Thailand on Sunday announced its decision to quit the IJO, which promotes the natural fibre produced by some of the poorest nations in Asia. Thailand followed in the footsteps of India, which quit the organisation last year.

"India's pull-out was a body blow to the organisation. Thailand's withdrawal decision is another punch to the neglected world body," IJO director Henri Jason told Reuters in an interview.

"The future of the IJO looks rather bleak unless political efforts are made at a higher level to persuade India to return to the fold and Thailand to withdraw its notification of pullout," Jason said.

The other producing member nations are Bangladesh, China and Nepal. The IJO, based in Dhaka, also comprises 21 consuming Western nations.

Thailand applied for withdrawal from the IJO last month under pressure fromrecession.

"Our government has cut budgetary allocation in some sectors due to economic recession. This is the main reason for withdrawal of membership from the IJO," Thai ambassador to Bangladesh Pithaya Pookaman said.

"The importance of jute in the economy is less as we cultivate a little amount of the fibre nowadays," he added. The IJO was formed in 1984 following an international agreement in Geneva. The agreement will expire in April 2000.

IJO officials said India, the world's largest jute producer, quit the body last year after failing to get its candidate appointed for the post of IJO Chief executive. Majority importing countries chose Jason, a French National, for the post.

Out of total annual world jute production of about 3.37 million tonnes, India yields 1.836 million tonnes followed by Bangladesh's 900,000 tonnes.

IJO officials said there would be a meeting for a fresh agreement under the auspices of a United Nations Conference on Trade and Development (UNCTAD) in Geneva in Novemberwhere the IJO might be given a fresh mandate to continue as a world body.

Jason said Bangladesh, which accounts for 70 per cent of world jute exports, should campaign for bringing India back for the survival of the organisation.

"The withdrawal of the two producing countries is sending a wrong signal to international donors (importers)," he said.

Jason said the importers contributed funds for research, development and promotion of jute fibre, derived from reed-like plants.

Although jute faced challenges from cheaper synthetics for packaging the natural fibre had great untapped potential, he said.

"I believe jute, which has been badly neglected, has tremendous potential. The IJO is trying to diversify the use of jute fibre," hesaid.

He said the IJO was using a $1.5 million project in Bangladesh to experiment with the use of jute plants for producing paper pulp.

"Jute could be an ideal substitute for timber for paper-making," he said. He added that the use of jute in making paper pulp wouldencourage production of jute twice a year.

"This will give a very good financial benefit to farmers," he said.

He said another $3.5 million project was underway to blend jute fibre with cotton for producing cheaper yarn. "This will supply cheaper yarn to thousands of handlooms being operated by poor Bangladeshis for making cloth," he said.