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Tuesday, 25 June, 2002, 13:17 GMT 14:17 UK
Bangladesh to shut biggest jute mill
Bangladesh police
Extra police were brought in to the mill to stop unrest

The Bangladeshi Government has announced that over 25,000 workers in the world's largest jute mill will be made redundant.

The decision reflects the worldwide downturn in the jute industry and the pressure the government is under from the International Monetary Fund and the international community to close down loss-making, state-owned business.

The government has been careful not to reveal exactly when the Adamjee jute plant, south of Dhaka, will close down, fearing the decision may provoke a wave of industrial unrest.

The Adamjee jute mill may be the biggest in the world, but it is losing millions of dollars a year.

Old glory

During the 1960s and 1970s the plant used to be the pride of Bangladesh.

High on the itinerary of foreign visitors and renowned for its well-managed and efficient workforce.

But since then the jute industry in general, and the Adamjee plant in particular, have gone into decline.

Demand for jute, a natural fibre used in textiles and furniture, is now lower than supply.

Exports all over the world have slumped because of increased competition from India and China.

Synthetic materials have become increasingly popular and are far cheaper than jute.

Surplus crop

To make matters worse, both India and Bangladesh have had bumper jute harvests this month, which has added to an already over-saturated market.

Ministers argue that the running costs of the Adamjee mill are far higher in comparison to other jute plants and that the workforce is too large and overpaid.

They say that in addition, the 300 acre Adamjee site has become a hotbed of militant trade unionism and corruption, and has become a breeding ground for criminals.

woman brick worker
The jobs shortage is growing
There have recently been numerous gun battles at the site.

The government says that once the site has closed down they will remove illegal housing colonies that surround the plant.

Repercussion

The closure is likely to be well-received by the IMF, which in recent months has been lobbying hard for the government to shed loss-making, publicly owned industries.

Ministers are now concerned that their decision does not provoke serious unrest.

Fearing labour unrest against the government decision, hundreds of extra police have been deployed in and around the jute mill.

Already protest rallies have been announced by unions who say that the government's US $50 million redundancy package is too small.

See also:

29 Apr 02 | Business
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17 Feb 02 | South Asia
04 Jan 02 | Business
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