Garment export to US plummets

Kathmandu, June 8:

Nepali readymade garment (RMG) exporters continued to suffer yet another month as exports to the United States (US), the single largest market of Nepali readymade garment exports, plummeted by 51 per cent in value during the month of May.

It is the fourth consecutive month this year that the exports of Nepali textile and apparel products have lost its beat. The RMG exports to the US have been suffering for the last couple of years but it had slightly recovered early this year with exports rising by a mere two per cent.

The exports had suffered a loss of 30 per cent in 2004 and it went down further by 41 per cent in 2005. It slowed down with six per cent drop in 2006 but it saw a whopping fall of 48 per cent in 2007.

As the US alone absorbs more than 80 per cent of the total RMG exports, the single country concentration is blamed to be one of the major reasons for such a huge and continuous plummet.

The industry is already in doldrums for the last couple of years with the crisis deepening further following a complete phase out of quota regime under the Agreement on Textiles and Clothing (ATC) from January 1, 2005.

During the peak time, the total number of industries had crossed 1,200 but today over 95 per cent of them have already shutdown bringing the figure down to only 40 units in operation at present.

The RMG products valued over $1.10 million were exported to the US in May, whereas the garment products worth over $2.25 million were exported in the corresponding month last year, reveals the figures provided by the Garment Association of Nepal (GAN).

The continuous fall in exports indicates that the Nepali readymade garment industry is gradually on the verge of a ‘complete collapse’, as the global markets have already been opened for all the competitors without quota restrictions.

An industry insider stressed the need of enhancing competitive strength in terms of price and quality of the Nepali products to compete with big suppliers from India and China and other fervent players like Bangladesh, Sri Lanka and Cambodia.

Besides building the competitive strength, diversification of both the markets and products has remained a major challenge for the Nepali garment manufacturers and exporters.

A gradual increment of the exports to the European Union and the Canadian markets has shown rays of hopes to the garment manufacturers and exporters. These two big and potential markets have already provided duty free access to the exports from the 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.