Nepal's garment export industry endures troubled times

09 Aug '12

3 min read

The once thriving readymade garment export business in Nepal is currently going through a low phase because of political instability, the Eurozone crisis and slowdown in the US economy.

The President of the Garment Association - Nepal (GAN), Mr. Uday Raj Pandey, spoke to Fibre2fashion over the issues affecting the country’s apparel trade. He said, “The garment industry in Nepal is showing no signs of improvement due to the continued political instability. There is a serious dearth of big orders from foreign countries and as a result the large factories are forced to take smaller orders.”

He also cited the ongoing European debt crisis as an issue that is further adding to the miseries of the garment export traders. “Due to the Eurozone crisis we are not getting big orders from Europe. As a result, our factories are working on very small orders, so the business is not improving as compared to last year,” he avers.

Talking about major markets for Nepali garment exports, he quips, “65 to 70 percent of our export volumes go to the European Union (EU). Remaining 30 percent goes to India, as well as Japan and the United States. However, the export orders from the US are declining every year and have now become negligible.”

Giving figures about the volume and value of Nepali garment exports, he mentions, “Compared to last year, the apparel exports have increased in terms of value by about 18 to 19 percent, but decreased in terms of volume. This is mainly because of the 20 percent appreciation in the US dollar against the Nepali currency. In fiscal 2010-11, the garment exports were around Np Rs. 4.25 billion, which increased to around Np Rs. 4.50 billion last fiscal.”

When quizzed about the measures taken by the Government to support the ailing apparel export industry, he informs, “The Government has proposed a new monetary policy where they have offered some refinancing provisions for exports. If the refinancing provision is implemented, then the export bank loan will be reduced by about 5 percent and will come down to 2.5 percent. This will, in turn, bring down the cost of doing business and help the exporters.”

“The business is not really very good and the factories are running only for survival. Once we have political stability in the country, then we can expect the buyers to place orders and exports may get a boost. It is a wait-and-watch situation at present,” he concludes.

Fibre2fashion News Desk - India

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