The industry as a whole earned Rs 1.5 billion less than what it earned in the same period last year, said Kabindra Nath Thakur, president of Nepal Carpet Exporters´ Association (NCEA). [break]
If the policymakers dealing with the challenging task of managing current balance of payment (BoP) deficit think this is bad news, entrepreneurs caution worse is still to come.
Central Carpet Manufacturers Association has reported that many manufacturers are still folding their production units. Furthermore, exporters and manufacturers of late have started to refuse accepting the new bulky orders.
"This is a new trend that has penetrated into the industry," said a manufacturer. In the past, such trend was visible only in the readymade garment industry.
But Thakur says emergence of such a situation is only obvious because the production environment within the country is same throughout and the structural constraints facing the two industries too are just the same.
"Extent of adversities might be different, otherwise rigid labor law and protracted power outage and their resulting impact on cost have consistently eaten away the competitiveness of all our industries," echoed Uday Raj Pandey, first vice president of Garment Association of Nepal (GAN).
The latest trend, meanwhile, has mounted problems for the policymakers, who are trying to work out measures to give new impetus to the exports sector. So far, they were focusing only on tax incentives to bail the leading export industries out of the current mess. But exporters said mere tax incentives would not yield desired results.
"If the government did not improve labor law and trade unions applied themselves to improve work culture, all other supports will simply go meaningless," said Thakur, who is also a CA member. He noted that the carpet industry will suffer further if the government paid no heed to their demand of instating order-based recruitment and lay off mechanism.
Manufacturers of all major exportable commodities have been demanding the facility from the last couple of years.
Presently the manufacturers need to shoulder liability of full strength staff even in the lean period. And they lament that it has been adding cost of doing business, rendering Nepali carpet less competitive in the international market.
And it is not just the matter of cost. Exporters said they have also lost confidence to deliver orders on time due to instability, banda and other untoward incidents.
Thakur admitted that such a situation has caused many importers to shift their orders to cheaper suppliers such as Vietnam, China and India.
"But there is nothing that we can do. It is better to say no now than to lose the buyers and dent Nepal´s image on delivery capacity forever," Thakur said.
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