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Nepal : Garment exports nosedive as neighbours raise the stakes |
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2004-8-6
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Competition grows stronger as Nepal''s garment exports continue to dip for the seventh consecutive month, with fear of its SAARC friends turning its foes.
Exports to the US, were down 29 percent as compared to the figures for July 2003. US buys about 85 percent of Nepalese garments - the largest forex earner for the country, according to the Garment Association of Nepal (GAN).
This is the fallout of an agreement that will see the phasing out of export quotas by December this year, says Kiran Prakash Shakha, president of GAN.
With the multi-fibre agreement scheduled to end this year, neighbour China, it is feared, will have a monopoly in the garment and textile export sector.
China had a nine percent market share when the quotas were in place. But after the quotas began to be phased out - in 1995, 1998 and 2001 - it has increased its share to 65 percent, a recent study said. After the total phase-out of quotas in 2004, the share is likely to go up still further to 75 percent, the study said.
Besides China, Nepal also has to contend with SAARC neighbours India, Bangladesh and Pakistan, all of whom have a thriving garment industry with cheap labour and raw material available in plenty.
"When the quotas end, it is going to be a free for all," Sakha informed.
"Exporting countries are going to manufacture as much as they can and with supplies exceeding the demand, prices are going to fall. They have already started doing so. But whereas India, Bangladesh and Pakistan can decrease their prices, Nepal can''t. So our buyers are going elsewhere."
A frantic Nepal therefore has joined an alliance of 92 countries that is pressing the World Trade Organisation to extend the phase-out deadline by three more years.
Significantly, India, says Sakha, is opposing the extension.
Though Nepal is exploring the European market, it is difficult to get a substitute for a market as large as the US overnight, Sakha said. Nepal has a lot at stake waiting for the news about an emergency meeting held with WTO officials in Geneva Tuesday, which has so far not been in their favour. |
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