In an effort to tap the growing demands from Europe, the number of small apparel producers and exporters has doubled in a year to deal with possible labor unrests and delay in shipments.[break]
Even the big apparel houses are segregating their productions into small scale units to be able to ensure smooth and uninterrupted supply of products to overseas markets.
Uday Raj Pandey, the president of Garment Association of Nepal (GAN), told Republica on Saturday that European Union countries are buying over 60 percent of the total RMG exports and the remaining quantities are finding their way to Indian and the US markets. Germany, France, Holland and Italy are the major importers of Nepali RMG.
“Small producers and exporters have multiplied over a year owing to frequent labor unrests and uncertainty in shipments to overseas buyers. Big buyers are opting for smaller units where the chances of unionization of labor and shipment disruption are nominal,” said Pandey.
“Despite the higher production and supply costs in operating small scale units, entrepreneurs prefer small units,” added Pandey.
The number of Nepali apparel producers shrunk to around a half dozen big companies and around 60 small factories over a decade following the phase out of duty-free quota-free (DFQF) compounded by the frequent labor unrests that have been disrupting the timely shipment of products to overseas markets.
A decade ago, over 1,000 big and small apparels operating in Nepal exported a record high Rs 12 billion worth of RMG to different overseas markets, mainly to the US. Exports of apparels started to dwindle following the end of DFQF facilities and enforcement of 17 percent tariffs on imports from Nepal.
“Whatever growth we have seen in the exports of RMG is encouraging at a time when a limited number of exporters are struggling to survive the adverse business climate. Lately, European markets have opened their doors for Nepali apparels and we can increase the export significantly if the concept of Garment Processing Zone comes about,” said Pandey.
According to the data compiled by Trade and Export Promotion Center (TEPC), export of RMG has shot up by 11.5 percent to Rs 3.62 billion during the first eleven months of the fiscal year 2010/11 compared to the figure during the same period last year. During the year 2009/10, total garment exports amounted to Rs 3.75 billon.
Nepal had exported 15.22 million units of RMG goods during the review period, up from 15.05 million units recorded during the same period earlier year.
Exporters also said the demands from European countries have shifted from traditional items such as shirts, T-shirts and trousers to boutiques that Nepal can exclusively supply with huge value addition.
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