Jute goods manufacturing gets investors’ greater attention
The volatile cotton yarn market is forcing many entrepreneurs to invest in the jute yarn industry as the country’s jute and jute goods export reached a new height in recent years.
Industry insiders said many entrepreneurs have made changes in their plan to set up cotton spinning mills and are showing growing interest in jute spinning mills.
Fazlur Rahman, Managing Director of Rahman Jute Spinning Private Ltd in Rajshahi which is expected to go into operation after Eid-ul-Azha, said they had earlier planned to invest in cotton spinning mills but presently they are not interested in that as the sector is struggling hard.
“We have invested in the jute sector because the prospect of the sector is bright with the demand for the eco-friendly item increasing day by day across the globe,” said Mr Rahman adding if one can run the mill properly one will definitely make profit.
Shalauddin Ahmed, Deputy General Manager (DGM) of Mazada Jute Mills Industries Ltd which was established in June this year, said they are investing in the sector since the sector is no more a loss-making one.
“If the millers can purchase raw jute at a lower price, it is easy to make profit,” said the DGM adding now there is no crisis of raw jute as the production has increased much.
According to Bangladesh Jute Spinners Association (BJSA), around 16 new jute spinning mills have been set up in the country over the last 16 months whereas eight more mills are in the pipeline.
BJSA data shows that four jute spinning mills were established in 2008-09 financial year (FY), and another four in FY 2009-10. There are a total of 82 jute spinning mills in the country.
BJSA President Muhammad Shams-uz-Zoha said: “Much investment has been made in the jute spinning sector over the last two years as there has been a revival of the jute industry.”
Business insiders said banks have also squeezed loans for the cotton-based spinning mills but not for the jute-based industries.
A senior official at Islami Bank Bangladesh Ltd (IBBL) told the FE that they have almost suspended new loans to the cotton spinning mills but have been extending support to the jute-based industries in recent years.
Since the jute industry has regained its image showing an export growth over the last couple of years, we are now seeing a good prospect of jute spinning and other jute-based industries, he added.
Managing Director of Agrani Bank – the country’s third largest state-owned commercial bank – Syed Abdul Hamid said they have funded at least two jute spinning mills over the last two years due to the increasing demand of jute products in the globe.
He also said their bank has stopped funding in the cotton spinning sector.
Bangladesh Textile Mills Association (BTMA) Secretary Mansur Ahmed said nowadays there is no new investments in the cotton spinning mills of the country due to the deteriorating condition of the sector.
Bangladesh, a major exporter of jute yarn, usually exports 350,000 to 380,000 tonnes of yarn a year against the global demand of up to 450,000 tonnes.
Beyond the jute spinning units, the number of jute mills has also increased in recent years.
Around 10 jute mills are now in the process of being established, according to the data of Bangladesh Jute Mills Association (BJMA). Two jute mills were established in 2009 and eight in 2010.
BJMA Secretary Abdul Barik Khan said investment in the jute mills has also increased over the last two years. “Investors are now very much positive about investing in this sector.”
Export Promotion Bureau (EPB) data shows that export earning from the jute sector stood at US$ 244.90 million during the July-September period of 2011-12 FY, recording a 17 per cent growth over the corresponding period of the last fiscal.
It also shows that around $ 121.81 million was earned from jute yarn and twine export, $ 45.85 million from jute bags and sacks, $ 65.54 million from raw jute during the last three months.