Garment Industry Matters

With export volume at Rs 4.5 billion rupees in the last fiscal year, readymade garments (RMGs) continued to remain the largest export item of the country but hidden behind the seemingly [break]colorful figure is a sad saga of an industry that not very long ago promised a lot more. Just less than a decade back in 2002/2003, export of RMGs had registered over 11.5 billion rupees, clearly indicating that the value of export of RMGs in the last fiscal year is something we should be lamenting about rather than cheering.



While the Maoist insurgency and the political instability, which brought with it all kinds of ills such as the rise of unionism and general strikes, undoubtedly hit the industry very hard, it was primarily our own failure to prepare for a quota-free regime beginning 2005 that resulted in a sharp decline in the volume of export. The quota reduction, which was implemented in four phases – 16 percent in 1995, 17 percent in 1998, 18 percent in 2002, and finally 49 percent in 2005 – had ended 40 years of quota-based trading on textiles and clothing.



That resulted in export to US dwindling from about 9 billion rupees in 2002/2003 to about 1 billion rupees in 2008/2009. Thankfully, the industry so far has been able to stay afloat on the back of preferential access granted by the European Union, Canada and Japan, among others, where export values have grown moderately.



While inadequate preparation to survive in a quota-free regime is one of the saddest chapters of Nepal’s RMG industry, what is inexplicable is why the government continues to remain insouciant to do even what is possible to save an industry that still continues to show immense promise despite regularly receiving a step-motherly treatment. If the status-quo remains, time is not far when the industry, which has been reduced to just a shadow of its former self, will cease to exist altogether.



Among other things, the government needs to get serious about establishing a Garment Processing Zone, a demand that those in the industry have been pushing for since 1999. Besides this, industry experts say, it is urgent to bring in export-oriented policies, favorable labor laws, etc. But since all this is impossible in the absence of a political commitment, which has become one of the rarest commodities in present-day Nepal, the road ahead looks fraught with obstacles. In a country that has not been able to elect a prime minister in seven rounds of elections, to expect that things would change overnight would certainly be a tad too optimistic.

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