The issue of revival of jute sector
Tuesday, 18 September 2007
Syed Jamaluddin
THE Nagorik Committee led by Dr. Kazi Kholiquzzaman Ahmed has made some serious recommendations for revival of the jute sector in a Bengali daily. It will be worthwhile to examine how far these recommendations are workable and implementable.
The committee has blamed all the past governments for wrong policy and management inefficiencies for the decline of the jute sector. Its observations indicate that the jute workers and their families have suffered due to closure of mills. Jute goods have diversified use but Bangladesh has taken anti-jute policy. According to the committee, the destructive jute policy should be abandoned and replaced by welfare oriented jute policy. Taking advantage of our policy, the neighbouring countries are setting up new jute mills. The committee is saying that privatisation of jute mills is helping the destruction of the jute sector. But they are not saying anything about the capability of loss making jute mills. Privatisation is one of the methods of avoiding losses in the jute sector.
It is futile to criticise the IMF and the World Bank for failure of our jute policy. Finance Adviser has categorically denied involvement of these institutions in the closure of state run jute mills. Attacking the IMF and the World Bank is a standard slogan of the so-called intellectuals. It is funny to blame others for our failure.
According to the committee, the decision to close down public sector jute mills has to be abandoned. If so, who is going to run these mills and accept financial liability? It is proposed that quality jute is to be supplied to the jute mills, but it is not clear who will take this responsibility. Nagorik committee may suggest a mechanism for this without involvement of the government. They have recommended that property of all corrupt ministers, bureaucrats, exporters and diplomats associated with purchase and sale of jute as well as for its decline may be confiscated and this money may be used for the benefit of the jute sector. This is a good proposal. Nagorik committee may file cases against these people. This will facilitate the process.
The jute sector will have to be given all assistance. But who will foot the bill? Government cannot go on funding loss making jute mills for an indefinite period. Government subsidy to the tune of Tk. 79 billion has been injected in the jute mills since 1992. The present government has also given Tk. 3.0 billion.
The committee recommended that projects may be undertaken for diversification of jute products. There is no bar to invest in jute sector. Nagorik committee may explore the possibility of attracting potential investors for diversification of jute products.
According to Nagorik committee, loan is to be provided to the jute sector at reduced rate of interest. It all depends on the banks to determine the rate of interest depending on the viability of projects and cost of fund. It is upto the banks to consider the recommendations of the Nagorik Committee. Government cannot give a directive for reducing interest rate.
The committee has recommended for introduction of the minimum price for raw jute. This system was tried in the past but failed. It is possible to suggest a minimum price but there is none to implement it. Nagorik Committee may fix an agency to ensure the minimum price to the jute growers.
The Nagorik committee has recommended to set up a buffer stock of jute. This is an impractical suggestion. Who will bear the cost of the buffer stock? Buffer stocking system has failed globally.
The committee has suggested that unnecessary middlemen are to be eliminated. This is a good proposal but how to replace them? Seeds, fertiliser and pesticides are to be supplied at subsidised rate. Again who will bear the cost of subsidy? Modern equipment is to be imported for jute mills. Government does not feel encouraged to make any investment in the loss making jute mills. Private sector may examine this proposition but those involved are unlikely to come forward as there is no prospect of getting any return on such investment.
According to the Nagorik Committee, there is tremendous potential for jute sector and their recommendation are implementable. But it appears that their recommendations give all the responsibilities to the government. This is an absurd proposition. Jute sector has to show its own strength for survival.
Most of the recommendations of the Nagorik committee are not realistic. If their suggestions are acted upon, most of the responsibility will devolve on the government. The whole idea of privatisation and the free economy is to relieve the government from financial burden. If the jute products are eco-friendly, let the private sector take the initiative for project implementation.
It will be realistic for the government to adopt a uniform policy for the jute sector, after privatising all the mills. Public sector mills have failed to operate in a viable manner. There is no point in trying to assist the public sector.
If the Nagorik Committee is serious about the jute sector, they must develop national jute strategy without asking the government to bear cost. We agree that alternative employment is to be found out for retrenched workers. They may be retrained for working in other sectors. Retrenchment may be done through golden handshake.
Our jute research institute is working for a long time and has been producing doctorates. But we do not know the outcome of their research work. Their research has not helped the jute sector.
The only workable strategy of the jute sector is to privatise all public sector jute mills. Losing mills will have to be closed down and workers may be absorbed in other areas. Private sector may set up new mills for diversified products. They may convince the banks to give loans for viable projects. Government may give subsidy to encourage export of jute products as is done in the case of other products. The international jute sector study group may be asked to prepare viable projects for the benefit of the investors. Government may give promotional assistance to the jute sector without accepting any financial liability.
Nationalisation of jute industry was the greatest blunder. The Nagorik Committee may be concerned about the jute sector but they should not be engaged in an utopian exercise. If we have comparative advantage in producing eco-friendly jute products, let us prove it. The only way to strengthen jute industry is to make it competitive in a globalized world. Subsidy will only play a marginal role as in the case of other exportable products. Viability is the criteria for the survival of jute sector. Cheap slogans will not solve the problem.
(The writer is an economist and columnist)
THE Nagorik Committee led by Dr. Kazi Kholiquzzaman Ahmed has made some serious recommendations for revival of the jute sector in a Bengali daily. It will be worthwhile to examine how far these recommendations are workable and implementable.
The committee has blamed all the past governments for wrong policy and management inefficiencies for the decline of the jute sector. Its observations indicate that the jute workers and their families have suffered due to closure of mills. Jute goods have diversified use but Bangladesh has taken anti-jute policy. According to the committee, the destructive jute policy should be abandoned and replaced by welfare oriented jute policy. Taking advantage of our policy, the neighbouring countries are setting up new jute mills. The committee is saying that privatisation of jute mills is helping the destruction of the jute sector. But they are not saying anything about the capability of loss making jute mills. Privatisation is one of the methods of avoiding losses in the jute sector.
It is futile to criticise the IMF and the World Bank for failure of our jute policy. Finance Adviser has categorically denied involvement of these institutions in the closure of state run jute mills. Attacking the IMF and the World Bank is a standard slogan of the so-called intellectuals. It is funny to blame others for our failure.
According to the committee, the decision to close down public sector jute mills has to be abandoned. If so, who is going to run these mills and accept financial liability? It is proposed that quality jute is to be supplied to the jute mills, but it is not clear who will take this responsibility. Nagorik committee may suggest a mechanism for this without involvement of the government. They have recommended that property of all corrupt ministers, bureaucrats, exporters and diplomats associated with purchase and sale of jute as well as for its decline may be confiscated and this money may be used for the benefit of the jute sector. This is a good proposal. Nagorik committee may file cases against these people. This will facilitate the process.
The jute sector will have to be given all assistance. But who will foot the bill? Government cannot go on funding loss making jute mills for an indefinite period. Government subsidy to the tune of Tk. 79 billion has been injected in the jute mills since 1992. The present government has also given Tk. 3.0 billion.
The committee recommended that projects may be undertaken for diversification of jute products. There is no bar to invest in jute sector. Nagorik committee may explore the possibility of attracting potential investors for diversification of jute products.
According to Nagorik committee, loan is to be provided to the jute sector at reduced rate of interest. It all depends on the banks to determine the rate of interest depending on the viability of projects and cost of fund. It is upto the banks to consider the recommendations of the Nagorik Committee. Government cannot give a directive for reducing interest rate.
The committee has recommended for introduction of the minimum price for raw jute. This system was tried in the past but failed. It is possible to suggest a minimum price but there is none to implement it. Nagorik Committee may fix an agency to ensure the minimum price to the jute growers.
The Nagorik committee has recommended to set up a buffer stock of jute. This is an impractical suggestion. Who will bear the cost of the buffer stock? Buffer stocking system has failed globally.
The committee has suggested that unnecessary middlemen are to be eliminated. This is a good proposal but how to replace them? Seeds, fertiliser and pesticides are to be supplied at subsidised rate. Again who will bear the cost of subsidy? Modern equipment is to be imported for jute mills. Government does not feel encouraged to make any investment in the loss making jute mills. Private sector may examine this proposition but those involved are unlikely to come forward as there is no prospect of getting any return on such investment.
According to the Nagorik Committee, there is tremendous potential for jute sector and their recommendation are implementable. But it appears that their recommendations give all the responsibilities to the government. This is an absurd proposition. Jute sector has to show its own strength for survival.
Most of the recommendations of the Nagorik committee are not realistic. If their suggestions are acted upon, most of the responsibility will devolve on the government. The whole idea of privatisation and the free economy is to relieve the government from financial burden. If the jute products are eco-friendly, let the private sector take the initiative for project implementation.
It will be realistic for the government to adopt a uniform policy for the jute sector, after privatising all the mills. Public sector mills have failed to operate in a viable manner. There is no point in trying to assist the public sector.
If the Nagorik Committee is serious about the jute sector, they must develop national jute strategy without asking the government to bear cost. We agree that alternative employment is to be found out for retrenched workers. They may be retrained for working in other sectors. Retrenchment may be done through golden handshake.
Our jute research institute is working for a long time and has been producing doctorates. But we do not know the outcome of their research work. Their research has not helped the jute sector.
The only workable strategy of the jute sector is to privatise all public sector jute mills. Losing mills will have to be closed down and workers may be absorbed in other areas. Private sector may set up new mills for diversified products. They may convince the banks to give loans for viable projects. Government may give subsidy to encourage export of jute products as is done in the case of other products. The international jute sector study group may be asked to prepare viable projects for the benefit of the investors. Government may give promotional assistance to the jute sector without accepting any financial liability.
Nationalisation of jute industry was the greatest blunder. The Nagorik Committee may be concerned about the jute sector but they should not be engaged in an utopian exercise. If we have comparative advantage in producing eco-friendly jute products, let us prove it. The only way to strengthen jute industry is to make it competitive in a globalized world. Subsidy will only play a marginal role as in the case of other exportable products. Viability is the criteria for the survival of jute sector. Cheap slogans will not solve the problem.
(The writer is an economist and columnist)