Khulna Industrial Decline: How Jute Mill Closures Devastated a Once-Thriving Bangladesh City

Khulna, August 8, 2026 — The industrial belts of Khalishpur, Daulatpur, and Rupsha were once alive with production — jute mills, textile factories, paper mills, hardboard factories, match plants. Tea stalls, grocery stores, transport operators, and rental housing all depended on the steady flow of workers and wages. Today, the remains of Khulna's once-thriving industrial landscape tell the story of a city that has lost more than 34,000 industrial jobs since 2002, with its population declining and its economic future increasingly uncertain.

👕 The Jute Mills: Heart of Khulna's Economy

For decades, jute was the beating heart of Khulna's economy. Crescent Jute Mills, Platinum Jubilee Jute Mills, Star Jute Mills, and other state-owned factories became symbols of the city's industrial success. At their peak, the region's seven state-owned jute mills employed nearly 50,000 permanent and temporary workers. Entire neighbourhoods, schools, markets, and housing colonies grew up around them. People arrived from Barishal, Jhalakathi, Pirojpur, Bagerhat, Satkhira, and Gopalganj in search of jobs, many settling permanently.

The biggest blow came on July 1, 2020, when the government shut down 25 state-run jute mills operated by the Bangladesh Jute Mills Corporation (BJMC) amid mounting losses. The mills employed more than 50,000 workers nationally across permanent, temporary, and substitute categories; seven were in Khulna, employing more than 29,000 workers, including around 15,000 permanent employees.

👥 Human Cost: Stories of Lost Livelihoods

One worker, who found employment at Crescent Jute Mills nearly three decades ago, described how the mill sat at the centre of his life. The wages let him raise two children and build a modest life in a city that became his home. In 2020, that life crumbled. "My children grew up in Khulna. They still want to live here because this city is their home," he said. "But after losing the job, it became impossible to bear the living cost." Four years ago, facing mounting pressure, he left for his ancestral village, leaving behind decades of memories and a community built around the mill.

For Nasima Akter, 49, the mill closures meant the collapse of a lifetime of hope. She worked there as a casual worker for 16 years, always believing she would become a permanent employee. That never happened. A divorced mother of two, she could no longer afford her rent and moved to a slum-like settlement with her son. "When the mill closed, I received Tk 114,000 as settlement. It disappeared within months," she said. "Now I work whenever I can. Earlier, shopkeepers trusted us and gave us groceries on credit because they knew we had steady jobs. Now they don't. Even landlords refuse to rent houses to former jute mill workers."

📊 Decades of Decline: A Timeline of Closures

The decline did not happen overnight. It unfolded over four decades, with each closure removing another pillar of Khulna's industrial base:

• 🏭 1993: Khulna Textile Mills shut down (established 1931, 1,600 workers laid off)
• 🏭 2002: Khulna Newsprint Mills closed after 43 years (3,200 workers, Tk 284 crore losses)
• 🏭 2010: Dada Match Factory closed (1,950 workers, established 1955)
• 🏭 2020: 7 state-owned jute mills shut down (29,000 workers in Khulna alone)

The Khulna Newsprint Mills story illustrates the broader pattern. Starting production in 1959 using raw materials from the Sundarbans, the mill had an annual capacity of 48,000 tonnes and supplied newsprint to newspapers nationwide. That changed in the 1990s, as the government liberalised trade at the behest of multilateral lenders, including the World Bank. The withdrawal of a 75 percent import duty on newsprint in fiscal year 1995-96 made imported paper more competitive. Rising furnace oil prices, working-capital shortages, raw material constraints, and government-controlled pricing pushed it deeper into losses, which reached Tk 284 crore between 1995 and 2002. The mill closed on November 30, 2002.

💰 Ripple Effects Across the Local Economy

The impact of the closures rippled far beyond the factory gates. Tota Mia, a mobile financial service (MFS) agent at Chitrali Market, said daily transactions at his outlet had fallen from Tk 35,000 to Tk 40,000 to about one-tenth of that amount after the mills closed six years ago. "Before their shifts and after, workers would crowd the shops to send money through bKash, recharge mobile phones, and pay electricity bills," he said. After the mills closed, business fell, leading to the decline of MFS agents in the market from more than a dozen to four.

"From the front of Chitrali Market to Peoples Goal Chattar there were more than 150 small and large garment shops. Every Thursday, after workers received their wages, the market would see a shopping spree," said Swapan Howlader, who once owned a clothing store there. Unable to sustain the losses, he closed the shop, and now alters old trousers and clothes on the pavement beside the market. "Now I am struggling just to pay the shop rent, electricity bills, and household expenses. Many days pass without a single customer."

🐟 Shrimp Industry: The Failed Replacement

No major industry has emerged over the last decade to fill the void left by the closure of the state-owned jute mills. The most notable attempt — the shrimp industry — is itself in crisis. "We once hoped that the shrimp industry would become one of the main driving forces of Khulna's economy. But that industry is also facing a severe crisis now," said Abdul Jabbar, a former director of the Khulna Chamber of Commerce and Industry (KCCI).

Nearly 80 percent of shrimp processing factories have become virtually defunct due to raw material shortages, declining production, international competition, and structural problems. Around 120 shrimp and fish processing plants registered with the Bangladesh Frozen Foods Exporters Association once operated in the region. Even a few years ago, 35 to 40 were running. Today, only 8 to 10 remain operational and continue exporting. "This is a clear indication of the decline in Khulna's industrial and export sectors," Jabbar said.

🛢️ Padma Bridge: Unfulfilled Hopes

Kazi Hafizur Rahman, another former KCCI director, said the 2022 inauguration of the Padma Bridge had raised hopes of new industrial investment. "While the bridge has undoubtedly improved connectivity and reduced transportation time, the level of industrial investment the business community had anticipated has not yet materialised," he said.

Some jobs have appeared in logistics, real estate, healthcare, education, retail, IT, and small-scale agro-processing, but "large-scale manufacturing industries capable of generating significant employment have yet to emerge in the region." He pointed to the lack of gas supply, high energy costs, bureaucratic complexity, and the absence of targeted policy incentives for the southwest.

"Khulna has all the ingredients to become a major economic hub — a seaport, rail and road connectivity, proximity to international markets, and a skilled workforce. What is needed now is a comprehensive government strategy to develop Khulna as a dedicated economic and industrial zone," Hafizur said. "In the last 10 years, not even 1,000 jobs have been created here in total."

📊 Population Decline: The Statistical Evidence

The city's fading fortunes show in its population. Khulna City's population peaked at 770,000 in 2001 and fell to 718,000 in 2022, according to Bangladesh Bureau of Statistics census data. The urban share of Khulna Division's population dropped to 41 percent in 2022 from 55 percent in 2001 — a striking de-urbanisation trend that directly contradicts Bangladesh's broader urbanisation trajectory.

• 📉 Khulna City population (2001): 770,000
• 📉 Khulna City population (2022): 718,000 (−6.8%)
• 📉 Urban share of Khulna Division (2001): 55%
• 📉 Urban share of Khulna Division (2022): 41% (−14 percentage points)

🏛️ Failed Revival Attempts

When the state-owned jute mills closed, the government promised to revive them by leasing the factories to private investors. Six years later, little has changed. Four mills have been leased out for 30 years to lessees including footwear and pharmaceutical manufacturers, feed producers, and foreign investors. Production is currently underway at Eastern Jute Mills and Khalishpur Jute Mills; Daulatpur Jute Mills also resumed production after being leased by BJMC, though it is now temporarily suspended. Critically, the lease agreements do not require operators to manufacture jute goods — they are free to produce whatever they choose.

The Newsprint Mills was listed for privatisation in 2005. Two tender attempts failed, and the mill was returned to the industries ministry in 2008. Plans for a textile village and other redevelopment proposals have since stalled, and trees now cover much of the abandoned site. The Bangladesh Chemical Industries Corporation, which owns the mill, has sold 50 acres of the land to North-West Power Generation Company for a power plant — a telling symbol of the transition from industrial manufacturing to power generation on the same land.

✅ What Needs to Happen

"It is heartbreaking to see the decline of what was once a vibrant industrial hub. Thousands of workers have lost their livelihoods, while vast industrial estates remain abandoned," said Sheikh Ashrafuzzaman, president of the Greater Khulna Development Movement Coordinating Committee. To revitalise Khulna's economy, there is no alternative to establishing new industries, reviving existing ones, and providing special incentives to export-oriented sectors, according to KCCI leaders. The city that once powered Bangladesh's jute exports now waits — its industrial infrastructure rusting, its workforce scattered, and its future dependent on whether the government can deliver the comprehensive economic strategy that the region has been promised for decades but has never received.