Manufacturing down last decade

  • The sector saw decline of 0.2pc per capita from 2000-01 to 2012-13, while its contribution to GDP fell to 6.2pc from 9pc
- PRITHVI MAN SHRESTHA, Kathmandu
Manufacturing down last decade

Jan 28, 2015-

The manufacturing sector posted a decline in terms of per capita growth in the last decade, a government report has shown. Among the sectors contributing to the national economy, manufacturing was the only sector that saw the decline over the period.

The sector saw a decline of 0.2 percent per capita from 2000-01 to 2012-13, the period marked by the Maoist insurgency, political instability, power crisis and labour problems.

Besides the decline in per capita growth, the sector’s contribution to the gross domestic product (GDP) fell to 6.2 percent in 2012-13 from 9 percent in fiscal 2000-01, according to the report titled “Development of Manufacturing Industries in Nepal: Current State and Future Challenges” released by the Central Bureau of Statistics (CBS).

Manufacturing’s contribution to the GDP in Nepal is the lowest compared to a few other select countries of the South Asian region, with Bangladesh having the highest contribution of 17.6pc.

The report provides an overview of Nepal’s manufacturing sector using four National Census of Manufacturing Establishments (CMEs) data from 1991-92 to 2011-12.

According to the report, while manufacturing took a beating in the last decade, sectors like fishing (5.1pc), electricity and water (4.1pc), transport,

storage and communication (4.8pc), financial intermediation (6.6pc), and various services (together about 6pc) were the fastest growing sectors.

Another interesting fact according to the report is the manufacturing sector retreated towards more basic industries for relatively high-tech industries.

Of the sub-sectors under manufacturing, food had the highest share in the value addition (34 percent) in 2011 from 22.8 percent in 1996. This came at the expense of textiles (from 25.9pc to 3.8 pc), and wearing apparel and fur (from 6.3pcto 0.5pc) over the period.

All the three sectors are classified as low-tech sectors, but within these, food can be regarded as the first step towards industrialisation, according to the report.

Industrialists say it is natural for the manufacturing sector see the decline as the country witnessed insurgency and political instability and power crisis in the last decade.

Federation of Nepalese Chambers of Commerce and Industry President Pradeep Jung Pandey said industries could not be operated at full capacities due to the lack of electricity, which hit output. “The manufacturing sector suffered as businessmen instead invested in services and trading sectors where risk is minimal and profit margin is high,” said Pandey.

Hari Bhakta Sharma, senior vice-president of the Confederation of Nepalese Industries, said operating manufacturing industries have been very much stressful. “Political instability, power crisis and lack of skilled manpower have stood as major problems in the sector,” he siad.

According to the report, the sector had its best year in 1991-92, and it declined in successive census years 1996-97, 2001-2002, and 2006-07, and started a cautious recovery by the year 2011-12.

Meanwhile, the report also found the ratio of output growth remained lower compared to growth of input.

The inputs rapidly increased by 25 percent in 1996-97 and it surged in the following census years with rise of  93 percent, 165 percent and 253 percent in the years—2001-02, 2006-07 and 2011-12 respectively.

But real output increased only by a mere 22 percent, 72 percent, 125 percent and 189 percent in those four census years, respectively.

 

Published: 29-01-2015 09:27

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