The Untapped Potential of Handicraft

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The Untapped Potential of Handicraft

Time has come for the government to formulate and implement effective policies to exploit the business potentials in handicraft for which Nepal is renowned the world over.     

The Federation of Handicraft Association of Nepal (FHAN) in association with the Embassy of Nepal in Hong Kong and Hong Kong Nepalese Business Association Ltd (HKNBA) organised the Nepal Hong Kong Trade Fair 2017 on June 24 and 25. “The single country exhibition with 15 stalls of handicraft items was a success from the business perspective,” mentions Dharma Raj Shakya, president of FHAN.  According to him, about 25,000 people visited the stalls where different types of goods made in Nepal were displayed and sold along with sharing of information about Nepali handicraft producers and suppliers.  However, Shakya says that the initiative did not receive support from the government as expected.  

“The marketing part of the fair was lacking as we did not have enough time for the promotion of the show. Plus, the trade fair would have been much successful if there had been active government support,” he adds.  The two-day event was a part of the series of recent international trade fairs organised by Nepali handicraft producers. FHAN has organised trade fairs in China, Malaysia and Hong Kong so far. The expos in Malaysia and Hong Kong were single country fairs that were held for the first time by FHAN on foreign land. “The enthusiasm of the participants has shown good market potential for Nepali handicraft items in the countries,” opines Shakya. “We are planning to go to different parts of the world with similar trade exhibitions. We are looking to organise such programmes in countries including India, Bangladesh, Pakistan and the Netherlands and will continue the trade fairs in the nations where we recently started,” he adds. 

Handicraft plays a significant role in religion, culture and economy of Nepal as it is connected to different ethnicities of the nation. “Tourists visit Nepal to observe the art, culture and items related to handicrafts which are also a unique identity of the country,” says Shakya. According to him, Nepali handicraft is supplied not only to a close-knit community but it has expanded as a commercial product both in the internal and external markets.  “Nepali handicrafts are exported to foreign countries and that helps to earn foreign currency,” he adds.  He estimates that the demand of Nepali handicraft in domestic and foreign markets is the same or around 50-50.”   

Nepali handicrafts are being exported to 80 countries of North America, Europe and Asia. The US, the UK, Korea, China and India are the major importers of Nepali handicrafts. “We are exporting 42 types of handicrafts,” says Shakya. He says that according to recent statistics Nepali handicrafts worth about Rs 12 billion are being exported annually. 

“We are exporting handicraft products such as incense, felt, silver jewelry, metal products and singing bowls,” says Swoyambhu Ratna Tuladhar, managing director of Yak and Yeti Enterprises. He says that statues and Paubha and Thanka paintings are popular among the exported goods. 

Meanwhile, Maheswor Shrestha, CEO of Everest Fashion which mainly deals in felt and woolen-made products is exporting his products to the US, Canada, Australia, Japan and Korea. “We are mainly exporting decorative items made from felt and woolen sweaters and caps,” he says. 

Nepali producers say that international online shopping giants such as Alibaba, Flipkart and eBay have also been offering Nepali handicraft products through their stores which have aided to the exports.

According to Shakya, the demand for handicraft products changes with the varying needs of the clients. Sometimes, the demand for Pashmina is high and sometimes the demand for statues increases. “The demand changes according to the time,” mentions Shakya. Also, the demand depends on the importing country. “The export of handicrafts made of felt increased, amounting to over Rs 1.5 billion this year from Rs 500 to 600 million last year.” Meanwhile, the export of Pashmina has decreased. Shakya states that the demand for metal craft increased last year but decreased this year. Likewise the demand for Paubha and Thanka paintings in China has increased in the recent years. Till 2002-03, the demand for Nepali carpets used to be very high internationally.

Producers say that the easy availability of cheaper fabricated Pashmina items has hampered the overall Pashmina business. “Delay in the supply of raw material, lack of manpower and support from the government are some reasons behind the decreasing export,” points out Shakya.

Internal Market
Shakya says that the domestic demand for handicraft items has been increasing over the last few years. He also says that the notion that handicraft goods are produced only for foreigners and that is why they are expensive is also changing. “Various trade fairs and expos organised in different parts of the country over the years have helped in the promotion of handicrafts in the domestic market,” he says. According to him, there exists no official records of internal supply and there are records of only the exported products. “From the revenue perspective, the supply of handicrafts in the internal market is equal to external market,” he mentions. The demand for woodcraft, stone-craft and goods related to fiber is high in the Nepali market, according to Shakya. 

Tapping the NTPP potential
The US in early 2016 enacted the Nepal Trade Preferences Programme (NTPP) granting duty-free market access to Nepali products under a 66 Harmonised Tariff Schedule which was later expanded to 77 in order to support the Nepali economy that took a big hit following the 2015 earthquake. Different types of handicraft items have been included in the NTPP list.  Nevertheless, entrepreneurs say that the Nepali handicraft industry has not been able to take much advantage from the US initiative. “The exportable items of handicraft have not been clearly mentioned among the 77 items,” says Shakya adding that if the government does not clearly mention and negotiate on exportable handicraft goods then it will create problems at customs though the goods are listed in the export index. 

According to FHAN, the handicraft sector has been providing business opportunities and employment to more than 1.4 million Nepalis directly and indirectly. Shakya says, "By earning foreign currency, this business has helped in reducing poverty as well."          

Lack of Human Resource
Handicraft is all about artistic portrayal in products which requires special skills. The people in this sector say that due to many youths going abroad, there is a scarcity of skilled human resource. 

Shakya says, “Due to manpower scarcity we are not being able to fulfill the export demand.” Shakya who owns a stone carving business has around 20 employees working with him.

Tuladhar who owns a handicraft business of handprinting on silk textile also outsources the production of handicrafts such as incense, felt goods, paper metal and textile which he then exports.

Meanwhile, Shrestha claims that a handicraft artisan can earn from Rs 15,000 to 20,000 monthly. However, due to the lack of interest in people to learn the skills, very few people are working. He forecasts that if the same human scarcity continues for five or six years, then it will be hard to sustain in this sector due to the lack of manpower. 

The handicraft sector has also become a lucrative employment destination for females as well. According to Shrestha, Everest Fashion has 100 percent women participation in the production line of the enterprise. “There are about 500 female workers engaged in the handicraft production,” he says. 

Shakya says that there are no institutes in the country to provide professional training related to handicraft. “We are demanding authentic institutes with the government for handicraft training so that the trainees can become certified artisans,” he adds. He views that such institutes need to be included in the Council for Technical Education and Vocational Training (CTEVT) so that they can provide certified trainings. 

Despite this situation, some training programmes are about to start.  For instance, FHAN in collaboration Kathmandu Metropolitan City (KMC) and Department of Archeology (DoA) will be providing training from next month on stone and wood carving and building pagoda styled temples to renovate the temples destroyed by the earthquake of 2015 across the valley.  

Meanwhile, Everest Fashion has been providing trainings related to felt and woolen knitting in different parts of the valley.

Government’s apathy towards promotion
Entrepreneurs are upset with the government as the handicraft sector could ever become a government priority. According to them, the Department of Cottage and Small Industry (DoCSI) does not allocate sufficient budget for the promotion of handicraft. Stating an example, Shakya says that FHAN organises handicraft fair every year spending a minimum of Rs 10 million. “But the government does not provide more than Rs 1.5 million to Rs 2 million in this regard,” he states. According to him, the government also does not provide budget to participate in international trade fairs.   

“Only the efforts of producers are not sufficient to increase the volume of export. Promotional activities are equally important and the government needs to understand this,” he opines. 

Need for government support
According to entrepreneurs, the rising cost of production and lack of infrastructure are other problems that are hindering the growth of the handicraft industry. They demand with the government to formulate effective policies. “We are exporting handicraft goods worth about Rs 12 billion annually without proper support from the authorities. If the government supports, the export figure can easily exceed Rs 20 billion,” Shakya claims. 

He adds that this is possible only when the government takes steps that are favorable for the sector. Unlike other areas of business, there is no specific policy for the handicraft sector till date. FHAN which has been knocking the government’s door in this regard has prepared a draft of the policy. “We have recently prepared the draft which will be presented to the government very soon,” Shakya informs. Similarly, entrepreneurs stress that the government should support them to participate in international trade fairs. 

Tuladhar suggests that the government can support the sector by introducing cash incentives to producers and exporters. “It will lower the cost of production and encourage people to engage more in the business,” he says. Likewise, tax exemptions from production to export of handicraft items can also be helpful to promote the business, according to Tuladhar.  

As per the current arrangement, the government provides two percent grant to the producers. However, Shakya says that the entrepreneurs have not received any grant from the government. “Our demand with the government is to provide at least 10 percent incentive particularly to those products that are produced using local raw materials,” he urges. 

Maheshwor Shrestha agrees with Shakya and Tuladhar and points out the need for business friendly labour laws for the betterment of the handicraft sector.

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