Tapping into the potential of the golden fibre
The government of Bangladesh is preparing to draft and implement rules of the Jute Act 2017 (according to section 28 of the act), incorporating new provisions regarding the new penalty for violation of the act, conditions for licenses, creation of a development fund and development fee, and powers afforded to the government to ban the sale of raw jute.
The diversification of the exporting sector of Bangladesh has been on the agenda for the government for quite some time now in order to decrease the dependency on the ready-made garments, or RMG, sector.
The government has been in mutual understanding with European countries to export jute and jute products to meet the global demand for natural fibre and environmentally-friendly products.
This makes sense considering the fact that Bangladesh is the second largest producer of jute, and jute and allied fibre crops are the principal cash crops of Bangladesh.
The Bangladesh Jute Mills Corporation (BJMC) and private sector jute mills as well have been incurring significant losses since the country’s independence. The modernization of jute mills in Bangladesh, where adequate funds are invested and complications are removed, should be part of the government’s objective.
Government-run mills need to produce their products according to demand and not throw away unused products, lower production and labour costs to increase efficiency, and invest in newer machinery for mills.
High wages and inefficient management of the workers and poor marketing of jute products are some of the reasons government mills are operating at a loss.
As a result, the government of Bangladesh is offering attractive incentives and taking initiatives to restore the jute sector to its golden years. In the 1980s, jute production was between 1-1.2 million tons but in the 1990s it declined to between 0.75-0.85 million tons.
From 2010 onwards, 1.45 to 1.62 million tons of jute fibre have been produced from 0.70-0.80 million hectares of land. The government is offering incentives using the Export Policy of 2015-18 and National Industrial Policy.
Tax rebates, subsidies in utilities, and other financial benefits, reduced rates of interest which go as far as including duty-free import of machinery (aimed at modernizing the jute sector) are all changes which need to be implemented.
The Bangladesh Export Policy offers sound strategies such as updating Bangladesh Foreign Missions to promote economic diplomacy and bring in foreign investments.
Giving importance to worker rights is also a part of their implementation strategies.
In order to increase output from mills, workers’ pleas need to be heard and their safety and security have to be guaranteed, especially in the case of government mills.
Taking other necessary measures such as initiatives for getting duty-free market access for developed and developing countries, providing financial incentives for exporters including export credit at comparatively lower rates, and attracting export facilitating agencies for enhancing work-efficiency should be on the agenda.
The export policy is not being implemented by the appropriate authority, and neither is the country’s export situation being reviewed annually. A pragmatic initiative has to be taken to implement the targets of the policy.
Although the government of Bangladesh is pro-actively taking measures to boost the production of jute by banning low-grade jute from exports, imposing anti-dumping duties on jute and preparing funds specifically for the development of the jute sector, there is more that needs to be done.
The government formed the Export Development Fund (EDF) in 1989 to provide low-cost funds to export-oriented sectors like garments and leather for importing materials from abroad to make goods. There is no similar fund for assisting the jute industry as of yet.
The dependence on imported jute which is often of lower quality should be completely stopped and, instead, focus should be on amplifying the local production of jute.
About four to five million farmers are directly involved in jute production. Hence, unemployment will be enhanced as well. Taking assistance from the Industrial Policy of 2015, the government should do more to address the difficulties faced during implementation as simply drafting and enacting a policy is not enough unless it is followed.
The draft of the National Jute Policy of 2018 is already under consideration. Focusing on the production of quality jute, ensuring fair price of jute, diversification of jute products, modernization of jute mills, and expansion of jute markets is vital to meeting the demand for jute export and expanding our country’s export market to its full potential.
Sabrina Zarin is a Partner of FM Associates and an advocate of the Supreme Court of Bangladesh.