Nepal’s first garment processing zone in Bara district’s Simara is likely to be completed by April. The Rs 2.5-billion facility will facilitate export of Nepalese readymade garments (RMG) and minimise production costs, enabling those to compete in the international market, according to the Garment Association of Nepal. There are 52 RMG units in the country.
The garment processing zone, whose construction started in January last year, is expected to compensate high transport and shipment costs due to Nepal’s landlocked status as the zone is located near the country’s only rail-linked dry port in Birgunj.
The garment processing zone concept gained traction after the United States extended zero tariff preference for 66 products, including apparels, into its market through Trade Facilitation and Trade Enforcement Act.
The price of Nepali RMG rises 15-20 per cent when those reach global markets, said association president Chandi Prasad Aryal.
The government’s a 3-per cent cash incentive to RMG exporters is not sufficient to make Nepalese products competitive in the global markets, a report in a Kathmandu daily quoted Aryal as saying.
The production costs of Nepali readymade garments are high due to the high cost of raw materials, imported mainly from India and China, he said.
According to Nepal Rastra Bank, the country exported readymade garments worth Rs 2.27 billion in the first six months of the current fiscal year, against Rs 2.29 billion in the same period in the last fiscal year. Nepal’s garment exports totalled Rs 5.9 billion in the last fiscal year.
Aryal said Nepal’s RMG industry collapsed after the expiry of the Multi Fibre Agreement in January 2005, which provided duty-free access for Nepali garments to the United States. More than 85 per cent of the RMG factories shut down after that.