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Jute Ministry seeks more credit for sector
18 Aug '09
2 min read
The Jute Ministry has requested the Finance Ministry to revamp the distressed jute sector, by pumping more money into the industry, considering that demand for jute products is on the rise.
According to a letter written by the Jute Minister, Mr Siddique to the Finance Ministry, he has stated that adequate financing is crucial for the sector, for it to purchase raw jute of good quality at low prices in the peak season.
He has requested the Finance Minister to intervene and issue bonds or guarantee to keep previous loans with five-year interests in the block account and give moratorium for a period of 2.5 years with a facility to repay in 20 years.
He has pointed out that over 30 million people are directly or indirectly involved in the jute trade so it was necessary to provide relief to a sector which provides employment to so many people.
Quoting statistics, he said, export earnings from jute products dropped to US $283.29 million in fiscal 2008-09 from $318.34 million the previous year and which stood at around $320.78 million in 2006-07.
He added by saying that since jute was considered an environmentally friendly product, demand was increasing and in order to sustain competition from other countries, the sector must be in a healthy condition.
In the last few years, jute mills in the private and public sector have accumulated debts totaling to Tk 5,500 crore and out of the 24 mills under the management of Bangladesh Jute Mills Corporation, 3 have been shut down and 6 have been leased out.
Of the 90 mills under Bangladesh Jute Mills Association (BJMA), seven major mills faced closure and four have laid-off their workers because of liquidity crisis. He said that adequate financing was needed to set these mills in order.
Experts say that orders have increased despite the financial crisis, but the jute mills were not in a position to complete them, due to a lack of credit which was leading to a vicious circle.
According to a letter written by the Jute Minister, Mr Siddique to the Finance Ministry, he has stated that adequate financing is crucial for the sector, for it to purchase raw jute of good quality at low prices in the peak season.
He has requested the Finance Minister to intervene and issue bonds or guarantee to keep previous loans with five-year interests in the block account and give moratorium for a period of 2.5 years with a facility to repay in 20 years.
He has pointed out that over 30 million people are directly or indirectly involved in the jute trade so it was necessary to provide relief to a sector which provides employment to so many people.
Quoting statistics, he said, export earnings from jute products dropped to US $283.29 million in fiscal 2008-09 from $318.34 million the previous year and which stood at around $320.78 million in 2006-07.
He added by saying that since jute was considered an environmentally friendly product, demand was increasing and in order to sustain competition from other countries, the sector must be in a healthy condition.
In the last few years, jute mills in the private and public sector have accumulated debts totaling to Tk 5,500 crore and out of the 24 mills under the management of Bangladesh Jute Mills Corporation, 3 have been shut down and 6 have been leased out.
Of the 90 mills under Bangladesh Jute Mills Association (BJMA), seven major mills faced closure and four have laid-off their workers because of liquidity crisis. He said that adequate financing was needed to set these mills in order.
Experts say that orders have increased despite the financial crisis, but the jute mills were not in a position to complete them, due to a lack of credit which was leading to a vicious circle.
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