News and Update: Bangladesh government works on leasing out state-owned jute mills

Khawaza Main Uddin, NewAge, September 30, 2007. Dhaka, Bangladesh

The government, fixated on the free market philosophy that business in public sector is not feasible, is going to lease out all the state-owned jute mills in phases to stop spending on them, jute ministry sources said.

The ministry has initiated a move to strike management outsourcing contracts with interested private parties based on production sharing to efficiently run the eight jute mills, instead of disinvestment.

‘It is no longer possible to run the jute mills in a cost-effective manner. The government cannot keep counting losses for years. We had better lease them out, rather than privatising or closing them,’’ a high jute ministry official told New Age.

The ministry is also working out a profit-sharing formula with the Bangladesh Export Processing Zones Authority through a committee to hand over about 300-acre compound of the now-defunct Adamjee Jute Mills for use by export-oriented industrial units, said the sources.

The public sector jute units under the lease-out process include four closed mills — People’s Jute Mills, Karnaphuli Jute Mills, Forat-Karnaphuli Carpet Factory and Qoumi Jute Mills. Four others are Alim Jute Mills, where a lay-off has been announced, Dhaka-Baghdad Jute Mills, RR Jute Mills and MM Jute Mills.

‘We would like enter into five-year production sharing contracts with private entrepreneurs with the eight mills as we cannot guarantee the operation of the mills after their privatisation. It is something new by way which we can avoid counting losses, but can keep the industrial units in operation and earn some money as well,’ the jute ministry official said.

The government earlier closed four jute mills, bringing down the number of mills under the Bangladesh Jute Mills Corporation to 18. Until the beginning of the privatisation of jute mills in 1983, the number of jute mills under the state ownership was 77.

On July 18, the jute and textiles and industries adviser, Geeteara Safiya Chowdhury, expressed her determination to run the remaining jute mills efficiently and declared a ‘jihad’ (crusade) for jute sector revival.

The government accordingly allocated Tk 150 crore to buy raw jute, but the finance ministry tagged a condition of ‘getting rid of four more jute mills’ to the release of the fund in line with lenders’ prescription to reduce the number of loss-making public sector entities, sources in the two ministries said.

In the past week, the Jute Mills Corporation, which incurred a loss of Tk 320 crore in the financial year 2005–06, announced a lay-off at the Alim Jute Mills on cash crunch that had paralysed its operation. The Dhaka-Baghdad Jute Mills, RR Jute Mills and MM Jute Mills are also facing crisis of working capital.

Asked why lay-off was announced at another jute mill, a high jute ministry official said the government found it unaffordable to either count losses from the operation of the overburdened mills or close them down while privatisation was also not a viable option. The jute ministry also revoked its earlier plan to constitute a national commission to map out an effective jute sector revival strategy.

Civic forums and rights organisations are campaigning for the revitalisation of the sector and criticising the government policy of reducing the number of such mills that harms the interest of workers, employees and jute growers.

A citizens’ body, Public Commission on Jute and Jute Industries, is now working on a report in this regard.

Further Resources:

Editoral by NewAge, April 23, 2007: Repression on jute mill workers

A state-owned conspiracy, By Tanim Ahmed and Tapos Kanti Das

Photo Essay on the jute factory workers at the Khalishpur industrial belt in Khulna: The Tragic Fibre, Photo: Andrew Biraj, Text: Tanim Ahmed

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