Policies for revival of the jute sector
Sunday, 17 June 2007
Shahiduzzaman Khan
THE interim caretaker government has taken a fresh move to formulate a new jute policy for the revival of the ailing sector. The new policy is expected to give a boost to its development. Enhancement of the country's jute production capacity, diversification of product base, ways to attract foreign investment and increase of export earnings are high on the policy agenda.
A high-profile meeting was held last week on the formation of a new jute policy with the secretary of the Textile and Jute Ministry in the chair. It assigned a committee, headed by director general of the Department of Jute, to prepare a draft Jute Policy. Besides, the committee was given one-month time for submitting the final draft before the ministry.
The committee was asked to make comprehensive recommendations for the proposed policy in line with a previous draft, which was prepared in consultation with the stakeholders of the country's jute industry. Representatives from the ministries of finance and agriculture will be included in the policy formation process.
According to the industry circle, the main objectives of the proposed policy are to enhance productivity of the local jute industries through modernisation of their machinery so that the country can raise its share in the export market. Another aim of the policy is expansion of jute cultivation through introduction of high-yielding variety of crops and motivation of farmers. Continuation of the current process of divesting the state-run jute mills through protecting the interest of the workers will be another important agenda of the proposed policy.
The new policy is expected to also include strengthening the coordination between the related government agencies and private sector operators for the development of the country's jute sector and reducing poverty through ensuring fair prices for jute growers.
In fact, the jute sector is on the verge of a complete collapse because of the government's policy failure. Such failure has pushed most of the nationalised jute mills to the brink of closure. The flawed policy of and non-cooperation by successive governments was blamed for the prevailing dismal condition of the jute sector. The nationalisation of jute mills brought catastrophe to the sector. Most of the nationalised jute mills went out of production for lack of jute. According to an estimate, 30 per cent loss of the jute sector is caused by power shortage and another 30 per cent is attributed to interest charges. Jute sector itself is responsible only for another 30 per cent of the losses. However, the issue was grossly controversial.
The government is following the suggestions of the World Bank and the International Monetary Fund (IMF) which is apparently crippling the jute sector. In many respects, experts are of the opinion that the Adamjee Jute Mills was never in loss and the donor agencies had led a negative propaganda against it.
For the present, a severe crisis in the jute mills and jute sectors was prevailing as the immediate past government failed to provide funds to the mills for jute purchase during the last harvesting season. For such a crisis, the workers of state-owned jute mills are not receiving their wages for the last eight months and have been passing their days along with their family members through untold sufferings and economic hardship.
If the jute industries are saved from the state of ruination, those may contribute significantly to the country's fragile economy as well as rescuing huge number of workers from miserable economic hardship.
Public sector jute mills are assisted by the government, no financial help is given to the private sectors mills. Farmers lost interest in jute for not getting fair price. There was a minimum price of jute in the past but now it is not enforced because of open market economy policy. Currently, some 22 jute mills are in operation under the state-run Bangladesh Jute Mills Corporation (BJMC) while the private operators are running 77 jute units and 150 jute-spinning mills in the country. Except for the spinning units, most of the jute mills, especially those are under the BJMC, are in bad shape due to multifarious reasons like managerial deficiency, fund crisis and corruption
In order to have a balanced jute policy public sector mills should be privatised. This is expected to eliminate the loss of the government. There is no chance of improving the operational efficiency of public sector mills. The government can adopt a uniform policy for the private sector if all the jute mills are in the private sector. Adamjee area has been converted into an Export Processing Zone (EPZ) and a number of industrial units are already being built there. New employment opportunities will be created in the Adamjee industrial park. The allocation of Taka 3.0 billion was proposed to purchase raw jute, spares, fuel and other material for production. If the government is convinced about revival of the jute sector, then only such allocation should be made.
The wage of jute mill workers in India is almost double the amount of pay of jute mill workers in Bangladesh, although Bangladesh produces superior quality jute. Jute from Bangladesh is also being smuggled to India at a high cost. Even then the jute industry in India is flourishing and the country's jute industry is dying. This suggests that the country was not producing jute goods at a competitive price. Reports say that the private sector mill owners are not running their mills. Those who bought these mills are not interested to run the mills, rather they are selling the property of the mills. They blame the government for discriminatory policy. Private sector owners cannot maintain these mills with losses. But it is not wise to put the whole blame to the government for the losses. Supporters of jute sector are pressing the government for fiscal incentive. Such an incentive, experts say, must not be made without a rational policy.
Jute is a neglected sector despite having almost 100 percent local value addition and the farmers fall victims to unstable government policy as they do not get good prices of their produces years after years and are forced to shift to other crops.
If the jute industries are saved from the state of ruination, those may contribute significantly to the country's fragile economy as well as rescuing huge number of workers from miserable economic hardship.
THE interim caretaker government has taken a fresh move to formulate a new jute policy for the revival of the ailing sector. The new policy is expected to give a boost to its development. Enhancement of the country's jute production capacity, diversification of product base, ways to attract foreign investment and increase of export earnings are high on the policy agenda.
A high-profile meeting was held last week on the formation of a new jute policy with the secretary of the Textile and Jute Ministry in the chair. It assigned a committee, headed by director general of the Department of Jute, to prepare a draft Jute Policy. Besides, the committee was given one-month time for submitting the final draft before the ministry.
The committee was asked to make comprehensive recommendations for the proposed policy in line with a previous draft, which was prepared in consultation with the stakeholders of the country's jute industry. Representatives from the ministries of finance and agriculture will be included in the policy formation process.
According to the industry circle, the main objectives of the proposed policy are to enhance productivity of the local jute industries through modernisation of their machinery so that the country can raise its share in the export market. Another aim of the policy is expansion of jute cultivation through introduction of high-yielding variety of crops and motivation of farmers. Continuation of the current process of divesting the state-run jute mills through protecting the interest of the workers will be another important agenda of the proposed policy.
The new policy is expected to also include strengthening the coordination between the related government agencies and private sector operators for the development of the country's jute sector and reducing poverty through ensuring fair prices for jute growers.
In fact, the jute sector is on the verge of a complete collapse because of the government's policy failure. Such failure has pushed most of the nationalised jute mills to the brink of closure. The flawed policy of and non-cooperation by successive governments was blamed for the prevailing dismal condition of the jute sector. The nationalisation of jute mills brought catastrophe to the sector. Most of the nationalised jute mills went out of production for lack of jute. According to an estimate, 30 per cent loss of the jute sector is caused by power shortage and another 30 per cent is attributed to interest charges. Jute sector itself is responsible only for another 30 per cent of the losses. However, the issue was grossly controversial.
The government is following the suggestions of the World Bank and the International Monetary Fund (IMF) which is apparently crippling the jute sector. In many respects, experts are of the opinion that the Adamjee Jute Mills was never in loss and the donor agencies had led a negative propaganda against it.
For the present, a severe crisis in the jute mills and jute sectors was prevailing as the immediate past government failed to provide funds to the mills for jute purchase during the last harvesting season. For such a crisis, the workers of state-owned jute mills are not receiving their wages for the last eight months and have been passing their days along with their family members through untold sufferings and economic hardship.
If the jute industries are saved from the state of ruination, those may contribute significantly to the country's fragile economy as well as rescuing huge number of workers from miserable economic hardship.
Public sector jute mills are assisted by the government, no financial help is given to the private sectors mills. Farmers lost interest in jute for not getting fair price. There was a minimum price of jute in the past but now it is not enforced because of open market economy policy. Currently, some 22 jute mills are in operation under the state-run Bangladesh Jute Mills Corporation (BJMC) while the private operators are running 77 jute units and 150 jute-spinning mills in the country. Except for the spinning units, most of the jute mills, especially those are under the BJMC, are in bad shape due to multifarious reasons like managerial deficiency, fund crisis and corruption
In order to have a balanced jute policy public sector mills should be privatised. This is expected to eliminate the loss of the government. There is no chance of improving the operational efficiency of public sector mills. The government can adopt a uniform policy for the private sector if all the jute mills are in the private sector. Adamjee area has been converted into an Export Processing Zone (EPZ) and a number of industrial units are already being built there. New employment opportunities will be created in the Adamjee industrial park. The allocation of Taka 3.0 billion was proposed to purchase raw jute, spares, fuel and other material for production. If the government is convinced about revival of the jute sector, then only such allocation should be made.
The wage of jute mill workers in India is almost double the amount of pay of jute mill workers in Bangladesh, although Bangladesh produces superior quality jute. Jute from Bangladesh is also being smuggled to India at a high cost. Even then the jute industry in India is flourishing and the country's jute industry is dying. This suggests that the country was not producing jute goods at a competitive price. Reports say that the private sector mill owners are not running their mills. Those who bought these mills are not interested to run the mills, rather they are selling the property of the mills. They blame the government for discriminatory policy. Private sector owners cannot maintain these mills with losses. But it is not wise to put the whole blame to the government for the losses. Supporters of jute sector are pressing the government for fiscal incentive. Such an incentive, experts say, must not be made without a rational policy.
Jute is a neglected sector despite having almost 100 percent local value addition and the farmers fall victims to unstable government policy as they do not get good prices of their produces years after years and are forced to shift to other crops.
If the jute industries are saved from the state of ruination, those may contribute significantly to the country's fragile economy as well as rescuing huge number of workers from miserable economic hardship.