Global recession hits local jute spinners hard
S M Jahangir | Tuesday, 24 February 2009
The global financial crisis has already hit the local jute spinners hard as their exports recorded a 25 per cent fall following the recession, the industry said.
"Our volume of exports has already dropped by 30 per cent while the value of exports has fallen by around 25 per cent because of the financial meltdown," Chairman of the Bangladesh Jute Spinners Association (BJSA) Sabbir Yousuf said Monday.
Voicing deep concern over the prevailing situation, the BJSA leader said the country's Tk 14-billion jute spinning industry would fall into a deep crisis in the days ahead.
He also mentioned that a significant fall in the demand for jute in the global market due to the financial meltdown had already forced the jute industry to cut their production by around 40 per cent over the last few months.
As a result, over 15,000 people have so far lost their jobs, the sector insiders said, fearing that more workers and officials engaged in the jute sector would lose their jobs.
They apprehended that a good number of local jute mills might face closure in the near future.
According to the BJSA chairman, nearly 95 per cent of locally produced jute yarn is mainly used as semi-processed raw materials by carpet makers across the globe.
But the global production of carpets has declined significantly as the meltdown-hit real-estate sector around the world has drastically reduced their demand for the same, Mr. Sabbir Yousuf observed.
Considering the overall situation, the BJSA recently put forward a set of recommendations to the government seeking help for the local jute spinners so that they could withstand the adverse impact of the global recession, he said.
"We have made an appeal to the jute ministry to take pragmatic steps to help our sector face the global financial turmoil," the BJSA chairman said.
Among the steps, the apex body of the local jute spinning mills suggested that government should enhance the rate of cash subsidy on export of jute goods to 20 per cent from the existing 7.5 per cent.
The Association pointed out that India, Bangladesh's main competitor in the jute sector, had recently devalued its currency by around 32 per cent in phases, as a result of which the local jute goods became less competitive in the export markets.
Besides, it also sought proper implementation of the central bank's circular so that the local jute industry got credit from banks at the rate of 7.0 per cent, as was applicable for the agro-based sector.
Currently, the banks are charging interest at rates ranging between 13 per cent and 15 per cent on their credit for the jute millers, Mr. Sabbir said.
Apart from those, the Association demanded immediate implementation of all the decisions and recommendations made earlier by the government for salvaging the country's ailing jute industry.
"Our volume of exports has already dropped by 30 per cent while the value of exports has fallen by around 25 per cent because of the financial meltdown," Chairman of the Bangladesh Jute Spinners Association (BJSA) Sabbir Yousuf said Monday.
Voicing deep concern over the prevailing situation, the BJSA leader said the country's Tk 14-billion jute spinning industry would fall into a deep crisis in the days ahead.
He also mentioned that a significant fall in the demand for jute in the global market due to the financial meltdown had already forced the jute industry to cut their production by around 40 per cent over the last few months.
As a result, over 15,000 people have so far lost their jobs, the sector insiders said, fearing that more workers and officials engaged in the jute sector would lose their jobs.
They apprehended that a good number of local jute mills might face closure in the near future.
According to the BJSA chairman, nearly 95 per cent of locally produced jute yarn is mainly used as semi-processed raw materials by carpet makers across the globe.
But the global production of carpets has declined significantly as the meltdown-hit real-estate sector around the world has drastically reduced their demand for the same, Mr. Sabbir Yousuf observed.
Considering the overall situation, the BJSA recently put forward a set of recommendations to the government seeking help for the local jute spinners so that they could withstand the adverse impact of the global recession, he said.
"We have made an appeal to the jute ministry to take pragmatic steps to help our sector face the global financial turmoil," the BJSA chairman said.
Among the steps, the apex body of the local jute spinning mills suggested that government should enhance the rate of cash subsidy on export of jute goods to 20 per cent from the existing 7.5 per cent.
The Association pointed out that India, Bangladesh's main competitor in the jute sector, had recently devalued its currency by around 32 per cent in phases, as a result of which the local jute goods became less competitive in the export markets.
Besides, it also sought proper implementation of the central bank's circular so that the local jute industry got credit from banks at the rate of 7.0 per cent, as was applicable for the agro-based sector.
Currently, the banks are charging interest at rates ranging between 13 per cent and 15 per cent on their credit for the jute millers, Mr. Sabbir said.
Apart from those, the Association demanded immediate implementation of all the decisions and recommendations made earlier by the government for salvaging the country's ailing jute industry.