“The expiry of the facility has left a consignment of raw materials (supplied by the importers) worth $100,000 stranded at Tribhuvan International Airport,” Indra Chitrakar, senior staff of Sherpa Adventure Gear.[break]
Sherpa Adventure Gear has been exporting ´Sherpa´ brand of garment under the facility by importing raw materials free of cost from Taiwan, Hong Kong, Japan and China.
“If the government did not act promptly, we will lose business worth around $1 million,” Chitrakar told Republica on Wednesday.
Four other apparels manufacturers, including Ami Apparels and Kathmandu Star Fashion, too have lodged similar concerns at the Ministry of Commerce and Supplies (MoCS).
The government had introduced buyback guarantee facility four years ago and it was subject to renewal every two years. Though the latest tenure of the facility expired two months ago, exporters said MoCS has yet to take initiative to extend the facility.
About half a dozen RMG exporters are enjoying the buyback facility, exporting apparels worth around Rs 500 million to overseas markets every year.
“We had requested the government for extension of the buyback guarantee facility long before it expired. Sadly, our requests fell on deaf ears,” said Uday Raj Pandey, president of Garment Association of Nepal (GAN).
The ministry´s inaction, meanwhile, has put the fate of garment orders worth millions of rupees and jobs of hundreds of workers into uncertainty.
Ami Apparel that operates with 300 workers said lack of timely decision on buyback arrangement has exposed it to a risk of losing exports worth around Rs 80 million. The company has been exporting readymade garments to leading branded stores in India.
“We have shut down our factory temporarily. If the government did not extend the facility, we will be forced to shut it down permanently,” Rajesh Udas, proprietor of Ami Apparel, said.
Ashok Shakya, chairman of Kathmandu Star Fashion, too said the government´s indecisiveness is set to cost his industry business worth Rs 180 million. “We are facing shortage of raw materials. We´ve already informed buyers about the problem here,” he stated.
Kathmandu Star Fashion that employs over 500 people has been exporting garment to Europe and the US.
Shakya further said that Nepali apparels industry will face over 30 percent rise in production cost if the government did not renew the facility.
Under the buyback system, no importer of raw materials was required to keep deposits on imports supplied by the buyer and exporters were provided with bonded warehouse facility even without letter of credit. They were also exempted from paying bank guarantee charge.
Readymade garment was once the country´s largest exports commodity with annual exports crossing over Rs 12 billion in 1999/2000. However, its export has presently dropped to Rs 4.08 billion per annum.
Meanwhile, Lal Mani Joshi, secretary at the MoCS, said that ministry has received complaints over the issue and added that the government would take appropriate decisions within few days.
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