Garment exporters seek more incentives

At a time when the country has been facing huge trade deficit due to supply side constraints, garment entrepreneurs have asked the government to play a proactive role in promoting export of readymade garment (RMG). Nepal is facing trade deficit of as much as Rs 1.5 billion per day due to soaring imports and limited export capacity. Exports of Nepal´s main exportable items like RMG, carpets, pashmina and handicraft have been slowing for the past few years. Garment exporters, who have been passing through difficult times due to shrinking international market, have demanded that the government provide export incentive of at least 2 percent of the total exports to breathe a new life on the country´s apparel industry. Though the government last year decided to provide flag cash incentive of 2 percent on third country exports, entrepreneurs have complained that they are getting only one percent incentive. “Going against its own decision to provide 2 percent cash incentive for third country exports, the government provided incentive of only 1 percent last year. The government should sincerely implement its decision,” Uday Raj Pandey, president of Garment Association-Nepal (GAN), said at the 22nd Annual General Meeting (AGM) of the association here on Friday. Stating that labor dispute has become a major problems in industrial sector, Pandey demanded that the government enforce ´No Work, No Pay´ system to protect industrial sector. “Industries like the apparel industry will not survive if ´No Work, No Pay´ is not enforced immediately,” Pandey said, urging the government to press India to lift the Countervailing Duty (CVD) being imposed on Nepali RMG export. According to garment entrepreneurs, India slaps 12 percent CVD on Nepali RMG even though the southern neighbor has already removed excise duty on its domestic goods of similar nature. “I urge the government to take ministerial level initiation to lift CVD imposed on Nepali garment by India,” he added. As exports of garments and pashmina products to the US have been dwindling with each passing year, Pandey urged the government to sign Free Trade Agreement (FTA) with the world´s largest economy to pave the way for increasing Nepali exports there. Nepal and the US had signed Trade and Investment Framework Agreement (TIFA) in 2011 April, setting up the Nepal-US Council on Trade and Investment (NUCTI) -- a secretary level forum for bi-lateral trade talks. However, no such talk has been held between officials of the two countries so far. Nepal has been facing trade deficit with the US since 2009 in the absence of General System of Preference (GSP) - a preferential treatment by the US on imports of goods. Pandey also demanded that the government set up a taskforce to formulate the agenda for NUCTI meeting and follow up the implementation of decisions. He also asked the government to address the issues of sick industries in the proposed Industrial Enterprises Act and take serious attempt to finalize the Export Processing Zone (EPZ) and Garment Processing Zone (GPZ) in a bid to bring down trade deficit by boosting exports of manufacturing goods. Inaugurating the AGM, Finance Minister Shankar Prasad Koirala expressed commitment to extend all possible support to businesspeople for promoting trade. Nepal exported RMG worth Rs 4.6 billion during the fiscal year 2011/12. In the first eleven months of the fiscal year 2012/13, export of RMG was recorded at Rs 3.33 billion.