Amid shutdown spree, private jute mills demand interest-free loans
The demand is in the spotlight at a time when the government shutters state-owned jute mills as they have turned into loss-making concerns.
Private jute mills owners want the government to make arrangements for them to get interest-free loans for raw jute purchase and staff salary payments, saying their exports dipped due to the coronavirus pandemic.
They made the demand at a time when the government moves to shutter state-owned jute mills in the wake of recurring losses time and again.
The Bangladesh Jute Mills Association (BJMA) has applied to the Ministry of Textiles and Jute for interest-free pledge loan against their jute products at least for six months.
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Besides, the BJMA has proposed that the government waive existing tax on jute products, value-added tax, advance income tax for at least six months, and extend the deadline for provident fund installments.
The association also advocated utility bill waivers for the next one year. Otherwise, they feared that the utility costs might push them to closure as the virus eats up their earnings.
Demanding Tk4,955 crore for next six months to counteract the virus fallout, the BJMA said the loans could be adjusted gradually from jute item export once the situation improves.
The private millers proposed that the banks consider the manufactured jute products as pledge assets against the loan.
On top of that, the BJMA suggested that the government create a Tk10,000 crore jute sector development fund with 2 percent interest – similar to the export development fund.
The Ministry of Textiles and Jute forwarded the millers' proposals to the Financial Institutions Division (FID). The FID subsequently sent it to the Bangladesh Bank governor for consideration on July 3.
The private millers also called for raising the cash export scheme for jute products to 30 percent from the existing 20 percent, and transferring the jute sector's loans to block.
An official at the FID on condition of anonymity said that the government would consider those demands with due importance.
"Since the state-owned jute mills are closed, they will no longer buy raw jute from farmers. Against such a backdrop, if the private millers too suspend jute purchase because of the cash crunch, the growers will bear the brunt at the end," said the official.
Export of jute and jute-made items rose in 2019-20, though the major exporting sectors including ready-made garments registered negative growth. Jute export posted 8.10 percent growth in the last year amid the virus racing around the globe.
Export of jute and the fiber-made items amounted to $88.23 crore, which was $81.62 crore before.
Jute export posted more than 20 percent growth prior to the Covid-19 spread in Bangladesh last March. The export growth in eight months of the last fiscal year was more than 24.45 percent.
Bangladesh Jute Mills Association President Mohammad Mahbubur Rahman Patwari said they expected jute and jute product export to surpass $1 billion in the 2019-20 fiscal year.
"The pandemic jeopardised the target as many jute and jute product businesses in European Union, Middle East, USA, Australia and Africa shuttered trade," he said, adding the buyers were cancelling the earlier orders and there was no new order too.
In the meantime, FID officials said the government has been supporting other export-oriented sectors except jute since 1988 from the export development fund. Both the textile and jute ministry and jute millers have been advocating for the Tk10,000-crore-fund for the last three years.
Now the Bangladesh Bank will give its opinion on whether formation of such a fund is possible amid the pandemic-led revenue crunch.
