Chittagong
January 18th, 2018
Business / শিল্প-বাণিজ্য
Re-opening of closed jute mills: Some issues
August 15th, 20103,402 views
IT is heartening to note that the government had taken a move to re-commence the closed state-owned jute mills, including Adamjee Jute Mills -- the world's biggest. Some of the other closed mills are likely to be operated in partnership with private entrepreneurs as the government is not in a position to function all the shut mills on its own.

According to reports, the agriculture minister said recently that steps were being taken to re-start the bigger jute mills, so as to keep the government's promise of reinvigorating the jute sector, which has lost its glory in the post-independence years. She said the Adamjee Jute Mills would be reopened, if needed by the private entrepreneurs. It is expected that 8.4 million bales of jute will be produced in the country this season, Apparently, the government has decided to do everything possible to revitalise the past glory of jute, which was once upon a time known as, 'golden fibre of Bengal'.

However, Finance Minister Abul Maal Abdul Muhith said the government will not open all the closed jute mills, and there is no possibility of opening those mills, which were closed under 'golden handshake' scheme. The government has identified 27 jute mills that can be operated under the public sector. He said free flow operations of the jute mills under the corruption-driven Bangladesh Jute Mills Corporation (BJMC) were not possible. More so, the finance minister said that the government had already taken a few steps to re-commence the jute mills in phases in partnership with private businessmen. For the same, the government has made a budgetary allocation of Tk 300 million to encourage cultivation of jute in 28 districts for adoption of a technology called ribbon-retting, which is introduced by the Bangladesh Jute Research Institute to lessen wastage.

However, government's task of retrieving the lost glory of jute will not be an easy task as the steps involved from jute cultivation to its usage in both local and global markets, are yet to be handled with appropriate studies and examinations with respect to the current day circumstances.

For a healthy competition in the jute industry, the Jute (Amendment) Bill, 2010 was passed in the Jatiya Sangsad recently. Minister for Textiles and Jute Abdul Latif Siddiqui proposed for passage of the bill. Earlier on June 7, the minister introduced the bill in the House. In the bill, amendments in the existing Jute Ordinance 1962 have been proposed regarding the business of jute and jute products. Besides, new hope has been ignited amidst the industry stakeholders through the innovative jute genome sequence, discovered by a group of scientists.

The last Export Processing Zone (EPZ), was built at Adamjee Nagar on the ruins of now defunct Adamjee Jute Mills (AJM). The government took the decision to close down the AJM after it was incurring colossal losses. Mismanagement and corruption contributed to making the AJM a 'white elephant.' Even after floating of tender for several times for its sale as a mill, there could be found no taker. At last, the authorities took the painful decision of closing it down.

At a high level meeting, it was decided that the AJM premises would be turned into an industrial park. But the decision took such a long time - more than seven long years - to be implemented. Even the under-valuation of the machinery and properties of the closed AJM had caused a loss of Tk 104.50 billion to the government. The inventory committee has estimated the total price of the properties of Adamjee Jute Mills at Tk103.8 billion, but the valuation was not proper. The total value of the properties of the mill would be at least Tk 109.50 billion, according to the present market price, said an expert.

However, jute may still bring hope to this country, despite the decades of inefficiency and neglect, followed by dismissal of thousands of employees of the AJM that was ultimately closed down. In most developed countries like the US, the demand for eco-friendly products is on the rise and that of synthetic products on the decline. Jute products, being environment-friendly, thus have a huge potential in these markets. The only hitch is that unless the products are of high quality and unless consumers are environment conscious, it will not be possible to get a share of the market. Many other countries are producing jute products which makes it necessary for Bangladesh to catch up on quality improvement and diversification.

Under a $247-million loan agreement styled Jute Sector Adjustment Credit in the 1990s, the World Bank attached conditions of closure of 12 mills and 12,000 job cuts for the first instalment, closure of five mills, disinvestment of nine others and retrenchment of 8,000 workers for the second instalment and privatisation of nine mills for the third instalment. After reviewing the past policies and identifying the main causes of poor financial performance of mills, the global lender in its report laid out a strategy to create a 'viable jute industry' and claimed that such measures would result in enhanced productivity, more employment generation and expansion of the jute sector. But this did not happen. On the contrary, the productivity has declined, employment has reduced to less than half and the sector has shrunk instead of expansion.

During the announcement of 2002 jute policy, jute accounted for 8-12 per cent of the country's annual foreign exchange earning - a contribution which declined to only 4.0 per cent recently. No initiative was taken by successive government to change the state of the sector rather than attacks on the entire industry.

This is now evident that jute has reclaimed its honour as the second largest export item after nearly a decade, as increased use of natural fibre in the west and its diversified products ushered in a renaissance of the once-moribund industry. The Golden Fibre hit the jackpot this year, with the export of raw jute growing more than 40 per cent.

The revival of the jute sector is expected to help rejuvenate the rural economy directly and indirectly. What is needed now is formulation of a forward-looking jute policy with the close cooperation of, and concerted effort by, ministries of jute, agriculture, industry and textiles. Proper implementation of this policy may make the jute sector dynamic.