Jute millers want low-cost funds | The Daily Star
12:00 AM, March 15, 2017 / LAST MODIFIED: 11:57 PM, March 14, 2017

Jute millers want low-cost funds

State minister says he will discuss the matter with the central bank next week

Jute millers have urged the government to ensure low-cost finance to establish new factories and diversify products to cater to both the local and export markets.

“The prospect of job creation and earning foreign currency is rising, as a result of growing demand for diversified jute goods at both home and abroad,” said Muhammad Shams-uz-Zoha, chairman of Bangladesh Jute Mills Association, in a letter to the textiles and jute ministry early this week.

The trade body, a forum of 160 members, demanded formation of a Tk 10,000 crore fund, similar to the Export Development Fund (EDF) under Bangladesh Bank.

Photo: Star

The government formed EDF in 1989 to provide low cost finance and enable export oriented sectors to buy raw materials from abroad to make exportable items. The size of the EDF, a revolving fund, is about $2.5 billion, according to a senior official of the central bank.

Jute millers said formation of such a fund in the local currency would be instrumental to the sector's growth.

When contacted over the phone, State Minister for Textiles and Jute Mirza Azam said, “We are taking an initiative. Such a fund will further facilitate advancement of the jute sector.”

Azam said the issue was raised before the prime minister on March 13. “She asked us to examine what can be done.”

He will be discussing the matter with Bangladesh Bank next week.

“The leather and garments sectors are getting such benefits. The rights of the jute sector to avail the benefit are much more.”

Photo: Star

The jute millers' appeal comes at a time when the government is enforcing a rule to pack a number of commodities, including rice, wheat and maize, in jute sacks to promote the use of environmentally friendly products and increase the domestic use of jute.

The government is also taking steps to modernise and diversify jute products to restore the past glory of jute, once the biggest export earner. It also observed March 6 as Jute Day for the first time this year in order to highlight the significance of jute in the Bangladesh economy.

The ministry organised a fair in Dhaka on March 9-13 to showcase diversified jute goods, made from nearly 80 lakh bales of raw jute produced here annually.

About 4 crore people are directly and indirectly involved in the sector that ensures 100 percent value addition against exports, according to the ministry.

The association said entrepreneurs have to borrow from banks at an interest rate of 14 to 15 percent to buy raw jute during the harvest season and maintain stocks, to continue production and export.

Photo: Star

On the other hand, other export oriented sectors like apparel can import raw materials based on loans from the EDF at 2.5 percent interest plus LIBOR (London Interbank Offered Rate).

The association said the jute mills would have been profitable if the entrepreneurs got low cost loans.

The industry lobby group also wants the government to form a special fund so that millers can get competitive loans to modernise their factories and replace their four to five decades-old machinery.

India currently provides such support to its entrepreneurs to modernise their factories, it added.

Of the domestic production of raw jute, the public and private mills process a majority of the raw jute mainly for shipment abroad.

Local mills produce 9.17 lakh tonnes of jute goods and export 8.15 lakh tonnes a year. The rest is used for internal consumption, according to Bangladesh Jute Spinners Association.

Exports earnings from jute and jute goods rose 15 percent to $646 million in July-February of fiscal 2016-17 year on year, according to Export Promotion Bureau.

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