Global financial crisis hits jute goods sector
Tuesday, 11 November 2008
FE Report
The local jute goods manufacturers, concerned by the fall in export prices of their products following the global financial crisis, sought government support including creation of a 'crisis fund' for helping them to cope with external shocks.
"We are going to put forward a set of recommendations, including creation of a special fund, to the government for protecting the export of local jute goods from falling prey to the global financial turmoil," the Bangladesh Jute Mills Association (BJMA) Secretary Abdul Barik Khan said.
The recommendations have been made at a joint meeting of the BJMA and the Bangladesh Jute Spinners Association (BJSA), held recently at the former's office in the city to discus the impact of the global financial crisis on the local jute industry and its remedies.
Presided over by the BJMA Chairman Nazmul Haq, the meeting was also attended by the BJSA Chairman Sabbir Yusuf and other executive members of the two associations.
Expressing deep concern over the fall in the export prices of local jute goods due to the global financial crisis, the meeting sought immediate steps from the government in this connection.
According to the sector insiders, prices of jute goods have declined by up to 20 per cent in the international market because of the global financial turmoil.
Citing an example, a BJMA source said the average export price of jute bags has already fallen to US$ 62 per 100 pieces against the previous price of over $ 72.
Leaders of the private jute mills at the meeting feared that many of the ailing jute mills might have to be shut down due to the global economic slowdown unless the government took necessary steps to help protect the export-oriented industry.
Taking the adverse impact of the global financial recession into consideration, leaders of both the BJMA and BJSA at the meeting urged the government to enhance the cash subsidy on export of jute goods to 20 per cent from the existing 7.5 per cent.
The meeting also suggested that the authorities should either devalue the local currency or reintroduce the 'bonus voucher system' to help protect the country's jute export.
India, Bangladesh's main competitor in the jute sector, had recently devalued its currency by around 21 per cent in phases, as a result of which the local jute goods have become less competitive in the export markets, the meeting observed.
The meeting also laid emphasis on the need for immediate implementation of recommendations made by a high-powered Jute-Sector Taskforce, introduction of 'dual currency exchange rates' and reduction of bank interest on working capital.
The local jute goods manufacturers, concerned by the fall in export prices of their products following the global financial crisis, sought government support including creation of a 'crisis fund' for helping them to cope with external shocks.
"We are going to put forward a set of recommendations, including creation of a special fund, to the government for protecting the export of local jute goods from falling prey to the global financial turmoil," the Bangladesh Jute Mills Association (BJMA) Secretary Abdul Barik Khan said.
The recommendations have been made at a joint meeting of the BJMA and the Bangladesh Jute Spinners Association (BJSA), held recently at the former's office in the city to discus the impact of the global financial crisis on the local jute industry and its remedies.
Presided over by the BJMA Chairman Nazmul Haq, the meeting was also attended by the BJSA Chairman Sabbir Yusuf and other executive members of the two associations.
Expressing deep concern over the fall in the export prices of local jute goods due to the global financial crisis, the meeting sought immediate steps from the government in this connection.
According to the sector insiders, prices of jute goods have declined by up to 20 per cent in the international market because of the global financial turmoil.
Citing an example, a BJMA source said the average export price of jute bags has already fallen to US$ 62 per 100 pieces against the previous price of over $ 72.
Leaders of the private jute mills at the meeting feared that many of the ailing jute mills might have to be shut down due to the global economic slowdown unless the government took necessary steps to help protect the export-oriented industry.
Taking the adverse impact of the global financial recession into consideration, leaders of both the BJMA and BJSA at the meeting urged the government to enhance the cash subsidy on export of jute goods to 20 per cent from the existing 7.5 per cent.
The meeting also suggested that the authorities should either devalue the local currency or reintroduce the 'bonus voucher system' to help protect the country's jute export.
India, Bangladesh's main competitor in the jute sector, had recently devalued its currency by around 21 per cent in phases, as a result of which the local jute goods have become less competitive in the export markets, the meeting observed.
The meeting also laid emphasis on the need for immediate implementation of recommendations made by a high-powered Jute-Sector Taskforce, introduction of 'dual currency exchange rates' and reduction of bank interest on working capital.