As buyers in the largest apparel market shift to the cheaper suppliers, Nepal could export garment worth mere $4.16 million to the US. Exports for the period stood at 7 percent of what Nepal exported in 2004.
Since the elimination of quota in the global apparel trading in 2005, Nepal has witnessed a sharp drop in exports due to reasons such as eroding competitiveness in international market, increasing labor problems and incidents of bandas, which subsequently affected productions as well as timely delivery of orders.
While the problems of the industry still remain the same, exports in July dropped by 8 percent as compared to the exports recorded in the same period last year.
According to the statistics of Garment Association Nepal (GAN), the export of readymade garment to the US in July stood at $560,000. In July 2004, Nepal had exported garments worth $ 5.69 million in the US market.
Exporters said the present global economic slowdown and decline in consumption by the US consumers mainly hit the exports in recent months. However, it is not the sole reason behind the downfall of the industry, which was once the largest foreign currency spinning sector.
The industry first suffered in 2002, when the US pledged duty-free market access to Nepal´s competitors in sub-Saharan and Caribbean countries. The facility made the productions of those countries cheaper than Nepal´s by over 17 percent. Phase out of quota system from January 2005 landed another axe to the business, while industrial insecurity, labor stir and general strikes, which increased significantly in the following years, caused massive closure of manufacturing units, shrinking the number of industry to about a dozen from over 250 units.
Still, the exporters believe that the industry could bounce back if the US government pledged duty-free entry facility to Nepal and the government here developed garment processing zone in the vicinity of Birgunj, which could reduce transit transportation cost by some 20 percent.
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