Exporters say that the leading US importers offered 15 percent lower prices for fresh orders amid the drop in consumer spending in the United States, the largest apparel market. “The rates were so low, we wouldn´t have fetched any return; that´s why we could not accept all the orders,” said an official at Garment Association Nepal (GAN).
GAN´s statistics show that garment exports amounted to a mere US$ 3.40 million during the first five months of 2009; in the same period last year, the figure stood at US$ 6.91 million. In fact, the volume exported this year did not even total one-tenth of what the country exported in the same period in 2004.
Moreover, statistics show that garment exports dipped to 49 percent in May alone. Exports during the month were valued at just over half a million dollars; in May 2004, that figure was US $8.33 million.
Little wonder then that exporters say the industry has cratered over the last five years, in the absence of political and government support and in an environment that´s rife with labor problems.
The gloom in the garment industry, once the largest foreign currency spinner, had first crept in in 2002, when the United States started providing duty free facility to Sub-Saharan and Caribbean countries. That provision instantly made Nepali exports more expensive than their competitors´ by some 17 percent.
Since that year, the garment-export business has gotten progressively worse: within the country, labor problems, the lack of cost-effective infrastructural and logistics support and strike and bandas have hobbled the sector; and without, factors like the elimination of quotas in global apparel trading, have served to weaken Nepal´s garment sector.
During this ultra lean period, the number of industries has dropped to about a dozen from the more than 250 of the past. And in a vicious cycle, employment numbers have also declined with dwindling investments.
To resuscitate the industry, GAN has made clear that three measures must be taken: i) a Garment Processing Zone, the operating of which should lower productions costs, must be set up (the idea has been pushed since 1999); ii) an order-based hiring system (sought since 2007) that frees manufacturers from undue labor liability must be instituted; and iii) a duty-free-entry facility for Nepali garments in the United States (an issue that´s been lobbied for since 2005) must be provided by the United States.
Given the political instability and the weak government in the country, entrepreneurs doubt that the first two measures can be fulfilled. They are, however, hopeful that something similar to their third prescription might see the light of day, especially now that a couple of US senators have recently re-registered a bill that promises duty-free market access for some dozen Least Developed Countries, including Nepal.
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