Himalayan News Service

Kathmandu, May 2:

In the aftermath of quota phase out, Nepali readymade garment exports to United States suffered a massive fall of 41.43 per cent during the first four months of 2005, compared to the corresponding period last year.

Following a huge fall of 30 per cent in 2004, decrease in garment exports began with a whopping decline of 46 per cent in January, which further expanded to 55 per cent in February. Exports didn’t improve, as it fell by 41 per cent and 16 per cent in March and April respectively.

As US alone absorbs more than 80 per cent of the total garment exports of Nepal, single market concentration is also blamed for such a plummet. Exports to US had suffered almost throughout the year in 2004, except for a brief progress in October.

Garment and apparel products valued at over $22.98 million were exported to US from January to April 2005, whereas garment products worth over $39.24 million were exported last year, reveals figures provided by the Garment Association of Nepal (GAN), today.

The value of garments exported to US stood at $6.08 million in January, while it decreased to $4.45 million in February. Nepal exported garments worth $6.24 million in March and $6.20 million in April 2005.

With termination of multi-fibre arrangement (MFA) from January 1 that elapsed the quota system, export has been dwindling and expects a further massive decline ahead this year.

The fall in exports indicates a difficult time ahead for Nepali garment exporters, as markets have now been opened for all competitors without quota restrictions, said Uday Raj Pandey, general secretary at GAN.

He underlined the need for enhancing competitive strength in terms of price and quality of Nepali products.

Many internal factors and other non-tariff barriers such as social compliances, procedural complications, lengthy customs process and documentations, are said to be setbacks for export of Nepali apparel products that make them costly and less competitive.

Pandey also asked the government to extend its support to help the industry survive, which generates 12 per cent of the total industrial employment and earns 40 per cent

of foreign exchange of overseas export earnings.

“Rescheduling of commercial banks’ loans to garment exporters for at least six months could be a great relief at the moment,” he said.

Pandey hinted that there is a light at the end of the tunnel for revival of the industry, since Asia-Pacific trade bill that promises duty-free market access in US for 14 least developed countries (LDCs), is most likely to be approved this fall.

A strong lobby in US is working for the imposition of anti-dumping duty on Chinese apparels, which is yet another plus point for garment exports from the Asia and Pacific region, he added. Besides enhancing competitive strength, diversification of markets and products has remained a major challenge for Nepali apparel industries.

A gradual increment in exports to the European Union and Canada has lit rays of hopes for garment manufacturers and exporters.

These two big, potential markets have already provided duty free access to exports from least developed countries (LDCs) including Nepal. However, Nepal’s share of garment exports to these markets is still as low as 20 per cent of the total exports.