Koshi industries run at less than half capacity, Rastra Bank study finds

According to a Nepal Rastra Bank study, industries in Koshi province have not been able to use even half of their production capacity.

The study, based on data from fiscal year 2082/83, found that the weighted average capacity utilization of about 42 sampled industries stood at nearly 43 percent. The previous year, this rate was around 42 percent.

The study attributed the low utilization mainly to falling market demand and the industries' inability to compete on price with imported goods.

Although capacity utilization improved slightly, the number of workers employed in these industries fell by about 2 percent to nearly 17,000. The previous year, the number of workers had increased.

Capacity utilization varies widely by industry. The soybean oil industry produced more than its installed capacity, while the vegetable ghee industry's utilization was limited to about 7 percent. Mustard oil, noodles, biscuits, sugar and processed tea industries are in relatively better shape. Capacity utilization is low in industries producing cement, soap, iron rods, paper and processed milk.

Among the industry groups covered in the study, only slightly more than half used 50 percent or more of their capacity. Morang, Sunsari and Jhapa are the major industrial districts in the province. The study also found that growth in industrial credit flow in the province has been sluggish.