Yarn export hassles may be ending soon

Kathmandu, April 7

The government delegation led by Joint Secretary at the Ministry of Industry, Commerce and Supplies Ravi Shanker Sainju has provided the supporting documents to the Turkish government in a bid to help wrap up the ongoing investigation related to Nepal’s yarn export and help resume trade of the commodity.

Alleging that Chinese yarn is being circumvented to Turkey via Nepal, the Turkish government has suspended the generalised system of preferences (GSP) on export of yarn from Nepal since January. It had cited considerable growth in export from Nepal — around 190 per cent between 2011 and 2017 — without reliable production base in the country as the reason for suspending the facility.

Subsequently, the government of Turkey had also launched an investigation regarding the circumvention of yarn products to enforce anti-dumping duty on yarn import from Nepal.

Hoping to put the doubts of the Turkish government to rest, the Nepali delegation comprising government officials, textile experts, representatives from the Nepal Yarn Producers’ Association had left for Turkey on Wednesday.

During the meeting with the Directorate General of Customs Enforcement in Turkey, Joint Secretary Sainju had presented the data related to production units, production capacity of the spinning mills, employment generated by these factories and taxes filed by the factories to the government, he informed after his arrival here today.

Regarding the Turkish government’s suspicions on circumvention of yarn products, Sainju clarified that the factories were largely running below capacity in the earlier years as the country was facing crippling power shortage and labour unrest, among others, when Turkey was explored for the market of Nepali yarn products. Along with the rising demand of yarn, Nepali factories have started utilising their capacity towards the upper level and they have now doubled their capacity utilisation from 35 to 40 per cent to 70 to 75 per cent, Sainju informed.

Currently there are four spinning mills in Nepal that import raw materials from various countries and are also trying to create backward linkages to maximise the benefits of yarn export. Around 10,000 people are directly employed in yarn production at present.

Nepali yarn is being exported to India, Turkey, Bangladesh and some other African countries. Among them, India and Turkey are the major export destinations for Nepali yarn. Out of Nepal’s total annual yarn export worth around Rs 15 billion, yarn worth around Rs five billion is exported to Turkey, according to yarn exporters.

During the meeting with the Turkish government authorities, Sainju further said that there was no chance of circumvention as the Nepali factories are still operating below full capacity.

The four yarn producers in the country jointly produce almost 40,000 metric tonnes of yarn every year and the production could easily go up if the factories operated at the optimum capacity.

Sainju also clarified that Nepali exporters who were largely focused on Indian market are increasingly attracted towards Turkish market as the latter fetches better prices. He also invited the investigation team of the Turkish government to visit the production units of Nepal to cross-verify the data presented by the Nepali team.

He also talked about the adverse impact on jobs and exports of the country due to the Turkish government’s decision to suspend GSP facility and urged for early conclusion of the investigation.

In the meeting, officials of the Turkish government vowed to conclude the investigation as soon as possible.

Later, the Nepali team also held meetings with Turkish importers of Nepali yarn in Istanbul and briefed them about the talks with the government officials.

Nepal has been exporting yarn to Turkey under the most favoured nation treatment after suspension of GSP. Yarn exporters have said that yarn export will not be competitive if Nepal is not provided GSP facility that developed countries have been providing on imports from least developed countries.