Garment entrepreneurs seek export promotion facility

Kathmandu, Jun 3

Garment Association of Nepal (GAN) has demanded inclusion of garment industry in the list to get the facility of export promotion and up to 8 per cent cash incentives on export.

At a press meet on Friday, GAN expressed concerns over the exclusion of the sector from the group getting the facility, despite its potential to change the scenario of Nepal's export trade in a couple of years.

Finance Minister Janardan Sharma has announced to support the goods with export potential such as clinker, cement, steel, footwear, processed water and services based on IT and business process outsourcing with export promotion and 8 per cent cash incentive but the entrepreneurs said that garment is missing from the budget.

"This sector has export potential of US$1.20 billion dollars per annum. The World Bank has pointed to this potential in its report in 2021, but the government has not included it in the group of products getting the incentives," said General Secretary of GAN, Ashok Agrawal.

He said that the government has not called a meeting with them to find ways for business growth and development.

Export industry should be treated differently than the domestic industries so the government should have a separate desk or agency to listen to our demands and address the constraints, he suggested.

According to Agrawal, GAN has been demanding10 per cent subsidy on exports of garments.  

The government is drafting a new procedure to provide cash subsidy on the exports of goods like garment, handicraft, carpet and pashmina, so we want our sector to be included in the document, he said.

"The budget announced some long-term measures, it is a welcome step, but in the short-run we need some relief. Our demand is just as NRB has termed it as one of the most affected sectors by the COVID-19 pandemic," he said.

President of GAN, Chandi Prasad Aryal, said that Nepal is about 26 per cent expensive compared to the neighbouring countries and other developing countries so they want government to come in to finance the gap through discounts and cash incentives. "There is a need to create environment to sell our products. For it, we need to be competitive in terms of price and quality," he said.

GAN had made multiple requests to the prime ministers, and ministers of finance and industry to address their grievances but their demands have been largely ignored. Governments in the past also did not take any proactive steps to promote Nepali goods and products in the domestic and international markets.

"We are exporting for the last four decades. At a time, Nepal exported garments worth US$ 400 which has now come down to just $50 million. It has severe repercussion on the employment as well," said Aryal.

GAN has demanded the government to provide land at free of cost to the entrepreneurs. They decided to charge Rs. 20 per square foot at the garment processing zone in Simara which later converted to Special Economic Zone.

Aryal also said that getting back the government announced cash subsidies is a hard nut to crack, it takes quite a time, processing and efforts.

The garment industry had Rs. 12 billion investment in 1200 industries about two decades ago, they had employed about a million people but recent data is not available. Growth of garment and other sectors enhances business for air cargo and other backward businesses as well.

In Bangladesh, the share of garment in total export is above 80 per cent. Nepal couldn't maintain its quality and competitiveness after the implement of multi-fibre agreement in 2005.

There are some goods in the list of duty free of the United States of America for the period of 2015-2025 which have the margin of about 25 per cent,  Nepal can be competitive in these products so government should help us in developing them. The garment entrepreneurs also suggested that Prime Sher Bahadur Deuba during his anticipated visit to the USA should request the latter to provide duty free entry to 12 products of garment category from Nepal.

Executive Member of GAN, Rahul Shakya, said that they haven't received more than 3 per cent cash incentives while Bangladesh and China offer 14 per cent and India 8 per cent cash incentives.

"How can Nepali products compete with the product of those countries with 15-25 per cent additional costs due to our landlocked status? Meanwhile, the price of cotton has gone up by 50 per cent, and the price of yarn and transportation has also gone up significantly," he said.  

 Published in The Rising Nepal daily on 4 June 2022.