Feeble export revival

Just a decade back woolen carpets, readymade garments and pashmina products used to be the jewels in the crown of Nepal´s export sector, contributing around 80 percent of total export earnings and providing jobs to nearly a million people. However, a series of unfortunate developments occurred after 2002, mainly due to deteriorating law and order born of messy politics, and soon the years-long boom in these industries turned into bust. But a flicker of hope has appeared out of the gloom, with the prolonged downturn in Nepal’s major export sectors starting to crawl back onto the path of recovery. Serious skepticism does remain over the sustainability any revival.



Let’s first examine the latest stirrings of revival in Nepal’s ailing export sector. Undoubtedly, the 12 percent increment in total export during the first half of the current fiscal year is a remarkable development. More than that, the hefty 44 percent rise in exports of ready-made garments and woolen carpets -- the two heavyweights in the sector -- is certainly encouraging. According to half-yearly statistics released by the central bank, the third country export of readymade garments soared by 44.5 percent, thanks to a rapid rise in exports to European countries that have provided a zero tariff facility to Nepali apparel products. Likewise, the export of woolen carpets, which is one the most labor-intensive industries in Nepal, also grew by 44.2 percent, while pashmina enjoyed a 63.5 percent surge.



Now we come to our main point. We do welcome all these developments. But since the revival has occurred without any fixing of the fundamental problems that dragged these promising industries to the verge of collapse in the first place, we are doubtful about the sustainability of the upturn. This newspaper has long been saying that the twin phenomena of Nepal’s rigid labor laws and poor infrastructure have been the major hurdle in the development of exports. Needless to say, many promising industries have been the victim of rabid labor militancy. The tragic demise of Surya Garment last year is one of the painful reminders of this. Though there have been serious efforts to bring some flexibility to the labor laws with provisions for hire and fire with social security, these are yet to bear fruit.



Similarly, another stumbling block is lack of infrastructure, a prime reason why Nepali products cannot compete in the global market. How can we think of sustainable growth in garment exports as long as the country continues to reel under acute power shortage? So, we have a straightforward prescription for the government: bring massive reform in the labor laws and invest in infrastructure if we wish to see any sustainable growth in exports.

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