Govt plans Tk 10,000cr fund for jute sector

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Govt plans Tk 10,000cr fund for jute sector
« on: June 27, 2018, 10:02:34 AM »
Govt plans Tk 10,000cr fund for jute sector

The jute ministry is working on a policy to form a Tk 10,000 crore fund to provide low-cost loans for the development of the nearly $1 billion export earning jute sector. A panel headed by Md Mahmudul Hassan, chairman of Bangladesh Jute Mills Corporation (BJMC) has prepared the draft for the Jute Sector Development Fund. The panel proposed that the government form a 20-year revolving fund based on the budgetary allocation to provide loans to farmers, traders, industrialists, diversified goods producers and exporters.

The loans will be disbursed at 5 percent interest and half of the interest payments would come from the state coffer as subsidy, according to the recommendations. Bangladesh Bank would be assigned to manage the fund, to where banks would also enjoy access under refinancing arrangement, the committee suggested. Except for farmers, none without licence for jute and jute goods business will be eligible for getting loans from the fund.

“Loan defaulters will not be eligible for applying for loans from the fund,” according to the draft.  The draft policy targets providing the ailing jute sector opportunities similar to what garment and leather goods industries enjoy, the BJMC chairman said. “Jute industry is lagging behind in terms of technology. We are using traditional technology which needs to be modernised,” he said.

The government formed Export Development Fund (EDF) in 1989 to provide low-cost funds to export-oriented sectors—such as garment and leather goods—to buy raw materials from abroad to make exportable goods. There is no such fund for the jute industry, Hassan said. “The government's support is needed for the development of any industry.” The draft policy will be scrutinised, said Sabina Yeasmin, joint secretary to the textiles and jute ministry. “We are trying to frame a policy.” The initiative for the fund was taken as the jute millers have been demanding formation of a fund similar to the EDF.

In Bangladesh, around 2 lakh people work in 176 public and private mills, which process two thirds of the country's annual jute production of 14 lakh tonnes, according to data by Bangladesh Jute Spinners Association. Of it, 8.36 lakh tonnes are exported and the rest consumed locally, according to the association.