The most-reassuring development has come from third country exports (excluding India) that, according to the Nepal Rastra Bank, increased by almost 29 percent, despite the fact that readymade garments, Nepal’s leading export, continued to record a downfall. It is good that the export of woolen carpet, which has a strong backward linkage by generating mass employment for the lower class, is regaining its lost glory of being Nepal’s number one exported item. The total export of woolen carpet during the period stood at Rs 5.20 billion, though this is still less than half of its peak export volume reached in 1996. Along with the depreciation of Nepali currency against the US dollar, the extraordinary efforts made by the carpet entrepreneurs to recapture their lost market in Europe and the US is appreciable and can be attributed for the rise.
Likewise, the majestic growth seen in the export of pulses is an equally promising development, particularly for an agricultural country like Nepal, though there can be some inconsistency and anomalies between the volume of exports and their domestic production and consumption. Though growth of export of readymade garments, which was once seen as the most-vibrant exporting sector of the country, is a mere 1.4 percent, the positive development is that the sector has at least stopped squeezing and, maybe, we hope that these are initial signs that it is preparing for a fresh takeoff.
However, not every sector is shining. Export of pashmina products saw another double-digit decline of 31 percent, down from last year’s 41 percent. It is worrisome that the sector, the third-most important after garment and carpet industries, has been shrinking at full speed. The export of handicraft, which once again declined by 3.3 percent after a similar decline of 11 percent last year, shared the same sorry story.
Despite the growth seen in the total volume of exports, the key exports of the country are in a vulnerable position because the environment for doing business in Nepal is still not favorable. The worsening law and order condition, particularly in the Tarai region, has inflated the risks, resulting in rise in cost of production and erosion in competitiveness. Apart from measures to boost exports, maintaining rule of law is the most crucial thing that the government should do to promote the country’s exports.
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