Jute is commonly known as the ‘Golden Fiber’ of Bangladesh. Currently, the annual production of jute in Bangladesh is 1.349 million metric tons. This cash crop significantly contributes to the country’s economy as a major export. Even before ready-made garments (RMG) became a major export item for Bangladesh, jute was the primary exported commodity. The Awami League (AL) government has consistently prioritized the economic growth of Bangladesh, particularly focusing on the jute industry as a crucial export. Various initiatives have been taken by the government to enhance the reputation of jute both nationally and internationally. The Textile and Jute Ministry has also organized different programs to promote the golden fiber of Bangladesh.
For the continuous development in 2023, the Dhaka Stock Exchange noted an 11% surge in the jute sector’s market value.
The golden era of Bangladesh for the Golden Fiber
Jute, often referred to as the “golden fiber,” is recognized as one of the most sustainable and eco-friendly crops. Derived from the jute plant, this natural fiber has become increasingly popular, especially with the growing demand for environmentally friendly products. The global push for eco-conscious choices has led to an unprecedented demand for jute-based items. As one of Bangladesh’s oldest industries, the jute sector enjoys consistent governmental support and favorable policies, offering attractive investment opportunities for both domestic and international investors.
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Bangladesh is proud to be the world’s second-largest jute producer, with an estimated annual production of 1.6 million tons in 2019 (FAO). The country hosts around 220-245 private jute mills, and an additional 25 public jute mills are in the process of being privatized. Moreover, about 700 diversified jute producers significantly contribute to the industry, employing between 50,000 and 100,000 individuals. The average annual domestic consumption of raw jute is approximately 1.16 million tons (BJSA). Notably, Bangladesh leads the global export of jute and jute-based products, with an average annual export value of around USD 1 billion.
The textile industry plays a pivotal role in Bangladesh’s export history, contributing about 80% to the foreign exchange revenue and employing over 4.5 million people. The jute industry, once a key driver of economic growth, experienced a decline with the advent of synthetic fibers. However, the rising global awareness of environmental issues has led to a resurgence in the demand for jute.
As a significant player in the jute market, Bangladesh exports over 90% of the world’s raw jute fibers. Current government policies aim to increase production capacity, diversify product bases, and enhance export earnings. Despite the global economic challenges impacting the textile and garment (T&G) sector, Bangladesh strives to overcome marketing crises by improving financial packages, rescheduling loans, and developing human resources.
Efforts are ongoing to make jute products globally competitive. These initiatives include the production of high-yield jute seeds, diversification of jute products for domestic and export markets, and promotion of eco-friendly jute use. The government encourages the establishment of smaller mills and the introduction of a Diploma Course on Jute Technology to ensure a sustainable supply of manpower.
Bangladesh provides several advantages for investment in the Primary Textile Sector (PTS), including abundant and affordable skilled labor, low-cost infrastructure, and incentive packages for Foreign Direct Investment and Joint-venture projects. The textile sector, open to 100% foreign participation or joint ventures, offers promising opportunities for establishing new mills with advanced technology.
In recent times, jute has been acknowledged as an eco-friendly natural fiber with a wide range of applications, including packaging, geo-textiles, carpets, apparel, and upholstery. While the Bangladeshi jute industry is subject to global market conditions and competitive pricing, its potential for growth and contribution to the economy is evident in the ongoing reforms and initiatives.
Bangladesh’s Jute Advantage: Harnessing Competitive Strengths, Investment Potential, and Supportive Policies for Sustainable Growth”
Let’s explore the dynamic landscape of Bangladesh’s jute sector, where competitive strengths, vast investment potential, and supportive policies converge to create a thriving ecosystem. With a global shift towards eco-friendly products, Bangladesh’s expertise in cultivating superior Tossa jute on expansive lands positions it as a key player. The strategic location, skilled workforce, and diverse product range further enhance its allure. Delve into this narrative of sustainable growth, guided by the government’s proactive measures and lucrative incentives, as Bangladesh’s jute industry becomes a beacon for investors seeking eco-conscious opportunities.
The global shift in consumer preferences towards eco-friendly products is propelling the demand for jute-based items. Capitalizing on Bangladesh’s expertise in cultivating and processing jute, coupled with supportive government policies, presents a significant opportunity for increased investments in the sector.
Exceptional Raw Materials: With its fertile land and diverse climate, Bangladesh boasts a rich agricultural heritage. The Tossa jute produced in Bangladesh is renowned for its superior quality, making it a sought-after raw material.
Extensive Cultivation: Jute cultivation spans over 7.5 hectares of land, constituting 10% of the country’s agricultural area. This substantial cultivation ensures a robust supply of raw jute for processing.
Strategic Location: Bangladesh’s geographical advantage includes over 200 rivers and waterways, facilitating the processing of raw jute. Additionally, the country benefits from cost-effective water transport, a well-developed rail network, and an efficient road system.
Skilled Workforce: A diverse pool of semi-skilled and skilled human resources is available in Bangladesh. Numerous public and private universities offer courses in textile and design, while scientific research institutes regularly explore the potential of jute. This competitive workforce contributes to the sector’s overall strength and innovation.
The increasing global preference for environmentally friendly products has led to a rising demand for items crafted from jute. The Bangladeshi government is actively promoting the production of a wide array of diversified jute products, offering various fiscal and non-fiscal incentives, including export subsidies.
Investors have abundant opportunities to expand their exports in jute-based products, including:
- Home décor items such as rugs, mats, carpets, and floor coverings.
- Jute furniture.
- Footwear made from jute materials.
- Packaging items like shopping bags, sacks, and carry bags.
- Automobile accessories, including dashboards and door panels.
- Jute sticks.
This push for diverse jute product manufacturing aligns with the growing global emphasis on eco-conscious choices, presenting a favorable landscape for investors and businesses in Bangladesh.
Incentives and policy
Last year, Bangladesh implemented a 12 percent cash incentive for the export of jute goods, such as hessian and sacks, and a 7 percent incentive for jute fibers like yarn and twine. Additionally, a 20 percent subsidy is provided for the export of carbon and jute particleboards produced from natural fibers.
Regarding fiscal incentives, companies involved in the production of jute products are subject to a 10% income tax rate. For taxpayers other than companies, the maximum tax rate is also capped at 10%. Furthermore, there is a reduced rate of Tax Deducted at Source (TDS) or withholding tax for export earnings, set at 0.5%, as opposed to the standard rate of 1.0%.
Ministry/Institute at Support
- Ministry of Textile and Jute
- Jute Diversification Promotion Centre: (JDPC)
- Jute Research Institute (BJRI)
- Jute Goods Exporter Association BJGE)
- Bangladesh Jute Spinners Association (BJSA)
- Bangladesh Jute Association (BJMA)