Old and new players hold opposing views

Arafat Ara Spinners are concerned over the rat race among a section of entrepreneurs to set up jute spinning mills in the country as the production capacity of the sector has already been over-saturated compared to the global demand for jute yarn, claimed the sector insiders. Presently the production capacity of country's 82 jute spinning mills stands at 0.9 million tonnes against the global demand of only 0. 45 tonnes annually, said the spinners. Bangladesh Jute Spinners Association (BJSA) Chairman Muhammad Shams-uz-Zoha said of the total production, 95 per cent of the jute yarn is exportable but the demand for the same has not been increasing. "Bangladesh usually exports 350,000 to 380,000 tonnes of yarn a year and rest of the total global demand is met mainly by India". The production capacity of nearly 450,000 tonnes remains unutilised presently, according to the BJSA Chairman. He said the requirement of jute yarn depends on the demand for carpet as the golden fiber is mainly used as a weft of carpet in the globe. But the overseas demand for jute yarn is increasing by only one to two per cent annually and there is no possibility of expansion of the market in near future, the BJSA chairman said. Besides, now-a-days the export volume of jute yarn has declined due to unrest in Middle East and some North African countries," he added. According to the BJSA, around 16 new jute spinning mills have been set up in the country over the last 17 months and eight more are in the pipeline. BJSA data shows that four jute spinning mills were established in 2008-09 financial year (FY), and another four in FY 2009-10. BJSA Vice Chairman Iqbal Haider said many of the entrepreneurs are coming to jute spinning sector without proper analysis of the present condition of market. He claimed that maximum number of entrepreneurs were coming to invest in the sector being influenced by rumour and positive media report about the growth of the sector. "It is true the future of jute sector is bright, but demand for all jute products is not increasing at an equal pace," he said adding we've to understand the reality that there has not been a remarkable rise in the export of jute yarn. Mr Haider, who is also the managing director of Usha Jute Spinners Ltd said if the fresh investment in jute spinning sector goes on, the industry will become a sick one soon. For creating awareness among the new entrepreneurs, Board of Investment (BoI) should set up an advisory desk immediately, he added. But new entrepreneurs contradicted the opinion of the Association people adding no critical situation is in sight in the sector but the new spinning mills will boost up the country's economy. Fazlur Rahman, Managing Director of Rahman Jute Spinning Private Ltd in Rajshahi which is expected to go into operation after two months said, the demand for the eco-friendly item is increasing across the globe as a good number of countries are switching over to the jute products from plastic-made products. Beyond the traditional markets, Russia, Australia and Japan have also started importing jute yarn from Bangladesh for making jute products, he said adding not only for carpet those countries are importing the yarn for making diversified jute goods. If one can run the mill properly, he will definitely make profit now, he said. Shalauddin Ahmed, Deputy General Manager (DGM) of Mazada Jute Mills Industries Ltd which was established in June this year said if the millers can purchase raw jute at a lower price, it is easy to make profit. "Now there is no crisis of raw jute as the production has increased to a great extent. Export Promotion Bureau (EPB) data showed that export earning from jute sector stood at US$ 244.90 million during the July-September period of 2011-12 FY, recording 17 per cent growth over the corresponding period of last fiscal. It also stated that around US$ 121.81 million had been earned from the export of jute yarn and twine, US$ 45.85 million from jute bags and sacks and US$ 65.54 million from raw jute during the last three months.