – the young and the bright who had embraced a garment career in the 1980s are now seasoned businessmen harnessing their entrepreneurship elsewhere. Some have been recruited into garment management positions in India, East Asia, Middle East, and the US.

Many have gone on to contribute to buzzing garment industries elsewhere. Women workers who could not follow their peer have either transformed themselves into seamstresses and tailors, or moved on to other jobs, or just simply sat home. It sounds like one of those familiar stories where the people are winning but the country has lost.

My only plea is: We have lost this industry; let us not lose the lessons. Let us at least have the moral courage and intellectual honesty to acknowledge that this industry was one of the few momentous entrepreneurial movements that Nepal had witnessed amid the ongoing political and economic chaos.