Makers and movers; despite all

Amid the worsening business environment, energy crisis and political uncertainties, the country's manufacturing sector recorded a modest growth the last fiscal year. The Manufacturing Production Index (MPI), released by Central Bureau of Statistics (CBS) shows construction-related products and dairy products are the ones that registered an impressive growth in 2009-10. 

The MPI shows interesting results. As per the MPI, manufacturing of only five products had declined the last fiscal year, with other products maintaining growth. But barring a few products, the growth of others has been modest. As was the case in the third quarter, production of iron rods and galvanized pipes that has the largest weight in the MPI had strong growth of 7.20 percent. Though the demand for iron rods and pipes has declined of late, the growth is due to strong demand in the earlier quarters. Cement and concrete are other two construction materials that saw impressive growth during the period. Production of cement increased by 5.26 percent, while production of concrete went up by 4.25 percent.

Cement industry has been one sector where more investment is coming since the past few years. The rise in cement production over the past few years is now substituting the import of Indian cement. The Nepal Rastra Bank's annual macroeconomic statistics shows import of cement from India declined last year by 3.2 percent. According to Bal Krishna Shrestha, president of Nepal Steel Rolling Mills Association said that the increased demand for iron rods pushed up the overall production. "Had there been political stability and sufficient energy supply, production could have been increased," said Shrestha.

Over the last few years, more steel mills were established in the country. Till now, there are 18 steel mills in the country. The growth in the iron production can be ascertained by the fact that the import of M.S. Billet, a major raw material, increased by 42.72 percent in the last fiscal year. Nepal imported M.S. Billet worth Rs 14.32 billion, an increment of 42.72 percent. Pradeep Kumar Shrestha, managing director of Panchakanya Group says the growth in the production is due to more players coming into the business. Manufacturers say there has been a decline in the demand which may hit production this year.

"Till the third quarter, there was also good demand but it has subsided in the last quarter due to decline in the construction sector," said Shrestha. Dairy products were another major gainer last year. Milk production in the country increased by almost 8 percent last year. The country's dairy sector has made impressive progress last year with Chitwan Co E establishing a powder milk factory in Chitwan and Sujar Dairy of Pokhara exporting powder milk to Pakistan. Liquor industries in the country are having a better run. Among beverage products, the production of rectified alcohol was the star, with its production increasing by almost 10 percent. But, manufacturing of beer, recorded a slower growth¿only 3.19 percent. The growth in production of soft drinks remained below two percent.

Agricultural products like rice, wheat flour and animal feed recorded an increment of 2.33 percent last year. Though production of wheat flour and animal feed rose by 4.47 percent and 9.17 percent, respectively, it was the dismal growth of rice that pulled down the overall index. The production of rice, that commands 7.8 percent weight in MPI, grew by only 1.81 percent. In this group, noodles and chocolate production has increased by 4.12 percent and 3.49 percent. The MPI paints a bleak picture of Nepal's major exportable products. While woollen carpets and tanned hides recorded a nominal growth, the manufacture of readymade garments declined. As per the index, the production of readymade garments witnessed a 1.87 percent decline during the period. With export to third countries and India going down by 80.5 percent and 20.7 percent, respectively last year, decline in garment production was understandable. Production of woollen carpets saw a marginal growth of 0.26 percent while production of tanned hides also registered a growth of 4.42 percent. Among all industrial products, plastic products with a weight of 5.74 percent in the MPI had growth of almost 4.53 percent.

Source:
ekantipur