US apparel firm bankruptcy hits Nepal
ArthaExpress, 11-Jul-08
The bankruptcy of American apparel buyer giant Stephen Berry has put four major Nepali garment exporters at risk of losing US$ 4 million and possible closedown.
Omi Apparel, Amardeep Garment, Binita Fashion and Destination Apparels plunged deep into trouble after Stephen Berry sought protection under US Chapter 11 bankruptcy law, that gives troubled firms more time to reorganize debt obligations.
"Though the door to receipt of payments due has not been completely closed, there will certainly be delay in payment and that will land the industry in trouble," Prashanta Pokharel, owner of Omi Apparel, told the Post. However, he refused to elaborate.
Knowledgeable people in the industry said it´s not only a question of delay. Since the buyer has declared bankruptcy exporters will lose at least a chunk of the payments due.
Stephen Berry, known for dealing in cheap university labels in the US, has been importing a substantial volume of garments from Nepal over the last half decade.
In the latest deal, it placed orders worth US$ 5.25 million with the four Nepali manufacturers in January. Of that, the exporters said they have received payment of only US$ 400,000. While they are yet to dispatch last consignments worth US$ 850,000, they
are also supposed to have received payment of $ 4 million for consignments already dispatched.
According to exporters, the Stephen Berry bankruptcy is bad news for the four exporters and for the Nepali garment industry as a whole. As chances of the US economy going into recession are heightening, exporters warned that more such cases can surface in the days to come.
Delay in payment, which they said is the best case scenario in the Stephen Berry deal, would still affect timely release of bank guarantees, freeze assets, subject them to fines and affect future operations, unless the banks came to the rescue.
"If the court refuses Stephen Berry´s appeal, the company will have to go into liquidation, which will be a disaster for Nepali manufacturers," said an official at the Garment Association of Nepal, requesting not to be named.
Nepal´s garment industry, which had investment of Rs 9 billion and had over 200 players in 2001, currently comprises just a dozen companies because of eroding competitiveness and internal problems.
Showing posts with label Trade. Show all posts
Showing posts with label Trade. Show all posts
Monday, July 14, 2008
Nepal’s garment industry close to losing its shirt
Nepal’s garment industry close to losing its shirt
ekantipur, 10-Jul-08
Nepal's garment exports to the US dropped by nearly half during the last six months as a result of buyers' waning interest in the leading foreign currency earning industry due to eroding competitiveness and internal labor problems.
Nepal sold US$ 8.96 million worth of readymade clothes to the US in the first six months of 2008. According to the Garment Association of Nepal (GAN), the figure was a 43 percent decline from the same period last year.
GAN's monthly trading data shows that the fall in garment exports to the world's largest apparel market was the steepest in June. Exports plummeted 71 percent to US$ 929,366 from US$ 3.21 million during the same month last year.
Entrepreneurs, who have long been demanding support from political leaders to bring discipline in the labor force, said business has been in free fall for 24 months straight.
“The government still has not shown any seriousness to develop a garment processing zone (GPZ), a program which was announced two years ago to help us cut production costs by a quarter,” said a GAN official. Nepal's garment industry, which is largely dependent on the US market, has been going downhill from 2002 when the US pledged duty-free market access to its major competitors in Sub-Saharan and Caribbean countries.
The end of the quota regime in international apparel trading in 2005 came as another blow, while internal instability, labor stirs and deteriorated industrial security forced well over 90 percent of the manufacturing units to close up shop over the past three years.
The industry, which in 2001 had some 200 operators with investments amounting to Rs 6 billion and employed over 60,000 persons, is down to a mere dozen manufacturers.
Nepali exporters have been pressing the government for the past five years to mobilize its diplomatic channels to secure duty-free facility in the US market. They even tied up with other Asian garment producing LDCs to directly lobby for special preference. “Sadly, all our pleas fell on deaf ears,” said the official. Even the bill recommending special preference for Asian LDCs that a US congressmen had tabled a couple of years ago got nowhere.
Despite the gloom running deep in the industry, garment entrepreneurs said that the industry could still regain its former glory if the GPZ was developed urgently, foreign investment was brought in and the government announced minimal fiscal and procedural support.
ekantipur, 10-Jul-08
Nepal's garment exports to the US dropped by nearly half during the last six months as a result of buyers' waning interest in the leading foreign currency earning industry due to eroding competitiveness and internal labor problems.
Nepal sold US$ 8.96 million worth of readymade clothes to the US in the first six months of 2008. According to the Garment Association of Nepal (GAN), the figure was a 43 percent decline from the same period last year.
GAN's monthly trading data shows that the fall in garment exports to the world's largest apparel market was the steepest in June. Exports plummeted 71 percent to US$ 929,366 from US$ 3.21 million during the same month last year.
Entrepreneurs, who have long been demanding support from political leaders to bring discipline in the labor force, said business has been in free fall for 24 months straight.
“The government still has not shown any seriousness to develop a garment processing zone (GPZ), a program which was announced two years ago to help us cut production costs by a quarter,” said a GAN official. Nepal's garment industry, which is largely dependent on the US market, has been going downhill from 2002 when the US pledged duty-free market access to its major competitors in Sub-Saharan and Caribbean countries.
The end of the quota regime in international apparel trading in 2005 came as another blow, while internal instability, labor stirs and deteriorated industrial security forced well over 90 percent of the manufacturing units to close up shop over the past three years.
The industry, which in 2001 had some 200 operators with investments amounting to Rs 6 billion and employed over 60,000 persons, is down to a mere dozen manufacturers.
Nepali exporters have been pressing the government for the past five years to mobilize its diplomatic channels to secure duty-free facility in the US market. They even tied up with other Asian garment producing LDCs to directly lobby for special preference. “Sadly, all our pleas fell on deaf ears,” said the official. Even the bill recommending special preference for Asian LDCs that a US congressmen had tabled a couple of years ago got nowhere.
Despite the gloom running deep in the industry, garment entrepreneurs said that the industry could still regain its former glory if the GPZ was developed urgently, foreign investment was brought in and the government announced minimal fiscal and procedural support.
Saturday, January 05, 2008
BoP deficit may lead to crisis in forex reserves
BoP deficit may lead to crisis in forex reserves
eKantipur.com, 4-Jan-08
The continuing deficit in the country's balance of payments (BoP) may lead to a crisis in foreign exchange reserves, say monetary economists.
“The declining trend should provide a wake-up call to policy makers to devise ways to deal with it,” said Dr Raghav Dhoj Pant, a monetary economist. “It is a very worrisome situation, and if not dealt with immediately, it could go out of control.”
The data compiled by the Nepal Rastra Bank (NRB) shows that the BoP registered a deficit of Rs 3.61 billion in the first four months of the current fiscal year. During this period, the foreign currency reserve slipped down 1.2 percent to Rs 163.12 billion. There was a surplus of Rs 180.8 million in the BoP during the same period last year.
The country held enough foreign exchange to finance imports for 8.1 months during the period under review ended mid-November. However, during the same period in the previous year, the foreign exchange reserve was adequate to pay for imports for 8.7 months.
Pant said past experience in Nepal shows that once the reserve goes into a decline, the downward spiral begins to accelerate. “We cannot rule out this scenario now, as capital flight is on the rise,” he said. An official at the NRB said exports were falling and widening the trade deficit, thereby causing a big hole in the BoP. Exports decreased by 6.3 percent in the past the four months.
“The major reason behind the shortfall is that new investments are not coming in,” said the official. He said the government must chalk out a strategy to lure investment, both domestic and foreign, to boost exports. “Otherwise, stemming the deficit may not be achievable,” he said.
Pant also suggested that the government review its pegging system with the Indian rupee. “Our fixed exchange rate is not sustainable and justifiable as the Indian economic growth rate is way above Nepal's,” he added.
But, the NRB official said the pegging system has more benefits for Nepal. “As we do not have a strong export base, it is not the right time to depreciate our currency,” he said.
“As long as we have enough dollars to buy Indian currency, it does not have any impact on the economy.”
In recent periods, the central bank has faced a serious crunch of Indian currency. It bought Indian currency equivalent to Rs 26.87 billion, selling US$ 420 million.
eKantipur.com, 4-Jan-08
The continuing deficit in the country's balance of payments (BoP) may lead to a crisis in foreign exchange reserves, say monetary economists.
“The declining trend should provide a wake-up call to policy makers to devise ways to deal with it,” said Dr Raghav Dhoj Pant, a monetary economist. “It is a very worrisome situation, and if not dealt with immediately, it could go out of control.”
The data compiled by the Nepal Rastra Bank (NRB) shows that the BoP registered a deficit of Rs 3.61 billion in the first four months of the current fiscal year. During this period, the foreign currency reserve slipped down 1.2 percent to Rs 163.12 billion. There was a surplus of Rs 180.8 million in the BoP during the same period last year.
The country held enough foreign exchange to finance imports for 8.1 months during the period under review ended mid-November. However, during the same period in the previous year, the foreign exchange reserve was adequate to pay for imports for 8.7 months.
Pant said past experience in Nepal shows that once the reserve goes into a decline, the downward spiral begins to accelerate. “We cannot rule out this scenario now, as capital flight is on the rise,” he said. An official at the NRB said exports were falling and widening the trade deficit, thereby causing a big hole in the BoP. Exports decreased by 6.3 percent in the past the four months.
“The major reason behind the shortfall is that new investments are not coming in,” said the official. He said the government must chalk out a strategy to lure investment, both domestic and foreign, to boost exports. “Otherwise, stemming the deficit may not be achievable,” he said.
Pant also suggested that the government review its pegging system with the Indian rupee. “Our fixed exchange rate is not sustainable and justifiable as the Indian economic growth rate is way above Nepal's,” he added.
But, the NRB official said the pegging system has more benefits for Nepal. “As we do not have a strong export base, it is not the right time to depreciate our currency,” he said.
“As long as we have enough dollars to buy Indian currency, it does not have any impact on the economy.”
In recent periods, the central bank has faced a serious crunch of Indian currency. It bought Indian currency equivalent to Rs 26.87 billion, selling US$ 420 million.
Friday, January 04, 2008
Paddy prices jump on short supply
Paddy prices jump on short supply
eKantipur.com, 3-Jan-08
A ban slapped by India on the export of paddy to Nepal has cut down its supply in the local market and caused the prices of paddy and rice to shoot up.
Traders said the prices have already gone up by around 30 percent this season compared to a year earlier. India banned the export of food grains like rice and wheat to contain their prices. The price of Sona Mansuli rice, used mostly by people of the lower and medium classes, has reached Rs 1,450 per quintal, up from last year's Rs 1,100. Likewise, a quintal of basmati rice now costs Rs 2,400 where as it was available at Rs 1,800 a year ago.
The price rise came despite a robust 17 percent growth in paddy production in the country.
Fresh data from the Birgunj Customs shows that the country imported 26,448 metric tons of paddy and 3,276 metric tons of rice in the first quarter of the current fiscal year. No rice or paddy was recorded to have been imported since then.
“The prices will keep rising as stock keeps depleting,” Tara Prasad Gupta, a rice trader, told the Post. After carrying out a research on the possible impact of India's ban, Nepal Rastra Bank's Birgunj Regional Office has suggested that the government request India to roll back the ban. As internal production can only meet 65 percent of the total demand, Nepal has no option but to import paddy and rice to feed its people, the research said.
eKantipur.com, 3-Jan-08
A ban slapped by India on the export of paddy to Nepal has cut down its supply in the local market and caused the prices of paddy and rice to shoot up.
Traders said the prices have already gone up by around 30 percent this season compared to a year earlier. India banned the export of food grains like rice and wheat to contain their prices. The price of Sona Mansuli rice, used mostly by people of the lower and medium classes, has reached Rs 1,450 per quintal, up from last year's Rs 1,100. Likewise, a quintal of basmati rice now costs Rs 2,400 where as it was available at Rs 1,800 a year ago.
The price rise came despite a robust 17 percent growth in paddy production in the country.
Fresh data from the Birgunj Customs shows that the country imported 26,448 metric tons of paddy and 3,276 metric tons of rice in the first quarter of the current fiscal year. No rice or paddy was recorded to have been imported since then.
“The prices will keep rising as stock keeps depleting,” Tara Prasad Gupta, a rice trader, told the Post. After carrying out a research on the possible impact of India's ban, Nepal Rastra Bank's Birgunj Regional Office has suggested that the government request India to roll back the ban. As internal production can only meet 65 percent of the total demand, Nepal has no option but to import paddy and rice to feed its people, the research said.
Wednesday, October 10, 2007
Exporters face heat over pashmina's identity crisis
eKantipur.com, 9-Oct-07
Lack of proper definition and accreditation has exposed Nepali pashmina to a grave risk of losing leading European and Japanese markets, following which exporters have urged the government to set up an agency at the earliest to define and certify the products.
“We have already had an unpleasant incident in Japan once, and many more countries including Italy and Spain have also mounted pressure on us to come up with a definition and certification for Nepali pashmina to avoid restriction on imports,” said Shankar Pandey, president of the Nepal Pashmina Entrepreneurs Association.
While citing that countries such as Italy and Spain have warned of imposing a ban on the import if a product definition and standard certification is not established by 2008, Pandey said the government must act promptly if it wished to protect the country's third largest export.
Holding a series of meetings with officials of the Ministry of Industry, Commerce and Supplies, entrepreneurs have pushed the ministry to set up a mechanism to accredit Nepali products in order to enable them to remain in the European and Japanese markets.
The entrepreneurs have sought the involvement of the Nepal Bureau of Standards and Metrology to define the quality standard of pashmina and issue quality certifications. “The bureau already has a well-equipped laboratory. It only needs to update it. Once that is done, it can carry out the quality testing work with ease,” said Pandey.
The entrepreneurs have also asked the government to set up a separate body to inspect manufacturing units and exports in order to ensure that no other items are exported under the name of pashmina, and that the quality of the product is maintained.
They have demanded that the proposed body be legally empowered to take action against those who use the pashmina categorization to export undefined items or those of lesser quality. “We tried to control such activities through our association, but it lacked the legal grounds to take action against wrongdoers,” said Pandey.
The Nepali pashmina industry received a blow last June when Japan restricted entry of pashmina products demanding definition and standard certification. Other key importing countries such as Italy and Spain had also warned of similar action unless the manufacturers established the pashmina's identity.
Japan is the sixth largest importer of Nepali pashmina. Italy is the third largest buyer among European countries. Volume-wise, the European Union forms the largest market for Nepali pashmina.
Such actions from the leading pashmina importing countries came after unscrupulous exporters started dispatching items manufactured with viscous and polyester yarn and passing them off as pashmina.
In their action, Spain and Italy have already said they would ban pashmina import from 2008 if Nepal failed to define it. Several other European countries have also started demanding standard certifications, according to entrepreneurs.
“While situations like this clearly indicate that the third highest foreign currency earning export is on the verge of doom, the government is still slow in responding to our demands,” said Pandey.
eKantipur.com, 9-Oct-07
Lack of proper definition and accreditation has exposed Nepali pashmina to a grave risk of losing leading European and Japanese markets, following which exporters have urged the government to set up an agency at the earliest to define and certify the products.
“We have already had an unpleasant incident in Japan once, and many more countries including Italy and Spain have also mounted pressure on us to come up with a definition and certification for Nepali pashmina to avoid restriction on imports,” said Shankar Pandey, president of the Nepal Pashmina Entrepreneurs Association.
While citing that countries such as Italy and Spain have warned of imposing a ban on the import if a product definition and standard certification is not established by 2008, Pandey said the government must act promptly if it wished to protect the country's third largest export.
Holding a series of meetings with officials of the Ministry of Industry, Commerce and Supplies, entrepreneurs have pushed the ministry to set up a mechanism to accredit Nepali products in order to enable them to remain in the European and Japanese markets.
The entrepreneurs have sought the involvement of the Nepal Bureau of Standards and Metrology to define the quality standard of pashmina and issue quality certifications. “The bureau already has a well-equipped laboratory. It only needs to update it. Once that is done, it can carry out the quality testing work with ease,” said Pandey.
The entrepreneurs have also asked the government to set up a separate body to inspect manufacturing units and exports in order to ensure that no other items are exported under the name of pashmina, and that the quality of the product is maintained.
They have demanded that the proposed body be legally empowered to take action against those who use the pashmina categorization to export undefined items or those of lesser quality. “We tried to control such activities through our association, but it lacked the legal grounds to take action against wrongdoers,” said Pandey.
The Nepali pashmina industry received a blow last June when Japan restricted entry of pashmina products demanding definition and standard certification. Other key importing countries such as Italy and Spain had also warned of similar action unless the manufacturers established the pashmina's identity.
Japan is the sixth largest importer of Nepali pashmina. Italy is the third largest buyer among European countries. Volume-wise, the European Union forms the largest market for Nepali pashmina.
Such actions from the leading pashmina importing countries came after unscrupulous exporters started dispatching items manufactured with viscous and polyester yarn and passing them off as pashmina.
In their action, Spain and Italy have already said they would ban pashmina import from 2008 if Nepal failed to define it. Several other European countries have also started demanding standard certifications, according to entrepreneurs.
“While situations like this clearly indicate that the third highest foreign currency earning export is on the verge of doom, the government is still slow in responding to our demands,” said Pandey.
Tuesday, October 09, 2007
B'desh offers Rohalpur railway transit to Nepal
B'desh offers Rohalpur railway transit to Nepal
eKantipur.com, 8-Oct-07
Bangladesh on Monday agreed to allow Nepal to use Rohalpur as a new transit route to facilitate bilateral and third-country trade. However, it refused to extend duty-free market access for agricultural and primary goods on a unilateral basis as Nepal had requested.
“Bangladesh has already cut the duty to zero on some items, for others we are willing to go for a preferential trading arrangement,” said Bangladeshi Commerce Secretary Feroz Ahmed at the conclusion of the three-day commerce secretary-level bilateral talks Monday.
Nepal had handed over a list of 21 groups of products, mostly agricultural and primary goods, to Bangladeshi Commerce Ministry officials requesting duty-free entry facility for them in Bangladesh.
Officiating Nepali Commerce Secretary Purushottam Ojha said the three-day trade talks were successful as the two sides agreed to improve connectivity and harmonize transit and trading procedures at the earliest in order to facilitate bilateral trade.
“Most importantly, we came up with a working document for operating the transit facility provided to us,” he said. He added that the two sides would hold the next round of talks within two months to finalize the modality.
Although Nepal and Bangladesh signed a bilateral transit treaty in 1976, the two countries have not developed a working modality yet. This has rendered trading through the Kakarbhitta-Fulbari-Banglabandh route difficult, thus discouraging bilateral commerce.
On Monday, the Nepali and Bangladeshi commerce secretaries signed a memorandum agreeing to do away with the constraints seen in the movement of cargo vehicles, among others.
Talking to the Post, Ojha said that Bangladesh has agreed to facilitate entry of Nepali vehicles from the zero point on the Indo-Bangladesh border to the Banglabandh dry port in Bangladesh to facilitate two-way trade.
At present, Nepali exporters are required to transship their goods at the zero point where customs and other facilities are absent. This has been creating unnecessary hassles for traders.
As for the newly-offered transit route, Ojha said Rohalpur is a railway-based route, which can be connected with the Birgunj inland container depot via Singhbad in India. “We will have to talk with India for operationalizing it,” he said.
If India responds positively, it will link Nepal with Bangladesh's broad-gauge railway network, thereby facilitating better trading conditions for entrepreneurs.
Bangladesh also pledged to extend infrastructure and logistics support to Nepali export and import cargoes to lure entrepreneurs to conduct third-country trade via the Chittagong and Mangla ports.
Talking to the press, Ahmed further said that the two sides also agreed to exchange business delegations to facilitate business-to-business contacts.
Bangladesh is organizing a single-country trade fair in Kathmandu in December. The Nepali business community will also be taking part in trade fairs in Bangladesh, according to the officials.
eKantipur.com, 8-Oct-07
Bangladesh on Monday agreed to allow Nepal to use Rohalpur as a new transit route to facilitate bilateral and third-country trade. However, it refused to extend duty-free market access for agricultural and primary goods on a unilateral basis as Nepal had requested.
“Bangladesh has already cut the duty to zero on some items, for others we are willing to go for a preferential trading arrangement,” said Bangladeshi Commerce Secretary Feroz Ahmed at the conclusion of the three-day commerce secretary-level bilateral talks Monday.
Nepal had handed over a list of 21 groups of products, mostly agricultural and primary goods, to Bangladeshi Commerce Ministry officials requesting duty-free entry facility for them in Bangladesh.
Officiating Nepali Commerce Secretary Purushottam Ojha said the three-day trade talks were successful as the two sides agreed to improve connectivity and harmonize transit and trading procedures at the earliest in order to facilitate bilateral trade.
“Most importantly, we came up with a working document for operating the transit facility provided to us,” he said. He added that the two sides would hold the next round of talks within two months to finalize the modality.
Although Nepal and Bangladesh signed a bilateral transit treaty in 1976, the two countries have not developed a working modality yet. This has rendered trading through the Kakarbhitta-Fulbari-Banglabandh route difficult, thus discouraging bilateral commerce.
On Monday, the Nepali and Bangladeshi commerce secretaries signed a memorandum agreeing to do away with the constraints seen in the movement of cargo vehicles, among others.
Talking to the Post, Ojha said that Bangladesh has agreed to facilitate entry of Nepali vehicles from the zero point on the Indo-Bangladesh border to the Banglabandh dry port in Bangladesh to facilitate two-way trade.
At present, Nepali exporters are required to transship their goods at the zero point where customs and other facilities are absent. This has been creating unnecessary hassles for traders.
As for the newly-offered transit route, Ojha said Rohalpur is a railway-based route, which can be connected with the Birgunj inland container depot via Singhbad in India. “We will have to talk with India for operationalizing it,” he said.
If India responds positively, it will link Nepal with Bangladesh's broad-gauge railway network, thereby facilitating better trading conditions for entrepreneurs.
Bangladesh also pledged to extend infrastructure and logistics support to Nepali export and import cargoes to lure entrepreneurs to conduct third-country trade via the Chittagong and Mangla ports.
Talking to the press, Ahmed further said that the two sides also agreed to exchange business delegations to facilitate business-to-business contacts.
Bangladesh is organizing a single-country trade fair in Kathmandu in December. The Nepali business community will also be taking part in trade fairs in Bangladesh, according to the officials.
Saturday, October 06, 2007
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.
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.
Thursday, September 27, 2007
BIMSTEC meet to finalize FTA
BIMSTEC meet to finalize FTA
eKantipur.com, 26-Sep-2007
The seven member countries of BIMSTEC, including Nepal, have begun negotiations in Dhaka to finalize an agreement that would pave the way for establishing a free trade area (FTA) in the bloc.
The trade negotiation committee (TNC) assigned for finalizing the pact Wednesday discussed on agreements on trade in goods, which is one among the three subsidiary agreements to be agreed up for the establishment of the FTA.
Officials said that the TNC today mainly discussed on the negative lists and rules of origin - two areas in which differences have persisted for long.
During the meeting, Thailand proposed that the negative list, which includes items on which free trade rules would not apply, be brought down to 10 percent. Nepal and other members, citing sensitivity of agro and other products, proposed that it be kept at 20 percent.
So far, members have prepared a longer negative list including 25 percent of the total tariff lines. Nepal, Bangladesh, India, Thailand, Sri Lanka, Bhutan and Myanmar are the members of BIMSTEC.
During the discussions, Thailand opposed the intent of some of the member countries to include various items in negative list for some members and open those for others.
It proposed adoption of the principle of reciprocity in the agreement, whereby a product being in the negative list of a particular country would not get duty-free status in other countries in the bloc. The proposal was floated in order to apply pressure on the negotiating teams to reduce the negative lists.
On rules of origin, India stood firm on its proposal of 40 percent value addition for developing members and 30 percent for least developed members.
Thailand and other LDC members, including Nepal, on the other hand, pushed for 30 percent value addition criteria for non-LDC and 20 percent for LDC members.
Besides these two issues, which will determine the condition of trading under the FTA, BIMSTEC members are still to finalize items
to be opened under fast track and normal track of tariff liberalization.
Likewise, the TNC is also scheduled to discuss on items in which tariff would be brought down to zero and items in which tariffs would be slashed to 1 to 5 percent.
The members had agreed on a BIMSTEC framework agreement on FTA during the BIMSTEC Summit on February 8, 2004. Nepal had acceded to the bloc during the summit.
Although BIMSTEC committed to commence free trade on goods from July 2006, it missed the deadline due to the failure in finalizing the agreement. Likewise, the members are yet to start discussions on an agreement on trade in services and investments.
eKantipur.com, 26-Sep-2007
The seven member countries of BIMSTEC, including Nepal, have begun negotiations in Dhaka to finalize an agreement that would pave the way for establishing a free trade area (FTA) in the bloc.
The trade negotiation committee (TNC) assigned for finalizing the pact Wednesday discussed on agreements on trade in goods, which is one among the three subsidiary agreements to be agreed up for the establishment of the FTA.
Officials said that the TNC today mainly discussed on the negative lists and rules of origin - two areas in which differences have persisted for long.
During the meeting, Thailand proposed that the negative list, which includes items on which free trade rules would not apply, be brought down to 10 percent. Nepal and other members, citing sensitivity of agro and other products, proposed that it be kept at 20 percent.
So far, members have prepared a longer negative list including 25 percent of the total tariff lines. Nepal, Bangladesh, India, Thailand, Sri Lanka, Bhutan and Myanmar are the members of BIMSTEC.
During the discussions, Thailand opposed the intent of some of the member countries to include various items in negative list for some members and open those for others.
It proposed adoption of the principle of reciprocity in the agreement, whereby a product being in the negative list of a particular country would not get duty-free status in other countries in the bloc. The proposal was floated in order to apply pressure on the negotiating teams to reduce the negative lists.
On rules of origin, India stood firm on its proposal of 40 percent value addition for developing members and 30 percent for least developed members.
Thailand and other LDC members, including Nepal, on the other hand, pushed for 30 percent value addition criteria for non-LDC and 20 percent for LDC members.
Besides these two issues, which will determine the condition of trading under the FTA, BIMSTEC members are still to finalize items
to be opened under fast track and normal track of tariff liberalization.
Likewise, the TNC is also scheduled to discuss on items in which tariff would be brought down to zero and items in which tariffs would be slashed to 1 to 5 percent.
The members had agreed on a BIMSTEC framework agreement on FTA during the BIMSTEC Summit on February 8, 2004. Nepal had acceded to the bloc during the summit.
Although BIMSTEC committed to commence free trade on goods from July 2006, it missed the deadline due to the failure in finalizing the agreement. Likewise, the members are yet to start discussions on an agreement on trade in services and investments.
Monday, September 24, 2007
Nepali carpet exports to US up
Nepali carpet exports to US up
ArthaExpress, 23-Sep-2007
Nepali carpet exporters are optimistic on regaining their lost glory in woollen hand-knotted carpets following an increase in exports to the US market.
Although the European markets still consumes major chunk of Nepali carpet exports, the US is steadily coming up with one of potential markets, as it lured more than 22 per cent of the total exports during the fiscal year 2006-07.
Out of the total exports of 1.3 million sq-metre of hand-knotted carpets during the period, about 3,00,000 sq-metre were exported to US alone, according to figures of the Trade and Export Promotion Centre. Although total exports of carp-ets dropped by about 11 per cent in 2006-07, export to US market has been steadily growing
Nepal exported hand-knotted woollen carpets worth abo-ut Rs 5.5 billion during the fiscal 2006-07, whereas the exports in 2005-06 accounted for about six billion rupees. Poor manufacturing condition, static global demand along with the competition posed by Chinese and Vietnamese carpets lowered the demand for the Nepali carpets.
“Besides increasing demand in the US, competitive strength of Nepali carpets has also gone up in recent years, which is a plus point,” said Ram Bahadur Gurung, director of Gandaki Carpet Industry and joint coordinator of the Central Carpet Industry Association (CCIA).
He further said that Nepali carpet manufacturers and exporters could benefit from spill-over effect of proposed wage hike in China and India. Quoting unconfirmed reports, Guru-ng said that China is planning to fix a minimum wage of a labourer at Rs 17,000 per month and India is likely to follow.
“The hike in minimum wage is sure to make cost of production dearer in China and India, which will be an opportune ti-me for Nepal,” Gurung said. He urged that current problems such as political instability, labour dispute, frequent strikes and bandhs should, however, be addressed immediately.
In the operational front, the government must provide tax incentive by bringing back the carpet-manufacturing units into cottage and small industry category, according to CCIA. The association has also asked the government to formulate a separate labour law for the carpet industry, set up a carpet processing zone and distinct label or logo for Nepali hand-knotted carpets.
“Its time for an aggressive promotion, as the Nepali carpets is still popular among many buyers in Europe and luring new importers in the US, Japan, Korea and also in Latin America,” suggested Gurung, adding that the private and public sector must address the issue of Indo-Nepal carpet immediately. He foresees that the Nepali carpet exports could recover its lost glory with an average growth of 12-15 per cent annually, if the persisting issues are addressed on time.
Once, the carpet industry al-one is said to have provided more than 3,00,000 jobs.
ArthaExpress, 23-Sep-2007
Nepali carpet exporters are optimistic on regaining their lost glory in woollen hand-knotted carpets following an increase in exports to the US market.
Although the European markets still consumes major chunk of Nepali carpet exports, the US is steadily coming up with one of potential markets, as it lured more than 22 per cent of the total exports during the fiscal year 2006-07.
Out of the total exports of 1.3 million sq-metre of hand-knotted carpets during the period, about 3,00,000 sq-metre were exported to US alone, according to figures of the Trade and Export Promotion Centre. Although total exports of carp-ets dropped by about 11 per cent in 2006-07, export to US market has been steadily growing
Nepal exported hand-knotted woollen carpets worth abo-ut Rs 5.5 billion during the fiscal 2006-07, whereas the exports in 2005-06 accounted for about six billion rupees. Poor manufacturing condition, static global demand along with the competition posed by Chinese and Vietnamese carpets lowered the demand for the Nepali carpets.
“Besides increasing demand in the US, competitive strength of Nepali carpets has also gone up in recent years, which is a plus point,” said Ram Bahadur Gurung, director of Gandaki Carpet Industry and joint coordinator of the Central Carpet Industry Association (CCIA).
He further said that Nepali carpet manufacturers and exporters could benefit from spill-over effect of proposed wage hike in China and India. Quoting unconfirmed reports, Guru-ng said that China is planning to fix a minimum wage of a labourer at Rs 17,000 per month and India is likely to follow.
“The hike in minimum wage is sure to make cost of production dearer in China and India, which will be an opportune ti-me for Nepal,” Gurung said. He urged that current problems such as political instability, labour dispute, frequent strikes and bandhs should, however, be addressed immediately.
In the operational front, the government must provide tax incentive by bringing back the carpet-manufacturing units into cottage and small industry category, according to CCIA. The association has also asked the government to formulate a separate labour law for the carpet industry, set up a carpet processing zone and distinct label or logo for Nepali hand-knotted carpets.
“Its time for an aggressive promotion, as the Nepali carpets is still popular among many buyers in Europe and luring new importers in the US, Japan, Korea and also in Latin America,” suggested Gurung, adding that the private and public sector must address the issue of Indo-Nepal carpet immediately. He foresees that the Nepali carpet exports could recover its lost glory with an average growth of 12-15 per cent annually, if the persisting issues are addressed on time.
Once, the carpet industry al-one is said to have provided more than 3,00,000 jobs.
Wednesday, July 04, 2007
Consumer inflation eases
Consumer inflation eases
eKantipur.com, 3-Jul-07
As an impact of lower rate of price rise in food materials and appreciation of the Nepali currency, consumer prices grew at 4.6 percent in mid-May.
However, average inflation for the first 10 months of the fiscal year remained at 6.8 percent, says a latest report of Nepal Rastra Bank (NRB).
According to the report on the country's macroeconomic situation for the first ten months, prices of food and beverages rose by 6.1 percent during the period, contrary to a rise of 9.1 percent a year ago.
During the period, the price of spices grew by 20 percent. However, the prices of sugar and related products declined by 16.3 percent, pulses went down by 11.2 percent, grains and cereal products declined by 6.4 percent, vegetables and fruits dropped by 6.4 percent and beverages lowered by 2.3 percent, easing inflation.
Likewise, prices of non-food items and services rose by 3 percent compared to a rise of 9.1 percent of the same period last year. The moderate rise in prices of this group is due to the impact of recent appreciation of the Nepalese currency against the US dollar on imported commodities. According to NRB, Nepali currency vis-à-vis US dollar appreciated by 12.79 percent in mid-May in comparison to mid-July 2006.
The exchange rate of one US dollar stood at Rs 65.70 in mid-May 2007 compared to Rs 72.19 in mid-May 2006. As a result, remittance receipt of the country grew at a slower rate.
NRB report further says that Nepal's external sector did not perform satisfactorily in the first ten months of 2006/07. “Exports fell by 0.3 percent in contrast to a growth of 3.3 percent recorded in the same period last year.”
The central bank has attributed the decline to a number of factors such as deteriorating security condition, frequent bandas, lack of investment friendly climate and power shortages.
While exports to India rose by just 1 percent in the first 10 months, exports to other countries declined by 3.1 percent. In the same period last year, exports to India had grown by 8 percent, and exports to other countries had declined by 5.6 percent.
Likewise, the country's total imports rose by 10.5 percent during the period, whereas it had grown by 16 percent in the same period last year.
Imports from India also increased at a slower rate of 11.4 percent and imports from other countries also rose by 9 percent during the period.
eKantipur.com, 3-Jul-07
As an impact of lower rate of price rise in food materials and appreciation of the Nepali currency, consumer prices grew at 4.6 percent in mid-May.
However, average inflation for the first 10 months of the fiscal year remained at 6.8 percent, says a latest report of Nepal Rastra Bank (NRB).
According to the report on the country's macroeconomic situation for the first ten months, prices of food and beverages rose by 6.1 percent during the period, contrary to a rise of 9.1 percent a year ago.
During the period, the price of spices grew by 20 percent. However, the prices of sugar and related products declined by 16.3 percent, pulses went down by 11.2 percent, grains and cereal products declined by 6.4 percent, vegetables and fruits dropped by 6.4 percent and beverages lowered by 2.3 percent, easing inflation.
Likewise, prices of non-food items and services rose by 3 percent compared to a rise of 9.1 percent of the same period last year. The moderate rise in prices of this group is due to the impact of recent appreciation of the Nepalese currency against the US dollar on imported commodities. According to NRB, Nepali currency vis-à-vis US dollar appreciated by 12.79 percent in mid-May in comparison to mid-July 2006.
The exchange rate of one US dollar stood at Rs 65.70 in mid-May 2007 compared to Rs 72.19 in mid-May 2006. As a result, remittance receipt of the country grew at a slower rate.
NRB report further says that Nepal's external sector did not perform satisfactorily in the first ten months of 2006/07. “Exports fell by 0.3 percent in contrast to a growth of 3.3 percent recorded in the same period last year.”
The central bank has attributed the decline to a number of factors such as deteriorating security condition, frequent bandas, lack of investment friendly climate and power shortages.
While exports to India rose by just 1 percent in the first 10 months, exports to other countries declined by 3.1 percent. In the same period last year, exports to India had grown by 8 percent, and exports to other countries had declined by 5.6 percent.
Likewise, the country's total imports rose by 10.5 percent during the period, whereas it had grown by 16 percent in the same period last year.
Imports from India also increased at a slower rate of 11.4 percent and imports from other countries also rose by 9 percent during the period.
Saturday, June 16, 2007
Trade deficit continuous to widen: NRB
Trade deficit continuous to widen: NRB
Nepalbiznews.com, 11-Jun-2007
Due to continuous rise in imports against export, Nepal's trade deficit continues to widen, as it crossed Rs 70 billion during the first nine months of the current fiscal year 2006-07, states a recent data of Nepal Rastra Bank (NRB).
According to the macroeconomic situation report released by NRB on Sunday, total exports fell by 2.9 per cent in the first nine months, while imports registered a growth of 7.4 per cent. Total exports in the corresponding period in the previous year had risen by 9.1 per cent and a 21 per cent rise was recorded on imports.
While exports to India declined by 2.3 per cent in 2006-07 as against a significant increase of 15.4 per cent in the same period of 2005-06, exports to other countries fell by 4.2 per cent in comparison to a decline of 2.6 per cent in the preceding year.
The responsible factors for the dismal performance of the export sector included the unfriendly investment climate, worsening security situation, load shedding and the Terai bandh, among others.
The decline in exports to India was ascribed to the decline in exports of polyester yarn, cattle-feed, plastic utensils, G.I. pipes and readymade garments. Likewise, the decline in exports to other countries was due to the decline in the export of readymade garments, pashmina, woollen carpets, and handicrafts and tanned skin.
On the other hand, total imports from India increased by 9.5 per cent in the review period compared to a higher growth of 26.4 per cent in the corresponding period last year. Similarly, imports from other countries registered a rise of four per cent compared to a growth of 13.4 per cent a year earlier.
The rise in total imports during the period was attributed to the rise in imports of vehicles and spare parts, petroleum products, cold rolled sheet in coil, electrical equipment and cement, among others, from India as well as a rise in imports of crude palm oil, computer parts, chemical fertilizer, zinc ingot and medicine, among others, from other countries.
On the external front, the overall balance of payments (BoP) posted a surplus of Rs 10.79 billion in the first nine months of 2006-07. In the corresponding period of 2005-06, the BoP surplus was significant at Rs 17.15 billion.
Of this BoP surplus, the current account surplus was Rs 6.85 billion and the remaining Rs 3.94 billion emanated from the capital and financial account.
In the government budgetary operations, the total expenditure, on a cash basis, increased by 13.3 per cent to Rs 68.68 billion. Of the total government expenditure, recurrent expenditure increased by 12.7 per cent to Rs 47.76 billion, while the capital expenditure rose by 25 per cent to Rs 11.67 billion.
Increase in the allowance of government employees, expenses on the management of Maoist's army, re-establishment of the police posts accounted for the acceleration of recurrent expenditure in the review period, while a frequent Terai unrest and absence of elected representatives in local bodies accounted for deceleration in capital expenditure.
During the review period, total revenue grew by 22.2 per cent to Rs 56.65 billion compared to a growth of a mere 0.1 per cent in the previous year. Revenue collection grew on the account of adjustment in customs and excise rates, improvement in customs valuation, increased tax compliance, a rise in corporate income tax and value added tax as well as an increase in some non-tax revenue.
In the review period, the government incurred a cash budget surplus of Rs 2.50 billion in contrast to a deficit of Rs 5.99 billion in the corresponding period last year. In the review period, the government mobilised Rs 12.41 billion through borrowing, consisting domestic borrowing of Rs 10.03 billion and external borrowing of Rs 2.38 billion.
As capital expenditure did not increase as expected, the government recorded a cash reserve of Rs 16.78 billion with the NRB in the review period.
As a result of higher cash surplus with the NRB and domestic debt repayment of Rs. 3.03 billion, the net domestic financing of the government budget stood at a negative of Rs 9.78 billion in the review period.
Nepalbiznews.com, 11-Jun-2007
Due to continuous rise in imports against export, Nepal's trade deficit continues to widen, as it crossed Rs 70 billion during the first nine months of the current fiscal year 2006-07, states a recent data of Nepal Rastra Bank (NRB).
According to the macroeconomic situation report released by NRB on Sunday, total exports fell by 2.9 per cent in the first nine months, while imports registered a growth of 7.4 per cent. Total exports in the corresponding period in the previous year had risen by 9.1 per cent and a 21 per cent rise was recorded on imports.
While exports to India declined by 2.3 per cent in 2006-07 as against a significant increase of 15.4 per cent in the same period of 2005-06, exports to other countries fell by 4.2 per cent in comparison to a decline of 2.6 per cent in the preceding year.
The responsible factors for the dismal performance of the export sector included the unfriendly investment climate, worsening security situation, load shedding and the Terai bandh, among others.
The decline in exports to India was ascribed to the decline in exports of polyester yarn, cattle-feed, plastic utensils, G.I. pipes and readymade garments. Likewise, the decline in exports to other countries was due to the decline in the export of readymade garments, pashmina, woollen carpets, and handicrafts and tanned skin.
On the other hand, total imports from India increased by 9.5 per cent in the review period compared to a higher growth of 26.4 per cent in the corresponding period last year. Similarly, imports from other countries registered a rise of four per cent compared to a growth of 13.4 per cent a year earlier.
The rise in total imports during the period was attributed to the rise in imports of vehicles and spare parts, petroleum products, cold rolled sheet in coil, electrical equipment and cement, among others, from India as well as a rise in imports of crude palm oil, computer parts, chemical fertilizer, zinc ingot and medicine, among others, from other countries.
On the external front, the overall balance of payments (BoP) posted a surplus of Rs 10.79 billion in the first nine months of 2006-07. In the corresponding period of 2005-06, the BoP surplus was significant at Rs 17.15 billion.
Of this BoP surplus, the current account surplus was Rs 6.85 billion and the remaining Rs 3.94 billion emanated from the capital and financial account.
In the government budgetary operations, the total expenditure, on a cash basis, increased by 13.3 per cent to Rs 68.68 billion. Of the total government expenditure, recurrent expenditure increased by 12.7 per cent to Rs 47.76 billion, while the capital expenditure rose by 25 per cent to Rs 11.67 billion.
Increase in the allowance of government employees, expenses on the management of Maoist's army, re-establishment of the police posts accounted for the acceleration of recurrent expenditure in the review period, while a frequent Terai unrest and absence of elected representatives in local bodies accounted for deceleration in capital expenditure.
During the review period, total revenue grew by 22.2 per cent to Rs 56.65 billion compared to a growth of a mere 0.1 per cent in the previous year. Revenue collection grew on the account of adjustment in customs and excise rates, improvement in customs valuation, increased tax compliance, a rise in corporate income tax and value added tax as well as an increase in some non-tax revenue.
In the review period, the government incurred a cash budget surplus of Rs 2.50 billion in contrast to a deficit of Rs 5.99 billion in the corresponding period last year. In the review period, the government mobilised Rs 12.41 billion through borrowing, consisting domestic borrowing of Rs 10.03 billion and external borrowing of Rs 2.38 billion.
As capital expenditure did not increase as expected, the government recorded a cash reserve of Rs 16.78 billion with the NRB in the review period.
As a result of higher cash surplus with the NRB and domestic debt repayment of Rs. 3.03 billion, the net domestic financing of the government budget stood at a negative of Rs 9.78 billion in the review period.
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