New jute policy needed
JUTE was the largest foreign exchange earner for Pakistan during 1947-71. It played a major role in industrialisation. Even after the liberation of Bangladesh it remained as the biggest foreign exchange earner till early '80s.
It's common knowledge that before independence industries in Bangladesh were overwhelmingly dominated by non-Bangalees. As such, Bangladesh lacked the skills required to manage jute industries.
This resulted in turning of the profitable jute mills into loss-making ones after the Bangladesh government took over. Irregular or delayed payment of dues discouraged the growers from selling their products to government mills. Thus, good quality raw jute was smuggled out to India. With the fall of regular export of raw jute and the mismanagement of jute mills, it started losing its pristine glory and vitality.
It is difficult to evaluate the structures and performances of industries in general in Bangladesh due to the lack of reliable and comprehensive statistics. The losses sustained by the manufacturing enterprises may be attributed to lack of proper management skill, labour absenteeism, power crisis, cost price squeeze, poor maintenance of machinery, shortage of working capital, low labour productivity, foreign exchange constraint, lack of improvement in capacity utilisation etc.
To illustrate the point further, it may be stated that the total profit of the 38 jute mills of Bangladesh Jute Mills Corporation's (BJMC) during 1985-90 was only Tk.800 million. In fact, public enterprises were made dependent on allocation from Annual Development Program (ADP) and financing from nationalised banks.
A major management problem of public enterprises has been the allocation of responsibilities and related accountability among the line ministries, sector corporations and enterprises. The government owns all the public enterprises. The sector corporations act as agents of the government in administering the sector. Presidential Order 27 of 1972 did not define the governmental authority over the corporations.
As for technology, Bangladesh industries are continuing mainly with outdated technology. This has resulted in low productivity and high material cost for production. In fact, it is time that Bangladesh adopts a technological profile to meet the techno-economic need.
One of the right policies of the government appears to be slowing down the pace of privatisation of industries. In fact, privatisation should be totally stopped till new investments are encouraged. Another good step by the government would be to adopt necessary measures to revive the jute sector. Fortunately, raw jute is now fetching high price, and its export market has picked up. It is reported that state-owned jute mills are approaching the break-even point.
Seven out of sixteen public sector mills are now making a monthly profit of around Tk.20 million on an average. The other nine mills have been able to reduce their losses significantly.
Amongthe profit-making mills are Latif Bawany Jute Mills, Karim Jute Mills, Alim Jute Mills, Rajshahi Jute Mills and Carpeting Jute mills. The other nine jute mills will reach break-even soon.
The workers have regained their confidence and production, export and prices have gone up (production from 300 to 585 bales monthly, export price from $62.5 to $94 per bale). The wages of jute workers increased 20% from October 2009. Price of raw jute has gone up from Tk.1,000 to Tk.1,700 per bale.
High rise in raw jute prices is regarded by some analysts as a threat. The government has already provided Tk.3,000 million to BJMC in time. BJMC has further pleaded for control of price by imposing a ban on export of raw jute. The government is reported to be examining the proposal.
Revival of the jute sector will certainly assist in rejuvenating the rural economy directly and indirectly. What is needed now is formulation of a good jute policy with the close cooperation and effort of ministries of jute, agriculture, industry and textiles. Proper implementation of the policy may make the jute sector dynamic.
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