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Let us get our act together on jute
The jute sector which has steadily been going downhill has recently attracted special attention because of the current Administration's decision to close down four jute mills -- Peoples Jute Mills in Khulna, Karnaphuli Jute Mills and Forat-Karnaphuli Carpet Factory in Chittagong and Quami Jute Mills in Sirajganj. It has been claimed that they were shut down to help the government run the rest of the mills more efficiently.
This latest measure has not only raised questions about this industry's future but also given way to serious criticism within the business community and economists associated with this sector. The immediate human cost has been the termination of more than 6,000 employees of these industrial units. Unfortunately, alternative possibilities of employment were not thought of before the serving of their redundancy notices. There was also no effort to initiate any Voluntary Retirement Scheme (VRS) whereby the personnel structure cost could have been downsized. Very understandably, such a step had led to rioting, work stoppage and unease within other existing jute mills in the public sector.
All this has been happening at a time when the United Nations has declared 2009 as the International Natural Fibre Year One would think that the significance and purpose for designating such an observance has been totally lost on our current interim Administration.
Jute, since the partition of India in 1947, has played an important role within the matrix of our country's economy. 'Golden fibre' as it is referred to, has been, in more ways than one the mainstay of our rural economy. It has played an invaluable part with regard to providing employment and income generation to millions of farmers. In many parts of the country, jute stalks have also been the ideal source of alternative energy.
The primacy of this industry continued through the 1960s into the 1970s. In 1972-73, a survey indicated that the industry was directly or indirectly involved in providing income to nearly 13 million people, in producing about 450,000 metric tons of jute products and in the earning of about US $ 195 million in terms of export.
Then came the fatal mistake on the part of the government. Under a Presidential Order, spurred on by its belief in an exploitation-free society and socialism, it nationalised all major industries including the viable jute industry without taking into consideration, whether the mills were owned by Bangladeshi nationals or otherwise. The Bangladesh Jute Mills Corporation that was created in the wake of such a decision only resulted in more chaos within the industry. What followed was total and complete mayhem. Corruption are away the vitals. This manifested itself during the purchase of raw jute for the factories, in the purchase of equipment and machinery for the mills and also in false billing with regard to transportation.
Within ten years the government had realised that the only way to stop the crippling losses was to privatise a section of this industry. Nearly one-third of the loss making jute industry was privatised during FY 1982-83. There was a slight upturn and the industry ended up that year producing about 500,000 metric tons of hessian, sacking, CBC, carpet and yarn and earned in the process about US$ 300 million. This improvement was also made possible by the Bangladesh Bank according to the commercial banks facilities that were fair and equitable in nature. This movement forward encouraged this sector and the entrepreneurs associated with it.
One drawback however continued to haunt the scene. This fatal factor related to the cost of carrying the huge debt burden of jute mills that had to borrow from financial establishments to keep themselves afloat.
The democratic government brought into place in 1991 decided to address this issue seriously. A number of studies were undertaken and the World Bank finally came forward with a US $ 250 million Jute Sector Adjustment Credit (JSAC) Scheme and the Jute Sector Reform Programme (JSRP). The objective of the Programme was to induce viability into the existing loss-making jute industry with the active participation of the private sector. It was also decided that the government would address issues like capacity rationalisation, unsustainability of past debts, interim loss finance and privatisation. The first step the government had to take in this regard related to the closing down of nine public sector mills, downsizing two large public sector mills, privatising 18 public sector mills and writing off one third of all past bank loans as existing on 30 June 1992.
The JSRP was the single largest World Bank assisted project in Bangladesh. Things however did not move smoothly. After disbursing the first tranche of US$50 million, the World Bank felt that the government had not fulfilled all its obligations. Consequently, all further disbursements stopped. One can only assume that it was probably due to incompetence on the part of the relevant authorities associated with the implementation of the Programme. What was required was proper planning and seriousness and that was lacking. Political partisanship also cast its shadow.
In the latter half of the nineties with greater emphasis all over the world on environment, on biodegradable products and natural fibres, it was felt that a special effort should be made again to re-vitalise this sector. Two important measures were taken. The first was to strengthen the capacity of the Jute Research Institute. Unfortunately, the emphasis was given only on how better jute plants could be developed. Other areas of research as to diversification of jute were neglected. The second step was taken with the help of the FAO. An International Jute Organisation was established in Dhaka with the objective of promoting the development of this sector. The first two officials at the helm of this organisation were from Bangladesh. Unfortunately, for reasons not totally explained, they were failures. In fact, it has contributed very little to this sector.
Recent statistics show that though the demand for jute and jute products are growing worldwide, after a decade long recession, Bangladesh, which grows almost 70 percent of the world's raw jute, is witnessing a reduction in its just goods production due to closure of state owned units one by one. While jute goods production has gone down in Bangladesh, it has risen steadily in neighbouring India. In fact, India now imports nearly 700,000 bales of raw jute from us. There was a time, not too long ago, when state run jute mills in Bangladesh used to purchase about 1.3 million bales of raw jute from the local producers. That has now come down to less than 600,000 bales.
It is difficult to accept that jute can be on the way out in this country, particularly at a time when the rest of the world is recognising the importance of this crop and this sector. It is time that the malaise that exists within our system is identified and necessary steps taken, in an integrated and comprehensive manner so that this industry can return into the mainstream.
The following could be given serious consideration:
(a) Setting up a National Commission constituted of representatives from the public sector, the private sector, financial institutions, agronomists, scientists, the Export Promotion Bureau and those associated with the cottage and packaging industries.
(b) Capacity building in the Jute Research Institute to enable them to undertake research in diversified uses of jute. This could include the use of green jute pulp for the manufacturing of paper, the mixing of jute with wool and cotton to create new fashionable end products in the textile sector and the use of jute not only in the cottage industry but also in this inclusion in leather articles (meant for export and domestic use e,g, footwear and handbags). There could similarly be research about using jute with a plastic base to create construction sheeting and dividers as an alternative to wooden boards. I have seen this being already attempted in Europe. (c) Making it mandatory to pack food grains, sugar, fertilizer and cement in jute bags. This will increase consumption and demand for the product. (d) Supplying gas to jute industrial units at the same rate as paid for the Power Development Board. (e) Being more careful in spreading the message that the Ministry of Jute is not a dumping ground for bureaucrats. It is unfortunate that postings as Secretary to the Ministry lasts for less than the desired tenure, thus creating an impression of lack of seriousness and a breakdown in the planning of strategy or a perspective plan.
We have to get out act together.
There is no reason for the authorities concerned to consign jute to the back burner. A more pro-active national agenda needs to be agreed upon through consensus among the principal stakeholders -- political parties (that they will stop abusing this industry and using its meagre resources for narrow political ends), the labour force (that they, and their CBA, will refrain from taking advantage of poor supervision and stop assisting in corruption at all levels within the management structure) and the private entrepreneurs (that they will not only spend additional resources in making the industrial units more efficient but also set aside some of their profits for research and development of new products that rely on jute).
It will not be correct to just close down jute mills, lay-off workers and privatise the industry. Every government, including ours has to go beyond that and find responsible solutions that are not only profitable but also a generator of employment. We should try to emulate what is happing in West Bengal, India. If they can do it, so can we.
Muhammad Zamir is a former Secretary and Ambassador who can be reached at mzamir@dhaka.net
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