Development of jute sector
Monday, 12 November 2007
IT has been argued in recent years that the traditional jute mills are destined to die a natural death and there was no economic sense in wasting fresh resources to revive an industry the fortunes of which have dipped below any hope of recovery. But the pessimists have been proved wrong. As the jute mills, both in the public and private sectors, were found ailing, the ones in neighbouring Indian West Bengal seemed to be flourishing meeting increasing local demand and substantially enhancing export earnings. Such anomaly shows that the jute industry in Bangladesh is not destined to wither irreversibly. The tide can be turned once again in jute's favour provided proper reforms in the sector are carried out.
The reforms also ought not to once again repeat the folly of engaging in futile attempts to restore the health of the public sector jute mills. The mismanagement, corruption and other ills are so deep-seated in the public sector jute industries that probably not even the most thoroughgoing reforms might salvage them. Only their fastest privatisation will prepare them for gradual recovery and this course must be the thrust point of the government's reform policies for the sector. The other major strategy to be pursued is extending the utmost supports to the private sector jute industries. A report in this paper last Sunday stated that the government formed a task force to devise policies for the development of the jute sector. However, this task force should necessarily start off with the basic premise that the jute sector's privatisation must be speeded up and government's assistances should be maximised for the jute industries in the private sector. These would be the main tasks for achieving a turnaround for the sector as a whole in the short run.
The privately run jute mills are rightly demanding a number of facilities to acquire greater competitiveness and sustainability in their operations. First of all, the government can significantly improve the demand situation for their products. The jute mills in India are doing well considerably as the government there is making the use of jute bags compulsory for various purposes in place of substitutes. Similar measures, if taken in Bangladesh and well enforced, will ensure the jute industries a much expanded local market. The privately run mills are also in need of payment of the accumulated cash incentives in arrears to them by the government and also the enhancement of the rate thereof. The privately operated mills also have not adequately received financial assistance provisioned for the jute industry under the Jute Sector Adjustment Credit (JSAC). Disbursement of the JSAC credit to the private mills can be of much value when some of them are experiencing financial difficulties. The association of the private mills are also pleading for a lowering of the interest rate on working capital which they borrow from the banks. The government ought to consider and promptly act in response to these demands.
The longer term development of the jute industry essentially involves getting the private sector interested in making new jute products such as paper and pulp for paper, parts of automobiles, cloth, upholsteries, etc. Government should develop some of these products on its own and call upon the private sector entrepreneurs to establish industries to produce the same. Official supports to such new jute-based industries will have to be optimum at the outset to encourage investments.
The reforms also ought not to once again repeat the folly of engaging in futile attempts to restore the health of the public sector jute mills. The mismanagement, corruption and other ills are so deep-seated in the public sector jute industries that probably not even the most thoroughgoing reforms might salvage them. Only their fastest privatisation will prepare them for gradual recovery and this course must be the thrust point of the government's reform policies for the sector. The other major strategy to be pursued is extending the utmost supports to the private sector jute industries. A report in this paper last Sunday stated that the government formed a task force to devise policies for the development of the jute sector. However, this task force should necessarily start off with the basic premise that the jute sector's privatisation must be speeded up and government's assistances should be maximised for the jute industries in the private sector. These would be the main tasks for achieving a turnaround for the sector as a whole in the short run.
The privately run jute mills are rightly demanding a number of facilities to acquire greater competitiveness and sustainability in their operations. First of all, the government can significantly improve the demand situation for their products. The jute mills in India are doing well considerably as the government there is making the use of jute bags compulsory for various purposes in place of substitutes. Similar measures, if taken in Bangladesh and well enforced, will ensure the jute industries a much expanded local market. The privately run mills are also in need of payment of the accumulated cash incentives in arrears to them by the government and also the enhancement of the rate thereof. The privately operated mills also have not adequately received financial assistance provisioned for the jute industry under the Jute Sector Adjustment Credit (JSAC). Disbursement of the JSAC credit to the private mills can be of much value when some of them are experiencing financial difficulties. The association of the private mills are also pleading for a lowering of the interest rate on working capital which they borrow from the banks. The government ought to consider and promptly act in response to these demands.
The longer term development of the jute industry essentially involves getting the private sector interested in making new jute products such as paper and pulp for paper, parts of automobiles, cloth, upholsteries, etc. Government should develop some of these products on its own and call upon the private sector entrepreneurs to establish industries to produce the same. Official supports to such new jute-based industries will have to be optimum at the outset to encourage investments.