Bangladeshi jute mills likely to revival with implementation of packaging law

Bangladesh has 94 spinning mills in the country, of which around 20 were closed down in the last 7/8 months and many more mills are running below their capacity and will be forced to close down soon if the situation doesn’t improve. According to industry players, the implementation of the mandatory packaging law could rescue the local millers by increasing demand in the domestic market. Though the law was passed in 2010, the government is yet to implement it mainly due to an absence of associated rules and regulations.

Jute mills are also affected due to a depressed international market and currency devaluation in India. But the major reason behind the closure of the factories is the government’s failure to implement a packaging law for compulsory use of jute sacks to pack food grains and other items.
Bangladesh exported jute and jute goods worth $466 million during the July-January period of the current fiscal year, according to Export Promotion Bureau data. The earnings in the period declined by more than 21 percent year-on-year and fell 28 percent short of the target.

Exports of raw jute and jute sacks and bags plunged by a half so far this fiscal year. However, exports of jute yarn and twine that account for half of the country’s total exports of jute and jute goods increased by nearly 6 percent during the first seven months till January this fiscal year.

According to Shabbir Yusuf, president of the association, the global demand has gone down, while production cost has increased. Moreover, Syria which was a big market for Bangladesh’s jute yarn, imported around 70,000 tonnes of yarn a year is totally off now because of the ongoing political unrest there. Also, Iran which used to import around 40,000 tonnes of yarn a year from Bangladesh is also at a halt because of US sanctions against the country.

Kaihan N Rahman, deputy managing director of 40-year-old Pubali Jute Mills said that the current adverse situation has forced us to lay off workers temporarily. Pubali used to make mainly jute sacks and bags and export to countries like India, Thailand, Egypt, Syria, Turkey, Iraq and Sudan. Most of these markets have been facing political turmoil for months, while devaluation of the Indian currency has shrunk Bangladesh’s exports of jute and jute goods there.

As per Bangladesh Jute Mills Association (BJMA), 5/6 jute mills, including Pubali, Mohsin Jute Mill and Ajax Jute Mills, were closed in the last several months.