There are difficulties in running state-owned jute mills although the private sector ones are doing well and making profits. Exports of jute items developed by privately-owned jute mills are on the rise. Sustained by taxpayers' money, the publicly-run ones are incurring losses. The main reasons attributed to losses in government-run mills are mismanagement in buying raw jute and corruption. It is seen that jute is procured in these mills late in the season and at a higher cost.
Fund shortage is yet another problem and funds are not made available in time. Productivity in government-run mills is low with the cost of production being high because of old machineries in those mills. Wages of workers are also high in state-owned jute mills compared to the private sector mills.
The public sector jute mills often fail to pay wages to the workers. Unsold products are seen being dumped in godowns. Bangladesh Jute Mills Corporation (BJMC), during every jute season, has to seek fund from the government. Workers were reported to have shut down several mills protesting delay in payment of outstanding wages. Jute mills had a loss of Tk 4.81 billion during the year 2016-17. The mills have been incurring losses since the country's independence. Some jute mills were privatised in the past in an attempt to reduce the government's financial burden.
Awami League in its election manifesto in 2008 declared to make the country's jute sector sustainable. After coming to power, the party made plans to make the state-owned jute mills profitable. The incumbent government sanctioned Tk 52.41 billion to address the dues of Bangladesh Jute Mills Corporation (BJMC) with the understanding that further financial support would not be required. A memorandum of understanding (MoU) was also signed between Ministry of Jute, BJMC and Ministry of Finance. Thereafter, the government took over some private sector jute mills like Khalishpur Jute Mills, Daulatpur Jute Mills, Karnafuli Jute Mills and Forum Carpet Factory. But the scheme did not work and losses continued to pour in although these mills were made operational.
BJMC again started approaching the government for funds. The Corporation has requested the government this year for an allocation of Tk 10 billion to purchase raw jute. CPD's Distinguished Fellow Mustafizur Rahman said it was evident that the government was unable to run the mills. In order to make the jute mills profitable, number of workers and technology need to be made rational. Products should be made depending on demand. The entire system needs to be reformed. Jute mills were found buying jute when the price goes higher. Jute products remain unsold because of the inefficiency of marketing department.
In a government jute mill, 90 workers are required to produce one tonne of sacking. But in the private sector mills, only 25-30 workers can do the same job. The government said it is running jute mills at loss in the interest of the workers. According to the BJMC Chairman, high wages for the workers and excessive number of workers are the reasons for loss of the public jute mills. Labour leaders are saying that good management of these mills would reduce the loss considerably.
The government has now stopped privatisation. The Jute Commission prepared a report amid high hopes, but the report was never made public. According to the Finance Division, inefficiency, mismanagement and irregularity are mainly responsible for turning BJMC into a losing concern. In fact, BJMC has been incurring losses since the liberation of this country.
Some jute mills were closed for incurring losses, but the present government has resumed production in those mills. Labourers and other people concerned were happy about the decision. But now the mills are selling lands and properties to keep their operation going. Following an instruction from the Prime Minister, a total of 10.33 decimals BJMC land in Gulshan area was sold.
It is not realistic that BJMC will continue to incur losses and the government will keep pour in money. BJMC will have to run the mills with its own resources. The mills under BJMC have to reduce cost and find out ways to earn money. People responsible for making losses will have to be brought to book.
The Finance Minister recently said BJMC should be abolished. The Prime Minister, while inaugurating a three-day multipurpose jute products fair recently in connection with observance of National Jute Day, called for making the jute mills profitable. The Prime Minister also called for unlocking the huge potentials of jute and jute products. Good days have come back for jute mills. But the mills need to be modernised. Diversified design efforts should be there to help the sector grow. Local production of jute seeds is also needed to reduce dependence on low quality imported seed.
Syed Jamaluddin is an
economist and columnist.
