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Tk1,000 crore govt jute fund draft policy finalized

  • Published at 08:28 pm July 16th, 2018
  • Last updated at 08:30 pm July 16th, 2018
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File photo of farmers carrying raw jute bales after harvesting at a village in Bangladesh Dhaka Tribune

According to the draft policy, jute farmers, traders, entrepreneurs, and jute and jute product exporters are eligible for loans from the fund at a 5% interest rate

Jute export earnings for Bangladesh have been rising steadily in recent years. Jute, once the “Golden Fibre” of Bangladesh, lost its lustre in the 1980s with the advent of synthetic materials. However, it has been regaining popularity in recent years.

Only last fiscal year, Bangladesh earned over a billion dollars in jute and jute products export. The government has been taking various measures to bring back the fibre’s glory days.

As part of its initiatives, the government is going to establish a Tk10,000-crore Jute Sector Development Fund (JSDF). The Ministry of Textiles and Jute has already finalized a draft policy for low-cost loans from the special fund.

A six-member committee, headed by Bangladesh Jute Mills Corporation (BJMC) Chairman Md Mahmudul Hassan, prepared the draft and sent it to the Ministry of Finance for assessment. The Dhaka Tribune obtained a copy of the draft policy. 

According to the draft policy, the revolving fund will be there for 20 years and the entire management will remain under the central bank.

Jute farmers, traders, entrepreneurs, and jute and jute product exporters, are eligible for loans from the fund at a 5% interest rate at most – 2% to cover Bangladesh Bank operational costs, and a 3% margin of profit for the commercial banks disbursing the loans.

A government budgetary allocation will provide the funds at a single go or in phases. For the sustainable and fruitful use of the fund, the draft recommends a set of policies on loan eligibility from JSDF, and the process.

The draft says loans will be for people in the jute sector following a case by case application analysis according to the central bank’s loan facilities rules and regulations.

Last year, the Jute Ministry sent a proposal to the Finance Ministry and the Bangladesh Bank to form a special fund for the jute sector like the Export Development Fund (EDF).

The Jute Ministry formed a six-member body at the Finance Ministry’s suggestion to formulate a complete draft policy for the Tk10,000 crore special financing. The committee has conducted four special meetings so far to complete the JSDF draft policy.

BJMC Director Shahed Sobur, also a member of the committee, said the technology needs to be modernized, adding that jute sector exporters should get more low-rate loans as they use local sources for raw materials.

Usually, ready-made garments exporters, knitwear, textiles, plastic, leather, and ceramic exporters, get special facilities from EDF and the Green Transformation Fund (GTF). But there is no such facility for the ailing jute and jute products industry exporters and entrepreneurs, JSDF committee sources said.

The government formed EDF in 1989 to provide low-cost funds to export-oriented sectors, such as garment and leather goods, and to buy raw materials from abroad to make exportable goods. The JSDF initiative was taken following demands from jute millers to form a fund similar to the EDF.

Bangladesh mainly exports jute and jute products to India, China, Nepal, Germany, Korea, Brazil, Russia, Vietnam, Ivory Coast, the US, the UK, Iraq and Iran.

Around 200,000 people in Bangladesh work at 176 public and private mills, which process two-thirds of the country’s annual jute production of 1.4 million tons, according to the Bangladesh Jute Spinners Association. Of the total production, 836,000 tons are exported while the rest is consumed locally.