Garment industry reeling

KATHMANDU, May 9: Nepal´s garment industry has cratered. Over the first four months of 2009, the export of readymade garments to the United States dropped to US$ 2.83 million: that figure represents a drop of 59 percent, compared to the same period last year. In fact, Nepal´s garment industries did not even export 10 percent of what was exported in the first four months of 2004. [break]



"The industry is simply dying out," says a garment manufacturer now sitting idle following the closure of his company about a year ago. The gloom started around 2002 and business has got progressively worse since then, and exporters say they see no possibility of an immediate reversal of this trend. Now, with the political instability that has gripped the country, no one knows when the industry might find its feet again.



Once the largest foreign currency generator among exports, the Nepali readymade garment today suffers from an inability to compete with other countries and from labor problems and frequent strikes that prevent exporters from making delivery deadlines. To top it all, the end of the quota system in international apparel trade has severely hurt the already ailing industry. Because of the woeful business climate, the number of industries in this once thriving sector now hovers somewhere in the range of a dozen. And in a vicious cycle, employment numbers are also dropping with dwindling investments.



Only three measures can resuscitate the industry, say the garment factory owners: one, a Garment Processing Zone (the idea has been pushed since 1999) must be created; two, an order-based hiring system (sought since 2007) must be instituted; and three, a duty-free-entry facility for Nepali garments exported to the United States (lobbied for since 2005) must be provided for.



But all these goals remain elusive, even after all these years. The proposal that a GPZ should be built has been approved by the government, but the project is still all idea; the labor issue will not be solved anytime soon because the issue is a politically inflammable one for the government; and the proposal that the United State provide a duty-free facility has been pushed even further into the wilderness now that recession-time economics is coming into play."



"These revival measures need bold decisions and committed support from the government," says Uday Raj Pandey, vice president of the Garment Association of Nepal. "Sadly, the government has been nothing but meek."

Related story

Saving garment industry