Jute bag manufacturers muff huge market

March 31, 2011

Blame lack of finance, policy & other supports
The country’s small and medium manufacturing units of jute goods are muffing a huge demand for jute bags on the global market due to lack of finance and international-standard production efficiency, reluctance of jute mills to sell quality jute fabrics in small lots, and lack of policy-level drive for diversification of jute goods.
Western importers are on the lookout for large supplies of environment-friendly jute bags but the local small and medium enterprises producing this item are failing to capitalise on the lucrative marketing opportunity, SME entrepreneurs of jute goods said.
One of them, Mahmud Ali, managing director of Peerless Enterprise at Gulshan in the capital, said, ‘The jute mills usually prefer selling jute fabrics in large quantities to jute yarn manufacturers to selling the fibre in small lots that the SMEs need and can afford to buy at a time.’
Abu Saleh Md Khurshed Alam, managing director of Shuchili Jute Multi-production Limited at Shantinagar in the city, said, ‘Shuchili can supply at most 10,000 hand bags to foreign buyers in four months’ time, while there are plenty of buyers ready to place orders for millions. We cannot take any big order due to a lack of finance for expanding our production capacity and of government support and incentives.’
The factory Abu Saleh owns is manned by only 20 workers. Even this tiny enterprise has supplied jute bags to Japanese and UK importers.
‘While the SMEs producing jute bags are muffing the opportunity of making bulk exports, the country is also missing considerable and sustainable export earnings from this new jute good,’ he pointed out.
Mahmud Ali echoed Abu Saleh by saying that ‘I had to refuse a supply order for 50,000 ladies’ bags for lack of finance. With our existing capacity, I cannot accept any supply order for more than 20,000 bags, though I wish I could go for the supply orders for millions of bags many buyers are ready to make.’
Abu Saleh urged the government to promote the SMEs producing diversified jute goods by providing them with tax waiver and both the SME MDs demanded that the government should increase the cash incentive given to them from 7.5 per cent to 20 per cent like other SMEs, including the handicraft manufacturers.
The government must raise the cash incentive for jute good manufacturers to help them survive the intense competition they face from Indian manufacturers, who are enjoying a 10 per cent cash incentive from their government, Mahmud Ali argued.
Shankar Roy, chief operations officer of Applied Senses, a buying house of jute goods and research-based designer of jute bags, said, ‘I had to let go of a supply order for 50 lakh hand bags from a UK buyer as no manufacturer was found which could produce so many bags in four months’ time.’
‘The government should create a duty-free export processing zone for jute good manufacturers and offer soft loans to these SMEs on flexible terms,’ Shankar said, mentioning that India had already established some such special processing zones.
The demand for products like jute bags has posted a sharp rise in the developed countries after the European Union banned the use of synthetic fibres to protect the environment.
Ishtiaq Ahmed, in charge of Jute Entrepreneurs Service Centre on Manik Mia Avenue in Dhaka, said, ‘There is no manufacturer in the country capable of meeting a large supply order, say for 50 lakh bags. Most of the units are small. Even five or six of them can hardly manage a big order jointly.’
He said, ‘The Jute Diversification Promotion Centre offers loans through the BASIC Bank to small and medium manufactures at 9 per cent interest. It is also running a skills development training programme for the manufacturers.’
According to the Export Promotion Bureau data, in fiscal year 2009-10, Bangladesh earned more than Tk 14.14 billion, or 25 per cent of the total export proceeds of the sector, from raw jute exports, Tk 28.65 billion or 50 per cent from jute yarn and twine exports, Tk 9.85 billion or 17 per cent from jute sack and bag exports, and Tk 4.12 billion or 7 per cent from other jute goods exports.
The earnings from raw jute exports have risen by 85 per cent in July to February of the current fiscal year, by 50 per cent from jute yarn and twine exports, and by 34 per cent from jute sack and bag exports, and decreased by 15 per cent from other jute goods exports from that in the same period of FY2009-10.
Although jute sack and bag exports have increased a bit, as the data show, the country is exporting more raw jute and jute yarn and twine, with the jute production on the rise.
Shankar Roy said, ‘The country’s jute export will soon face a crisis if it remains focused on exporting raw jute and jute yarn and twine as the global market of these products is almost saturated and the prices will soon begin to slide with the supply surpassing the demand. Besides, to survive the competition with India and keep up the growth in export earnings made by the jute sector, there is no alternative to diversifying jute products.’
‘The demand for diversified jute products like jute bags is rising among the international buyers, with brands like IKEA and TESCO already showing interest to import jute bags from Bangladesh,’ he pointed out.
The jute bag manufacturers demanded that export of raw jute should be banned as the local jute good manufacturing industries were already facing a shortage of raw jute with the number of new jute spinning and other jute good manufacturing units on the rise.


Courtesy of New Age

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