We don't have official data about the industry’s performance. However, our own internal study points out that the industry has an investment of Rs 25 billion and has been directly employing over 150,000 individuals. 

 

The April 25 earthquake and the aftershocks that followed destroyed around five-six furniture outlets in Kathmandu. Though the relief and rescue work has come to an end, people are still homeless and due to this the market has slowed down. Like other industries, we too are losing money.

 

With Nepal gearing up for the reconstruction and rebuilding, what future do you see for the furniture industry?

The work of furniture and furnishing comes after completing the reconstruction and rebuilding of destroyed buildings and this will take some time. For the next few months, business may be slow but it will pick up gradually. But it does not mean that the market will go down. To address their immediate needs, people will buy cheap furnishing. And we are hopeful that within time our market will get back on track.

 

We do not expect that the market to grow dramatically and as I said earlier, it will take some time for the industry to bounce back. The domestic furniture industry has the capacity to meet reconstruction needs. There are three-four flooring industries that produce quality flooring products. Nepali furnishing products have a very good market and they have even somehow displaced imports in their categories. Along with our domestic production, we import some products that don't have good domestic alternatives in Nepal. Similarly, we import timber and readymade furniture from different countries like China, Malaysia, Indonesia, Japan, Vietnam, and Myanmar. With the situation in the country getting back to normal, we are confident that the industry is capable of meeting market needs if a proper environment is enabled. 

 

The major problem faced by the furniture industry, like others, is load-shedding. Furniture made using diesel generators is more expensive than those produced using hydroelectricity. Shortage of both skilled and unskilled manpower and scarcity of raw material are also our major problems. Before the earthquake, skilled manpower was in short supply. Now it seems we are going to face a shortage of even unskilled manpower. We are making furniture from imported timber which obviously increases the cost price of furniture. Amid such a situation, it is surprising to hear news of rampant deforestation and timber smuggling into other nations. We wonder where all that wood goes. Another problem is the government’s taxation policy.

 

Our industry has not ben able to run at full capacity due to the unfavourable environment. The earthquake has slightly slowed down our business. We are preparing for any possible increase in demand. As always, we expect the demand to surge during the festive season of Dashain this year also. So, we are preparing ourselves for that too. 

 

We are in the reconstruction and revival phase and as I said earlier for this phase our own domestic products will be sufficient. As far as the import of raw material as well as readymade furniture is concerned, we expect neither an increase nor a decrease. 

 

Furniture prices will increase if raw material prices increase. This increase also depends on the value of the US dollar. Some entrepreneurs might take undue advantage of the situation and increase furniture and furnishing product prices. But we would like to assure our customers that we are not going to hike the price. And if any entrepreneur does so, our association will take stern action against them by working closely with the government.

 

Regular supply of electricity to industries and industrial estates is the best the government can do. Along with that, it should re-allocate any unused space within industrial estates to functioning industries. For producing skilled manpower, the government should institute organizations that provide trainings and courses to individuals on a regular basis. It should make sure that the timber produced in the country is distributed and utilized properly and that trees are cut down by maintaining environmental preservation guidelines. And the government should ease customs procedures and lower custom duty on imports.

Currently, the market for steel and iron in Nepal is almost negligible. The recent earthquake has affected many dimensions of trade and activities related to it. For example, the government’s restriction on the building design approval procedure, necessary to give continuity to the ongoing construction, has seriously affected the industry. Due to the restriction, even if the steel and iron industries start manufacturing, right now they don’t have a market for their products.

 

 

There are around 20 steel and iron factories operating across Nepal.  But, right now, it’s not possible to say who is producing and who is not. Following the earthquake, the production capacity of the industry has declined massively. This sector consists of industries like the rebar industry, corrugated iron industry, and wire industry, among others. Of these, the earthquake has brought the rebar industry, which in normal conditions has an annual production capacity of 1.5million tons, to a grinding halt. The corrugated iron industry with an annual production capacity of 300,000 tons and the wire industry with an annual production capacity of around 200,000 tons, have been partially affected. 

 

Though the earthquake has hit some of our industries and though we need to recover our production capacity, our present production capacity is sufficient to meet market demand. As the rebar industry has come to a halt, we might face some shortage in its supply presently, but we expect this to be addressed within the next eight months.  As for other construction materials we are already in a position to meet the supply gap.

 

I won’t say that this is a big opportunity for us as most of our industries have been affected by the earthquake. We will need around eight months to regain our efficiency, which in turn depends on many factors like the economic condition of the country, government regulations, and customer choice,  among others. But considering the tremendous progress and development that other quake-hit countries have made during their post-quake reconstruction period, hopefully there will be growth here too. 

 

Well, right now the market is mediocre. But a lot of positive changes can happen if the policy is right. As I mentioned earlier, there are many countries, which have accelerated the development process after big calamities and if policies are right, Nepal has a  bright and attractive future ahead. 

 

We don’t have to import any material, as our own production capacity is enough to meet the nation’s demand. However, it would be better if the government could import electricity to meet the industry’s power needs. 

 

I think the capacity utilized is much lower than the reported 68%. It may actually be around 48%. The main reason for this is electricity shortage, which is available only 12 hours a day on average. This automatically cuts down the production capacity by half. Production booms when electricity is available round the clock. The Nepali steel industry can easily meet supply demands and there is no point in producing more steel, as it could lead to an over supply in the market. 

 

We don’t need to worry about the rise in demand. We will be able to produce as much as the market demands. A few industries may take some months to recover from the earthquake but collectively, our production will be enough to meet the increased demand.

 

It all depends on how the construction sector moves in the days ahead. If there is a growth in demand, there will be a growth in labour demand as well. If you compare the last five to ten years, there has been a huge supply gap in the labour market. Skilled manpower has gone abroad and this has created a shortage of skilled workers here which, consequently, has been increasing labour costs.

 

The simple economic principle that, an increase in demand with supply shortage will increase the price, may not always hold true. If we are short of supply then some people may take undue advantage of the situation. But as I already mentioned, we have sufficient production to meet the demand so we don't expect a price rise as such. So, whatever changes in price occur, they will be because of the fluctuation in the international market. 

 

We expect the government to focus on increasing the development budget along with starting the reconstruction and rebuilding process and resuming the design approval procedure by making appropriate changes. Another major thing we expect the government to do is to provide adequate electricity even if it means importing it from India. 

In the last one and a half months, all industries including the paint industry, have incurred heavy losses. This is supposed to be the biggest natural tragedy which Nepal is trying to overcome. A large number of real estate companies have been affected. Thousands of private homes and buildings have collapsed or developed cracks. They need to be rebuilt or repaired. But the rebuilding process or even repairing for that matter will not begin as long as the aftershocks keep coming. And as told by experts, the aftershocks will come for some more time. So, in my opinion, it will take at least two to three months more for the people to come out of this situation and think about reconstruction or repair. That will certainly create a big business for construction material like cement, iron rods, bricks and of course paints. You can say opportunity has come through sorrow. 

 

In my rough estimate, I think the paint industry was growing by about 12-14% before the earthquake. But the supply of paint and other related material has come to a standstill for the last one and half months. This situation is likely to continue for the three-four weeks. Therefore, I don't see us meeting our growth rate for this fiscal year. So, this fiscal year is not going to meet the expected growth target. But in the next fiscal year, may be from the second quarter onwards, the growth rate of the paint industry will double this fiscal year’s growth rate.

 

See, so far as Kansai Nerolac paint is concerned, our manufacturing facility is prepared to meet the increased demand. And this will remain true even if the demand grows by 20-25 per cent. We have a huge production facility in Birgunj. I have heard that some paint companies in Nepal are facing problems in terms of production due to the damage to their production units but as far as Kansai Nerolac paint is concerned, we are in a good position to meet the increased demand. We expect the paint demand to go up from the second quarter of the coming fiscal year. 

 

See, there are two things. If the demand increases, we will certainly increase our production. We have additional production capacity to fulfil the increase demand, so stocks will not be problem for us. 

 

I don’t think so because Nepal already has some big paint manufacturers who have been able to meet the national demand. So, I think, there won’t be a need to import paints, either for quality or for quantity. Nepal is self-reliant in paints and can handle any growth in demand. 

 

Nepal will require huge amount of paint in the days ahead and while catering to this need we should focus on lead-free and zero VOC paints.

 

For the last two and a half years, Kansai Nerolac Paint has been among the fastest growing paint companies in Nepal. In the next fiscal year, when county comes out of the mental trauma left by the earthquake, we expect our present growth rate to double. And I am sure that is going to happen.

 

The demand of construction materials is certainly going to increase. The demand will come from reconstruction as well as construction of new buildings. But the growth will take place only if there is a reasonable flow of capital in the market. Many people have lost the means of their livelihoods and ensuring capital flow in the market will ensure that they are employed again.