Nepali RMG a hot potato in US again

Kathmandu, September 4:

Nepali readymade garments (RMG) are selling like hot cakes again in their largest arena, the American market, and experts feel that the Nepali embassy in the US should focus on making RMG duty-free in the US.

Citing the example of a Caribbean country which managed through excellent lobbying to get duty free access to the market, Uday Raj Pandey, first vice-president of Garment Association of Nepal (GAN) said, “As the government has achieved stability, customer enquiry is also increasing and I hope the export of Nepali RMG will gradually increase. The change can be experienced by January 2009. “

Export of Nepali RMG to US in the month of August saw a slight rise by 14 per cent compared to July when it witnessed a whopping drop of 76 per cent. Nepali RMG worth $692,883.27 was exported to US in August.

In July, GAN exported $519,524.84 worth RMG.

According to recent data of GAN, the export of Nepali RMG in January was worth $2.65 million, in February it was $2.014 million, aIn March $991,820.70, in April $1.266 million, in May $1.109 million, in June merely $929,366.08 and a miserable $519,524.84 in July.

Pandey said right now India is the most favoured nation for the export of Nepali RMG

but since last fortnight, the duty charge has increased to 60 per cent on the Maximum Retail Price (MRP) tags.

Actually, according to the Trade and Transit Treaty, the duty charge should be zero per cent but India had been charging four per cent and now that also has increased. Over the invoice value, the counter value duty is already being charged that is four per cent for cotton and eight per cent for polyester.

“As charges have been hiked, RMG amounting to between Rs 2 and 3 million is stuck at the customs. Nepali RMG has become expensive now, so we urge the government to initiate talks regarding the new charges,” Pandey said adding that festival season was on and if the hike in the price continued the exporters will face huge losses.

According to GAN, in 2007 the export of Nepali RMG plunged by about 80 per cent. However, in 2008 just as Nepali RMG sector seemed to be on the verge of collapse recent data shows a new ray of hope for it.

Export to the US, which is the largest market for Nepali RMG, dropped by 14 per cent in terms of value in February. The US alone absorbs 80 per cent of the total Nepali RMG exports. There was a slight take-up in January, with exports upping by only two per cent. The RMG export suffered a loss of 30 per cent in 2004, 41 per cent in 2005, six per cent in 2006 and 48 per cent in 2007.