Lest we forget, the jute industry was the life blood of our economy for several decades and continues to be one of the mainstays of our rural economy even today. About 15 million farmers are involved in growing this cash crop and several million more of our population, perhaps an equal number, are involved with its processing, transportation, conversion, etc. Be that as it may, the industry has gone off track due to undue interference and discriminatory policies made by the policy- makers from time to time and also for reasons beyond the control of the industrial operators. In order to understand the current state of affairs in the industry, one must look into the background of the jute industry and the events that took place over the last several decades.
While this part of the country was considered to be a hinterland in the 1940s where we produced only raw jute, all processing of the fibre was done in the jute mills in present India.
The then Government of Pakistan realised that it would be better to add value to the fibre and export jute goods to earn foreign exchange for the nation instead of exporting only the fibre. As such, the Government began to promote setting up of jute mills as far back as in 1951 in this part of the country.
At a time when Pakistan was going through a period of rapid industrialisation, the Govt. of India decided to devalue her currency. The economists of that period realised that if Pakistani Rupee was also devalued at the same rate as that of India, the rapid industrialisation process that the country was experiencing would be retarded.
Therefore, the Govt. came up, as early as in 1959, with a unique method of compensating the industry for overvaluation of Pakistani Rupee in the form of bonus vouchers, a scheme carefully crafted where the consumers paid for the overvaluation of the currency and there was no burden on the national exchequer.
By the end of 1960s and early 1970s, about 30 million people were already involved directly or indirectly in the sector. By 1972-73 the industry was already producing about four hundred and fifty thousand metric tons of jute goods earning approximately US$ 195 million.
In the year 1971-72, the Govt. of Bangladesh adopted a policy of nationalisation and as such, under a Presidential Order, nationalised all major industries including the viable, vibrant and financially healthy jute industry without taking into consideration, whether the mills were owned by Bangladeshi nationals or otherwise.
After a period of about I I years of operation under the Bangladesh Jute Mills Corporation (BJMC), incurring huge losses and crippling the industry, the Government of Bangladesh adopted a policy of privatisation wherein little over one third of the loss making jute industry, which was originally owned predominantly by Bangladeshi nationals, were de-nationalised or privatised in the year 1982-83.
While doing so, unfortunately, the Government forced the present owners to shoulder the entire liability that they had created during the nationalised period. Let me reiterate that when the mills were nationalised in 1972 we had handed over a viable, vibrant and a financial healthy jute industry to the Government. In spite of all difficulties and against all odds, the original owners came forward and took over the mills in the hope of reviving the sector.
In 1982-83 the industry produced about five hundred and forty thousand metric tons of Hessian, Sacking, CBC, Carpet and Yarn and earned about US$ 300.00 million. Although the industry was divided between public sector and private sector, the norms of credit to the industry were directed by Bangladesh Bank to the commercial banks and any other facilities that were given to the industry were also given in a fair and equitable manner, irrespective of whether the mills were run in the public sector or the private sector.
The cost of the huge debt burden that the private sector jute industry had to shoulder resulted in continued losses for the industry. As a result a number of studies were undertaken and finally the World Bank came forward with a $250 million Jute Sector Adjustment Credit (JSAC) to support the Jute Sector Reform Programme (JSRP) in 1992-93. The objective of the programme was to transform the existing loss making jute industry into a viable industry run predominantly in the private sector. In order to achieve this goal the World Bank and the Government of Bangladesh decided to address 1) capacity rationalisation, ii) un-sustainability of past debts, iii) interim loss finance and iv) privatisation.