The challenge of reviving the jute industry
Abul Quasem Haider | Monday, 7 July 2008
BANGLADESH faces the challenge of reviving its jute industry. Strangely though as the jute mills in Bangladesh was closed down one after another, new jute mills, almost in the same numbers, was set up across the border.
The government needs to appoint a committee with people with probity to find out why things happened they way they did. The committee should come out with the reasons with specific recommendations for reviving Bangladesh's jute industry.
The government and the private sector should then work together to revive the country's jute industry to make it globally competitive.
While the output of the country's jute mills dropped from 10 million bales at the time of liberation to four or five million bales. But during the same period, production in India more than doubled to reach 10 million bales.
Immediately after liberation a chaotic situation prevailed in the economy. In 1972 the government hurriedly nationalised all the big industries of the country. As at that time the jute industry was the number one export sector, the country used to earn huge foreign currency by exporting jute goods and jute. Jute was called the 'golden fibre' of Bangladesh. This major foreign currency earning industrial sector had as many as 69 jute mills including Adamjee Jute Mills, the biggest jute mill in the world. In 1972 about 250,000 (2.5 lakh) workers, both permanent and temporary, were employed in those mills.
The government announced a jute policy without wasting time to make jute industry the country's largest industrial sector. It had identified the items developed through research and development (R&D) studies. They included pulp for making paper using jute waste and raw jute, jute rags, quality yarn mixed with jute fibre for making cloth, production of solid material using jute for making door and window frames as alternative to wood, production of jute mixed corrugated sheets for roofs as alternative to corrugated iron (CI) sheets, production of jute-o-plastic for making furniture and house-hold articles, body and other internal parts of vehicles, jute geo textile for prevention of river erosion, refrigerator body, decorative items and cloth made of jute fibre.
Now the jute industry is on the verge of extinction owing to gross negligence, faulty government policy over the decades and international conspiracy. Due to mismanagement, maladministration and corruption not only the government-owned jute mills, but the total jute industry is going to be gradually destroyed
The first jute mill of this land, Bawa Jute Mills, was established at Narayangonj in 1948. Subsequently, the world's biggest, Adamjee Jute Mills was established on a 298 acre area at Narayangonj in 1952. Later, there were a total of 78 jute mills in the country. From 250,000 workers engaged by the jute mills immediately before liberation the number has come down to 45 thousand. Production of jute also decreased with the shutting down of many of the jute mills. The number of looms has come down to 8,000 from 26,000. In the last fiscal year, Bangladesh Jute Mills Corporation (BJMC) had set a target for purchase of 0.26 million (260,000 lakh) metric tonnes of raw jute but purchased only 0.125 million (125,000 lakh) metric tonnes. According to a statistical report of ministry of jute the BJMC incurred a loss Tk 4.21 billion (Tk 421 crore) in the last fiscal year. Investigation shows that owing to financial loss, production by the jute mills has gone down alarmingly. Jute mills are being closed down and the jute industry of this country is utterly failing to meet the demand in foreign markets. About 200,000 staff and workers of the industry lost their jobs. The governments at different times appointed investigation teams to find out the reasons, but with no results. Only the prescriptions of the World Bank (WB) were implemented which resulted in closure of jute mills, one after another.
Everyone knew for long that the jute mills were incurring losses. The workers were not doing their work properly and production was falling owing to inefficiency of the managers and workers. And for that, the government was incurring huge financial losses. For this reason, all the governments, since 1975, took the initiative to denationalise the jute mills. The workers became scared. They became violent at different times and called for movement. Since the present caretaker administration took the charge, agitations by the workers of jute mills at Chittagong and Khalishpur industrial belt of Khulna and two garment industries in Chittagong and Savar caused a colossal amount of losses. The workers gave ultimatum to the government to pay their arrear dues by August 31, 2007. The then commerce adviser and the BJMC chairman, however, reiterated that all arrears would be paid within August 31. The workers took to the agitations as they had to starve or pass their days half-fed. Lacking food and clothing they had no alternative to agitation. It cannot be said with all fairness that the workers alone were responsible for the closure of the mills. The responsibility for such losses lies with the managements as well, who indulged in reckless corruption. Corruption bedevils the entire process of purchase of raw jute, machinery and the parts. Owing to corruption at every stage, cost of production increases and ultimately the jute mills incur heavy financial losses.
According to a report of the Ministry of Jute BJMC incurred losses aggregating Tk 4.21 billion (421 crore) in the last fiscal year, of which Tk 300-00 million (Tk. 30 crore) was incurred due to workers' movement. According to a survey report a loss of Tk 1.4 billion (Tk. 140 crore) was incurred due to delay in releasing the fund for the purchase of raw jute and another Tk 1.3 billion (Tk. 130 crore) was lost owing to disruption of power and other problems.
So, the lion's share of the losses was caused due to corruption and inefficiency of the management of the mills and the failure of electricity providers. Moreover, loss worth Tk 2.70 billion (Tk 270 crore) was incurred due to failure of the concerned authorities to purchase raw jute in time and failure to ensure uninterrupted power supply to the mills.
It is apparent that the failure to market jute goods, entrusting the jute industry sector to inefficient bureaucrats, corruption of the officers and mill managements and CBA leaders were the main reasons for such colossal losses. Denationalisation at the pressure of the World Bank without proper auditing was another big reason.
The labour intensive jute industry was then the largest provider of job opportunities for the workers of this country. According to the labour organisations, the number of workers in nationalised jute mills has reduced to one-fifth compared to that of pre-nationalisation period. The mills are running with 20 per cent of the actual labour requirement. In 1972, the 69 jute mills employed 162,000 permanent workers and 80 thousand substitute or 'bodli' workers (total 242,000). After denationalisation of 1985 when 35 jute mills were given to the private sector, the number of workers both, permanent and temporary, came down to 150,000.
In 1984 on advice of the World Bank, 30 thousand workers were straight way retrenched. The total number of workers dropped to 75 thousand. According to the labour organisations, now the number of workers is no more than 26 thousand. Bangladesh Jute Mills Corporation (BJMC) estimates the number of existing workers at 32 thousand. Now there is a trend among the workers to leave their jobs taking optional retirement. It is apprehended that the number of workers would drop to half of the existing strength. A prominent labour leader regrets that many a person, only disregard the facts when they state there are surplus workers in the jute mills or that the losses were caused by the workers. He states that there are no surplus workers and no loss was caused by the workers.
Of the 56 jute mills in the private sector with 11,700 looms, only 3,400 were in operation in the last fiscal year. The production capacity of the private sector mills produced 150,000 tonnes last fiscal year against the production capacity of 350,000 tonnes. The private sector jute mills engaged 13,000 permanent and 18,000 casual workers.
But it is encouraging that 65 twine and spinning mills in the private sector are running at profit, employing about 30 thousand workers. These mills produce yarn from jute fibre for export.
The jute mills under the BTMC are mostly located in Khulna and Chittagong. Out of eight jute mills with the BJMC in Khulna, only one is making profit.
Salary and wages of the staff and workers of Platinum, Crescent, Star, Afil, Jessore Jute Industries and Carpeting Mills fell arrears for six to nine months on an average. However, following labour agitation at Khalishpur, the government gradually paid the arrear salary and wages. BJMC sources say that the mills of the area have bank loans to the tune of Tk 6.3 billion (Tk.630 crore) and the arrear salary and wages payable to the staff and officers and unpaid bills of raw jute suppliers are worth Tk 8.3 billion (Tk. 830 crore). According to local BJMC sources, the daily production of the eight mills fell by 20 per cent. Against the production target of 383 metric tonnes, these mills are producing only 60 or 70 metric tons.
Out of 15 jute mills in Chittagong eight are in private hands and seven with the government. All the mills under private sector have been closed down throwing 20 thousand workers out of their jobs. The mill owners owe the workers Tk 500 million (Tk 50 crore) in arrear salary, wages and benefits. On the other hand, out of the seven jute mills with the government, Karnaphuli Jute Mills and Forat Carpet Mills were closed down on July 31, 2007. The government is trying to dispose them off.
The BJMC Chairman said that the government has decided to run the five closed down jute mills in Chittagong and Khulna under joint venture arrangement with the private sector or to lease them out to the private sector. Besides, Alim Jute Mills at Khulna and Bagdad-Dhaka Carpet Factory Ltd., would be run under joint venture, for which ads. would be published seeking partners after the government formulates the policy.
Production by the jute mills of the country fell from 10 million bales at the time of liberation to four or five million bales. In sharp contrast, production in India doubled to exceed 10 million bales during the same period.
After liberation, Bangladesh's production and export of jute goods gradually decreased. During the Liberation Warm jute was considered to be the most important resource of Bangladesh. But its importance was relegated in the post-independence period. The goodwill this country once earned for jute is lost due to failure to supply jute goods to the world market on the schedule. Bangladesh once produced 70 per cent of the total global production of the whole world. But its share has now drastically shrunk. The BJMC owes the small jute traders and the farmers of Bangladesh to the tune of Tk 1.5 billion (Tk. 150 crore) in arrear bills. They are not getting the money for long. The government totally lacks in initiative and drive to boost the demand for jute in the world market though the jute industry of Bangladesh faces extinction owing to squeeze of international market and our failure to go for product diversification necessitated by advent of new products.
Both the government and the private entrepreneurs should take initiative to increase demand for Bangladesh products in the world market. Effective initiative is needed to increase the use of jute and jute goods. Exhibition of jute products should be arranged in foreign countries to increase demand and expand the export market.
Use of jute in the country should be increased. Use of polythene should be totally restricted and replaced by jute. Entrepreneurs should take initiative to market jute and jute goods in the local markets. To make the drive effective, 15 to 20 per cent cash incentive should be given to users of jute goods, instead of polythene. Provision should be made to allow special cash incentive to the exporters of jute and jute-goods to encourage the export.
Supply of fertilisers and seeds, at subsidised rates, to the jute growers should be ensured. Necessary training on scientific cultivation should be imparted to cultivators. The ministries of jute and agriculture should take the necessary steps in the areas.
To avoid erratic power supply and to meet the shortage of electricity, arrangement should be made either to install power generator in the jute mills or ensure steady power supply to them. It would save the mills from incurring financial loss to the tune of Tk 1.3 billion.
For purchasing jute from the growers, production cost incurred by the farmers should be fairly considered to benefit them. Profit will encourage the farmers to cultivate jute extensively. So, at the beginning of purchase season, the government should provide sufficient funds to its mills on time to purchase raw jute according to requirement.
New jute mills are being established in West Bengal in India when the jute mills in Bangladesh are being closed down. It seems to be quite mysterious. Bangladesh needs to investigate the whole thing.
A committee should find out the reasons. At the same time the committee should examine and find out how India is expanding its jute industry. The committee should submit its reports with findings within three months. The jute industry in West Bengal was closed down after 1947. We need to know what went wrong in Bangladesh. This would help Bangladesh promote its jute industry as a prime export sector. India is making drives to promote its jute industry at home and abroad. To revive its sick jute mills India made "The Jute Companies (Nationalisation) Act 1980". On the basis of this law, the Indian government declared its National Policy in end 2005. Under this policy, the 35-year old Jute Organisation of India has been reconstituted. Side by side, the same year, the Indian government wrote off all outstanding loans to the tune of 1.95 billion (195.68 crore) rupees, with interest of 3.17 billion (317.97 crore) rupee. It gave a subsidy of 3.01 billion (301.88 crore) rupee. In Bangladesh the closure of the Adamjee Jute Mills signalled end of its jute industry.
Just after eight days India started modernisation of its jute industry. India has now 70 jute mills, 61 of them in West Bengal. India has set an export target 50 million (5000 crore) rupee in 2010 increasing from Rs 1000 crore.
In order to protect the jute industry of the country a high-powered committee consisting of jute experts, jute producers, exporters and experienced government bureaucrats should be formed. The committee should submit its report with clear advice on how this industry can be revised. The government should implement the recommendations. The committee should function free of any sort of influence from any corner. Bangladesh should always bear in mind that being the producer of 70 per cent of global jute output, why should it lag behind.
Why should its jute industry be destroyed?
The writer a columnist, former Vice President, FBCCI, BGMEA, BTMA and Chairman, Eastern University
The government needs to appoint a committee with people with probity to find out why things happened they way they did. The committee should come out with the reasons with specific recommendations for reviving Bangladesh's jute industry.
The government and the private sector should then work together to revive the country's jute industry to make it globally competitive.
While the output of the country's jute mills dropped from 10 million bales at the time of liberation to four or five million bales. But during the same period, production in India more than doubled to reach 10 million bales.
Immediately after liberation a chaotic situation prevailed in the economy. In 1972 the government hurriedly nationalised all the big industries of the country. As at that time the jute industry was the number one export sector, the country used to earn huge foreign currency by exporting jute goods and jute. Jute was called the 'golden fibre' of Bangladesh. This major foreign currency earning industrial sector had as many as 69 jute mills including Adamjee Jute Mills, the biggest jute mill in the world. In 1972 about 250,000 (2.5 lakh) workers, both permanent and temporary, were employed in those mills.
The government announced a jute policy without wasting time to make jute industry the country's largest industrial sector. It had identified the items developed through research and development (R&D) studies. They included pulp for making paper using jute waste and raw jute, jute rags, quality yarn mixed with jute fibre for making cloth, production of solid material using jute for making door and window frames as alternative to wood, production of jute mixed corrugated sheets for roofs as alternative to corrugated iron (CI) sheets, production of jute-o-plastic for making furniture and house-hold articles, body and other internal parts of vehicles, jute geo textile for prevention of river erosion, refrigerator body, decorative items and cloth made of jute fibre.
Now the jute industry is on the verge of extinction owing to gross negligence, faulty government policy over the decades and international conspiracy. Due to mismanagement, maladministration and corruption not only the government-owned jute mills, but the total jute industry is going to be gradually destroyed
The first jute mill of this land, Bawa Jute Mills, was established at Narayangonj in 1948. Subsequently, the world's biggest, Adamjee Jute Mills was established on a 298 acre area at Narayangonj in 1952. Later, there were a total of 78 jute mills in the country. From 250,000 workers engaged by the jute mills immediately before liberation the number has come down to 45 thousand. Production of jute also decreased with the shutting down of many of the jute mills. The number of looms has come down to 8,000 from 26,000. In the last fiscal year, Bangladesh Jute Mills Corporation (BJMC) had set a target for purchase of 0.26 million (260,000 lakh) metric tonnes of raw jute but purchased only 0.125 million (125,000 lakh) metric tonnes. According to a statistical report of ministry of jute the BJMC incurred a loss Tk 4.21 billion (Tk 421 crore) in the last fiscal year. Investigation shows that owing to financial loss, production by the jute mills has gone down alarmingly. Jute mills are being closed down and the jute industry of this country is utterly failing to meet the demand in foreign markets. About 200,000 staff and workers of the industry lost their jobs. The governments at different times appointed investigation teams to find out the reasons, but with no results. Only the prescriptions of the World Bank (WB) were implemented which resulted in closure of jute mills, one after another.
Everyone knew for long that the jute mills were incurring losses. The workers were not doing their work properly and production was falling owing to inefficiency of the managers and workers. And for that, the government was incurring huge financial losses. For this reason, all the governments, since 1975, took the initiative to denationalise the jute mills. The workers became scared. They became violent at different times and called for movement. Since the present caretaker administration took the charge, agitations by the workers of jute mills at Chittagong and Khalishpur industrial belt of Khulna and two garment industries in Chittagong and Savar caused a colossal amount of losses. The workers gave ultimatum to the government to pay their arrear dues by August 31, 2007. The then commerce adviser and the BJMC chairman, however, reiterated that all arrears would be paid within August 31. The workers took to the agitations as they had to starve or pass their days half-fed. Lacking food and clothing they had no alternative to agitation. It cannot be said with all fairness that the workers alone were responsible for the closure of the mills. The responsibility for such losses lies with the managements as well, who indulged in reckless corruption. Corruption bedevils the entire process of purchase of raw jute, machinery and the parts. Owing to corruption at every stage, cost of production increases and ultimately the jute mills incur heavy financial losses.
According to a report of the Ministry of Jute BJMC incurred losses aggregating Tk 4.21 billion (421 crore) in the last fiscal year, of which Tk 300-00 million (Tk. 30 crore) was incurred due to workers' movement. According to a survey report a loss of Tk 1.4 billion (Tk. 140 crore) was incurred due to delay in releasing the fund for the purchase of raw jute and another Tk 1.3 billion (Tk. 130 crore) was lost owing to disruption of power and other problems.
So, the lion's share of the losses was caused due to corruption and inefficiency of the management of the mills and the failure of electricity providers. Moreover, loss worth Tk 2.70 billion (Tk 270 crore) was incurred due to failure of the concerned authorities to purchase raw jute in time and failure to ensure uninterrupted power supply to the mills.
It is apparent that the failure to market jute goods, entrusting the jute industry sector to inefficient bureaucrats, corruption of the officers and mill managements and CBA leaders were the main reasons for such colossal losses. Denationalisation at the pressure of the World Bank without proper auditing was another big reason.
The labour intensive jute industry was then the largest provider of job opportunities for the workers of this country. According to the labour organisations, the number of workers in nationalised jute mills has reduced to one-fifth compared to that of pre-nationalisation period. The mills are running with 20 per cent of the actual labour requirement. In 1972, the 69 jute mills employed 162,000 permanent workers and 80 thousand substitute or 'bodli' workers (total 242,000). After denationalisation of 1985 when 35 jute mills were given to the private sector, the number of workers both, permanent and temporary, came down to 150,000.
In 1984 on advice of the World Bank, 30 thousand workers were straight way retrenched. The total number of workers dropped to 75 thousand. According to the labour organisations, now the number of workers is no more than 26 thousand. Bangladesh Jute Mills Corporation (BJMC) estimates the number of existing workers at 32 thousand. Now there is a trend among the workers to leave their jobs taking optional retirement. It is apprehended that the number of workers would drop to half of the existing strength. A prominent labour leader regrets that many a person, only disregard the facts when they state there are surplus workers in the jute mills or that the losses were caused by the workers. He states that there are no surplus workers and no loss was caused by the workers.
Of the 56 jute mills in the private sector with 11,700 looms, only 3,400 were in operation in the last fiscal year. The production capacity of the private sector mills produced 150,000 tonnes last fiscal year against the production capacity of 350,000 tonnes. The private sector jute mills engaged 13,000 permanent and 18,000 casual workers.
But it is encouraging that 65 twine and spinning mills in the private sector are running at profit, employing about 30 thousand workers. These mills produce yarn from jute fibre for export.
The jute mills under the BTMC are mostly located in Khulna and Chittagong. Out of eight jute mills with the BJMC in Khulna, only one is making profit.
Salary and wages of the staff and workers of Platinum, Crescent, Star, Afil, Jessore Jute Industries and Carpeting Mills fell arrears for six to nine months on an average. However, following labour agitation at Khalishpur, the government gradually paid the arrear salary and wages. BJMC sources say that the mills of the area have bank loans to the tune of Tk 6.3 billion (Tk.630 crore) and the arrear salary and wages payable to the staff and officers and unpaid bills of raw jute suppliers are worth Tk 8.3 billion (Tk. 830 crore). According to local BJMC sources, the daily production of the eight mills fell by 20 per cent. Against the production target of 383 metric tonnes, these mills are producing only 60 or 70 metric tons.
Out of 15 jute mills in Chittagong eight are in private hands and seven with the government. All the mills under private sector have been closed down throwing 20 thousand workers out of their jobs. The mill owners owe the workers Tk 500 million (Tk 50 crore) in arrear salary, wages and benefits. On the other hand, out of the seven jute mills with the government, Karnaphuli Jute Mills and Forat Carpet Mills were closed down on July 31, 2007. The government is trying to dispose them off.
The BJMC Chairman said that the government has decided to run the five closed down jute mills in Chittagong and Khulna under joint venture arrangement with the private sector or to lease them out to the private sector. Besides, Alim Jute Mills at Khulna and Bagdad-Dhaka Carpet Factory Ltd., would be run under joint venture, for which ads. would be published seeking partners after the government formulates the policy.
Production by the jute mills of the country fell from 10 million bales at the time of liberation to four or five million bales. In sharp contrast, production in India doubled to exceed 10 million bales during the same period.
After liberation, Bangladesh's production and export of jute goods gradually decreased. During the Liberation Warm jute was considered to be the most important resource of Bangladesh. But its importance was relegated in the post-independence period. The goodwill this country once earned for jute is lost due to failure to supply jute goods to the world market on the schedule. Bangladesh once produced 70 per cent of the total global production of the whole world. But its share has now drastically shrunk. The BJMC owes the small jute traders and the farmers of Bangladesh to the tune of Tk 1.5 billion (Tk. 150 crore) in arrear bills. They are not getting the money for long. The government totally lacks in initiative and drive to boost the demand for jute in the world market though the jute industry of Bangladesh faces extinction owing to squeeze of international market and our failure to go for product diversification necessitated by advent of new products.
Both the government and the private entrepreneurs should take initiative to increase demand for Bangladesh products in the world market. Effective initiative is needed to increase the use of jute and jute goods. Exhibition of jute products should be arranged in foreign countries to increase demand and expand the export market.
Use of jute in the country should be increased. Use of polythene should be totally restricted and replaced by jute. Entrepreneurs should take initiative to market jute and jute goods in the local markets. To make the drive effective, 15 to 20 per cent cash incentive should be given to users of jute goods, instead of polythene. Provision should be made to allow special cash incentive to the exporters of jute and jute-goods to encourage the export.
Supply of fertilisers and seeds, at subsidised rates, to the jute growers should be ensured. Necessary training on scientific cultivation should be imparted to cultivators. The ministries of jute and agriculture should take the necessary steps in the areas.
To avoid erratic power supply and to meet the shortage of electricity, arrangement should be made either to install power generator in the jute mills or ensure steady power supply to them. It would save the mills from incurring financial loss to the tune of Tk 1.3 billion.
For purchasing jute from the growers, production cost incurred by the farmers should be fairly considered to benefit them. Profit will encourage the farmers to cultivate jute extensively. So, at the beginning of purchase season, the government should provide sufficient funds to its mills on time to purchase raw jute according to requirement.
New jute mills are being established in West Bengal in India when the jute mills in Bangladesh are being closed down. It seems to be quite mysterious. Bangladesh needs to investigate the whole thing.
A committee should find out the reasons. At the same time the committee should examine and find out how India is expanding its jute industry. The committee should submit its reports with findings within three months. The jute industry in West Bengal was closed down after 1947. We need to know what went wrong in Bangladesh. This would help Bangladesh promote its jute industry as a prime export sector. India is making drives to promote its jute industry at home and abroad. To revive its sick jute mills India made "The Jute Companies (Nationalisation) Act 1980". On the basis of this law, the Indian government declared its National Policy in end 2005. Under this policy, the 35-year old Jute Organisation of India has been reconstituted. Side by side, the same year, the Indian government wrote off all outstanding loans to the tune of 1.95 billion (195.68 crore) rupees, with interest of 3.17 billion (317.97 crore) rupee. It gave a subsidy of 3.01 billion (301.88 crore) rupee. In Bangladesh the closure of the Adamjee Jute Mills signalled end of its jute industry.
Just after eight days India started modernisation of its jute industry. India has now 70 jute mills, 61 of them in West Bengal. India has set an export target 50 million (5000 crore) rupee in 2010 increasing from Rs 1000 crore.
In order to protect the jute industry of the country a high-powered committee consisting of jute experts, jute producers, exporters and experienced government bureaucrats should be formed. The committee should submit its report with clear advice on how this industry can be revised. The government should implement the recommendations. The committee should function free of any sort of influence from any corner. Bangladesh should always bear in mind that being the producer of 70 per cent of global jute output, why should it lag behind.
Why should its jute industry be destroyed?
The writer a columnist, former Vice President, FBCCI, BGMEA, BTMA and Chairman, Eastern University