Sherpa Hossainy's Blog

High interest rate and energy crisis hampering jute and textile industries

Posted in Bangladesh, Business, Dhaka, Economy, Export and Import, RMG and textile by Sherpa Hossainy on June 4, 2011

Published in The Independent on 3 June, 2011

Read the article on The Independent website

Digital print version

The apex trade body of the country on Thursday pointed out high interest rates and energy crisis among others as major bottlenecks for the growth of jute and textile industries.

Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President AK Azad said, “18 per cent interest rate is a major hurdle for the growth of textile industries.”

He was speaking at a seminar on ‘Problems and prospects of jute and textile sector: Bangladesh perspective’ at the FBCCI conference room in Dhaka.

Abdul Latif Siddiqui, minister for textiles and jute, was present as the chief guest, while Md Ashraful Moqbul, secretary of the textiles and jute ministry, TD Mitra, chairman of Bangladesh Jute Mills Corporation (BJMC), Jahangir Alamin, president of Bangladesh Textile Mills Association (BTMA), were also present.

“Many spinning mills are closing down because of energy crisis and high interest rates. If the rate can’t be brought down to at least 13 per cent, this industry will not survive,” Azad said.

In the fiscal year 2009-10 the textiles sector earned $12.5 billion through export earnings, which is $15.07 billion in the first ten months of the current fiscal.

The FBCCI president said that despite posting an impressive growth the local textiles industry is under threat as EU has adopted the single-stage generalised system of preferences (GSP).

However Azad said jute sector is currently in a favourable position after long being in a state of despair. Jute and jute-goods export earnings were $925 million in the first 10 months 2009-10 fiscal, which is 42 per cent higher than the previous one.

Raw jute saw a 70 per cent growth in export earnings and jute-made goods marked a 45 per cent rise.

“Bangladeshi jute mills export 90 per cent of their products, whereas Indian jute mills only cater to the domestic market,” the FBCCI president said.

Azad said the jute sector will be in peril if the local market does not expand. He commended the efforts of the government in making the use of jute-made goods mandatory in the fertiliser, cement, textiles and construction sector.

Bangladesh is now the second largest exporter of jute and jute-made goods in the world.

Citing the 41 per cent rise in exports this fiscal, Azad said it is an encouraging figure but the import costs are rising and our economy is becoming dependent on RMG exports and remittance.

“We have to focus on other sectors and attract foreign investments,” Azad said.

The minister asked the FBCCI president to list all their demands and provide it to him so that he can submit it to the finance minister before the next budget.

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