Handicraft shipments predicted to plunge as virus smashes export marketDomestic sales too have disappeared with no tourists coming into the country.
Nepal's handicraft exports are expected to plunge by 70 percent next year as only a few orders are trickling in with Covid-19 ravaging the world economy, handicraft entrepreneurs said. The drop in shipments will hit the income of small and medium-sized enterprises and the economy as a whole, they said.
The nationwide lockdown followed by movement restrictions spelled doom for Nepal’s small and medium-sized enterprises (SMEs) like handicraft that account for a large share of the country's foreign exchange earnings.
SMEs account for 2.36 million jobs, according to a study report released by Nepal Rastra Bank. At the end of the fiscal year 2017-18, the country's 275,433 registered SMEs contributed 22 percent to the gross domestic product.
Handicraft products whose shipments were put on hold during the lockdown are being dispatched to their destinations gradually, said Dharma Raj Shakya, former president of the Federation of Handicraft Associations of Nepal. “But new orders are not coming from major buyers.”
More than 70 percent of the handicraft products that were stranded have been exported in the past three months, he said.
“But it will be difficult to maintain the same pace in the coming months with the decline in new orders from the international market,” Shakya told the Post. “The slowdown in orders will impact the export trade next year, and it is expected that 70 percent of the handicraft export business will be lost,” he said.
In usual times, September and October used to be the busiest season for handicraft exporters as they would be inundated with orders for Christmas and New Year.
The domestic handicraft market too has disappeared with no tourists coming into the country. Hundreds of handicraft shops in tourist districts like Thamel and sightseeing destinations like the Durbar Squares in Patan, Bhaktapur and Kathmandu have shut down.
“There are almost no new orders from international buyers,” said Surendra Bhai Shakya, president of the federation. International buyers are in a wait and watch mode and not placing new orders, he said.
“Exports are down to 10-15 percent of pre-pandemic levels,” he added. With people getting infected, production is dropping. “We are afraid to ask workers to come and work in the current situation with infections spreading rapidly,” he said.
“Handicraft production has declined by more than 50 percent,” said former president Shakya. "Output has further declined with no minimum order from the international market," he added.
The major export markets for Nepali handicraft goods are the United States, Europe, Japan and China. International traders have not been placing orders like they used to before, he said.
“International traders are placing a few orders for felt products and pashmina; but orders for expensive handicraft products like wooden craft, metal craft, stone craft and paintings have fallen steeply,” he said.
Handicraft products fall under the luxury category so it will take two to three years for the industry to return to normal levels.
In the past few years, the domestic consumption of handicraft was making good progress due to the proliferation of trade expos, and increasing incomes and public confidence in locally made goods,
“But the pandemic has caused the domestic consumption of Nepali handicraft to plunge by more than 80 percent,” he said. Handicraft shops are not able to re-start their operations as there are no sales like before, he added.
Most of the handicraft shops in Thamel, Bauddha, Patan Durbar Square and Bhaktapur Durbar Square have shuttered, and traders are fleeing to other occupations, said Shakya.
Due to the drop in export orders, Nepali buyers should start buying handicraft to support the industry, Shakya said.
According to a report of the federation, exports of Nepali handicraft saw a steep 32 percent drop to Rs3.64 billion in the last fiscal 2019-20 from Rs5.37 billion in the previous fiscal year.
The export of textile products like pashmina, woollen, felt, silk, cotton, hemp, allo, Dhaka and textile products declined by 44 percent in the last fiscal year compared to the previous year.
Shipments of non-textile handicraft products like silver jewellery, wooden craft, metal craft, handmade paper, glass product, leather goods, incense, thanka, bone and horn product, ceramic product, beads item, bamboo products, stone craft, plastic items and crystal products fell by 21 percent in the last fiscal year compared to the previous fiscal year.