Jute pulls in investors
The jute industry sees a surge in investment, as nearly a dozen companies are set to spin out jute goods and value-added items, inspired by the rising global demand for green products.
Local business conglomerate Partex Holdings, battery maker Panna Group and Aftab Group, and some shrimp processing firms are likely to invest hundreds of crores of taka in the resurgent jute industry.
At least eight new players, concentrating on yarn or jute goods, signed up to associations such as Bangladesh Jute Mills Association and Bangladesh Jute Spinners Association. Some are modernising their factories to increase production.
The new entrepreneurs are likely to create thousands of jobs and increase production capacity.
But a sudden increase in production capacity might spark a price war for exports, warned the industry insiders. Manufacturing more diverse products from jute is the need of the moment, they added.
At the same time, crop output has to be increased to meet the requirements of an increasing number of factories emerging to exploit demand on the international market.
Officials of Partex, Panna and Aftab said they would initially make yarn to exploit demand for carpets and jute-fabrics. But Partex and Aftab want to diversify production to make denim fabrics and home textiles.
“We see a new window of opportunity for exporting jute goods. The world market is excited about jute as people look for eco-friendly products,” said Rubel Aziz, managing director of Partex Jute Mills. “We want to enter the market with our golden fibre,” he said.
With a daily production capacity of 80 tonnes of yarn, Partex Jute Mills in Faridpur is likely to begin operation around mid-year. Partex will invest about Tk 140 crore for its yarn and twine factory.
“Our goal is to make value-added jute goods. We aim to make denim fabrics from jute and ladies handbags to market globally,” said Aziz.
He urged the government to ban raw jute exports to help Bangladeshi manufacturers increase their value-added jute goods volume for international markets.
The latest investment frenzy in the jute sector occurs at a time when the sector beat its longstanding competitor frozen foods in export earnings.
The local jute industry, employing about 150,000 workers, is now the second largest export earner after clothing, thanks to sustained demand.
In fiscal 2009-10, the sector logged 76 percent higher earnings at $736 million (Tk 5,225 crore) than the previous year, which remains buoyant in the current fiscal year.
The sector where 40 lakh farmers are involved is also set to reap the benefits of the packing law passed last year. The law made it mandatory to pack certain percentage of food items and fertilisers with jute to boost the industry and cut the use of environmentally-harmful polypropylene bags.
Such prospects on local and international markets also lured investors like Panna Group, according to its Deputy Managing Director Ramendra Nath Basak.
Panna Group took a Tk 160 crore project to set up its concern Altu Khan Jute Mills at Madhukhali in Faridpur, a major jute-growing belt. The mill will produce 60 tonnes of yarn a day and Hessian sacks. It is likely to start production in April, creating jobs for nearly 3,000 people, said Basak.
Kamrul Hasan, operative director of Aftab Jute Mills, said it is a pity that jute did not receive due attention in the past, despite immense prospects.
“Petrochemicals will be exhausted over time. But the demand for jute will continue as long as we can grow it. Many European countries are discouraging use of synthetic bags to protect the environment,” he said.
“Everything about jute is positive. It is a versatile product. If we can showcase it properly, we will be able to tap the global market,” said Hasan of Aftab Jute Mills, which aims to kick off operations this year to spin out 15 tonnes of yarn a day.
“We will begin with yarn. But our goal is to make diverse products from jute including shopping bags and home textiles,” he said.
“It will not be wise to stay content with yarn making only, because the market for yarn is almost saturated and prices will fall as soon as supplies surpass demands,” Hasan warned.
Kazi Shahnewaz, owner of a frozen fish processing plant in Khulna, has recently signed up to make twines and sacks from jute. The factory, Shahnewaz said, is likely to begin production about mid-year with 2,000 people working each shift.