KATHMANDU, JAN 12 -
Capacity utilisation of Nepali manufacturing industries could not go up in the last fiscal year, thanks to poor industrial environment as a result of protracted political transition, power crisis and skilled labour shortage.
The average capacity utilisation of industries stood at 57.83 percent, according to a study carried out by the Nepal Rastra Bank (NRB) in eight major cities and surrounding areas covering 47 districts. Industrialists have also termed the level of capacity utilisation poor.
The study was carried out on industries producing 23 products in Kathmandu, Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj and Dhangadhi and surrounding areas.
Industries manufacturing vegetable ghee, cooking oil, rice, wheat flour, biscuits, sugar, noodles, animal feed, processed tea, beverages, liquor and cigarette were surveyed. Other surveyed were those producing of cotton textiles, woollen garment, pashmina, garment, paper, soap, brick, cement, iron and steel and electric wire.
The level of capacity utilisation last year is almost same to that of the previous fiscal year 2011-12 when the figure was at 57.79 percent. However, the previous fiscal year’s survey was done on 18 products in 42 districts, including all the aforementioned cities.
According to the NRB report named “Economic Activity Report 2012-13”, noodles factories witnessed the highest capacity utilisation of 87.4 percent, while rice factories posted the poorest 22.1 percent.
Hari Bhakta Sharma, vice president of the Confederation of Nepalese Industries (CNI), said the main constraint for domestic industries to run at full capacity is energy crisis. “Most of the industries are not being able to operate due to power shortage,” said Sharma. “This has also increased the cost of production and operational costs.”
Labour-related issues, other local-level problems and the government’s failure to maintain efficient supply chain have also affected industries . “There is no efficient supply chain in Nepal. Some this or the other is also affecting industrial operation,” he said. “Take an example of problems created by truck entrepreneurs now.”
Sharma urged the government to shift its focus to the industrial sector and provide necessary support for its sustainable growth.
According to the NRB study, a big downfall in paddy production last fiscal year contributed to the dismal performance of rice factories. The report, however, said the state of rice industries this year will be better as rice production is forecast to be better this year. The report has said industries producing items like noodles, biscuits and light beverages will witness a positive growth, with improving living standard of the general people and changing consumption trend.
During the review period, industries manufacturing soybean oil, rice, wheat flour, animal feed, biscuit, sugar, noodles, refined tea, liquor, beer, refined leather, resin, medical products, plastic products, brick, cement, iron and steel, GI wire, metal utensils, aluminium products and footwear posted growth in terms production capacity. Industries witnessing fall in production capacity include those manufacturing vegetable ghee, mustard oil, dairy products, light beverage, thread, synthetic apparels, jute products, wooden products, paper, electric wire and cable, and tire and tube, among others.
The report has also identified major manufacturing items being produced in different regions. While Kathmandu and its surrounding primarily boasts of industries producing refined milk, pashmina, noodles and footwear, Biratnagar comprises mostly industries that manufacture ghee and oil, daily essentials, jute products, metal products and cement, among others. Janakpur area features industries producing sugar, liquor, paper and cement among others, whereas Birgunj mostly has factories making refined milk, animal feed, light beverage, cigarette, leather, apparels, cement, refined lather and medical items.
Pokhara mostly has biscuit, noodles and rubber industries ; Siddharthanagar wheat flour, light beverage and cement; Nepaljung mustard oil, wheat flour, rice; and Dhangadhi hosts industries making wheat flour and resin.
Economic activity report ’12-13
Top 5 industries with highest capacity utilisation
Industry Utilisation
Noodles 87.35%
Refined tea 82.41%
Liquor 79.62%
Biscuit 71.99%
Light beverage 71.77%
Top 5 industries with lowest capacity utilisation
Industry Utilisation
Rice 22.12%
Vegetable ghee 22.38%
Electric wire 38.13%
Pashmina 41.44%
Animal feed 44.36%
Source:ekantipur.com, Jan 12th 2014
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Capacity utilisation of Nepali manufacturing industries could not go up in the last fiscal year, thanks to poor industrial environment as a result of protracted political transition, power crisis and skilled labour shortage.
The average capacity utilisation of industries stood at 57.83 percent, according to a study carried out by the Nepal Rastra Bank (NRB) in eight major cities and surrounding areas covering 47 districts. Industrialists have also termed the level of capacity utilisation poor.
The study was carried out on industries producing 23 products in Kathmandu, Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj and Dhangadhi and surrounding areas.
Industries manufacturing vegetable ghee, cooking oil, rice, wheat flour, biscuits, sugar, noodles, animal feed, processed tea, beverages, liquor and cigarette were surveyed. Other surveyed were those producing of cotton textiles, woollen garment, pashmina, garment, paper, soap, brick, cement, iron and steel and electric wire.
The level of capacity utilisation last year is almost same to that of the previous fiscal year 2011-12 when the figure was at 57.79 percent. However, the previous fiscal year’s survey was done on 18 products in 42 districts, including all the aforementioned cities.
According to the NRB report named “Economic Activity Report 2012-13”, noodles factories witnessed the highest capacity utilisation of 87.4 percent, while rice factories posted the poorest 22.1 percent.
Hari Bhakta Sharma, vice president of the Confederation of Nepalese Industries (CNI), said the main constraint for domestic industries to run at full capacity is energy crisis. “Most of the industries are not being able to operate due to power shortage,” said Sharma. “This has also increased the cost of production and operational costs.”
Labour-related issues, other local-level problems and the government’s failure to maintain efficient supply chain have also affected industries . “There is no efficient supply chain in Nepal. Some this or the other is also affecting industrial operation,” he said. “Take an example of problems created by truck entrepreneurs now.”
Sharma urged the government to shift its focus to the industrial sector and provide necessary support for its sustainable growth.
According to the NRB study, a big downfall in paddy production last fiscal year contributed to the dismal performance of rice factories. The report, however, said the state of rice industries this year will be better as rice production is forecast to be better this year. The report has said industries producing items like noodles, biscuits and light beverages will witness a positive growth, with improving living standard of the general people and changing consumption trend.
During the review period, industries manufacturing soybean oil, rice, wheat flour, animal feed, biscuit, sugar, noodles, refined tea, liquor, beer, refined leather, resin, medical products, plastic products, brick, cement, iron and steel, GI wire, metal utensils, aluminium products and footwear posted growth in terms production capacity. Industries witnessing fall in production capacity include those manufacturing vegetable ghee, mustard oil, dairy products, light beverage, thread, synthetic apparels, jute products, wooden products, paper, electric wire and cable, and tire and tube, among others.
The report has also identified major manufacturing items being produced in different regions. While Kathmandu and its surrounding primarily boasts of industries producing refined milk, pashmina, noodles and footwear, Biratnagar comprises mostly industries that manufacture ghee and oil, daily essentials, jute products, metal products and cement, among others. Janakpur area features industries producing sugar, liquor, paper and cement among others, whereas Birgunj mostly has factories making refined milk, animal feed, light beverage, cigarette, leather, apparels, cement, refined lather and medical items.
Pokhara mostly has biscuit, noodles and rubber industries ; Siddharthanagar wheat flour, light beverage and cement; Nepaljung mustard oil, wheat flour, rice; and Dhangadhi hosts industries making wheat flour and resin.
Economic activity report ’12-13
Top 5 industries with highest capacity utilisation
Industry Utilisation
Noodles 87.35%
Refined tea 82.41%
Liquor 79.62%
Biscuit 71.99%
Light beverage 71.77%
Top 5 industries with lowest capacity utilisation
Industry Utilisation
Rice 22.12%
Vegetable ghee 22.38%
Electric wire 38.13%
Pashmina 41.44%
Animal feed 44.36%
Source:ekantipur.com, Jan 12th 2014
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