Kathmandu, January 3:

The sorry state of the Nepali readymade garment exports to the United States continues with a decline of about six per cent in 2006, compared to last year.

This fall in exports to the US, the single largest market of Nepali garment and apparel products that absorbs about 85 per cent of the total exports, is somewhat of a relief compared to the whopping decline of over 41 per cent in 2005 and 30 per cent in 2004.

Garment exports to US suffered almost throughout the year in 2006, except for a brief progress in the months of February, May and June.

Garment and apparel products valued over $47.77 million were exported to US in 2006, whereas garment products worth over $50.72 million were exported last year, reveals the figures provided by the Garment Association of Nepal (GAN), today. The fall in export indicates a difficult time ahead for Nepali garment manufacturers and exporters as well, as markets have been opened for all competitors without quota restrictions, an exporter told this daily.

He underscored the need for enhancing competitive strength of Nepali products to compete with big suppliers from India and China and other fervent players such as Bangladesh and Pakistan.

According to quantitative analysis of garment exports to US, altogether 133,832 kg of the commodity were exported during the year, whereas the figure for 2005 stood at 161,820 kg.

Many internal factors and other non-tariff barriers such as social compliance, procedural complications, lengthy customs process, documentations and among others, are said to be the debilitating factors for Nepali apparel products that are usually more costly, making them less competitive.

Garment exports have been dwindling for the past three years and the quota phase out from January last year came as a big shock to the already troubled industry. In the aftermath of termination of multi-fibre arrangement (MFA), the value and volume of exports declined by 22 and 28 per cent respectively, during 2005.

Since the US alone absorbs more than 85 per cent of the total garment exports, single market concentration is also blamed for such a plummet.

A recent UN report on garment and textile exports has suggested that Nepal ‘urgently needs to diversify’ its exportable products as well as markets. Carpets represent top Nepali export commodity in both US and EU markets. But, three out of Nepal’s top five commodities are those that face more competition after the elimination of quotas and also are produced by other countries in the region.

Besides building up competitive strength, diversification of markets and products have remained a major challenge for Nepali apparel industries. A gradual increment in exports to the European Union and Canada has lit a ray of hope for garment manufacturers and exporters.

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