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State-run jute mills to be privatised

Published : Wednesday, 3 March, 2021 at 12:00 AM  Count : 252

State-run jute mills to be privatised

State-run jute mills to be privatised

In a bid to modernise and reopen state-run jute mills under private management, the government has decided to lease out all its 25 jute mills to the private sector. Initial plans are to reopen them either through joint venture, public-private partnership - or a government-to-government (G2G) agreement. According to BJMC and ministry sources, it has been decided to lease out the mills for a period of 5 to 20 years through an open bidding system.

However, it was not until July of last year that the mills were shutdown because of incurring heavy losses and excessive production costs, laying-off more than 50,000 workers in three categories -- permanent, temporary, and substitute.

We believe, the process of privatising state-run jute mills has been long overdue. Not that the jute sector would revive its lost glory, the moment it comes under the private sector. But our private sector has long been hailed to launch and run several business ventures successfully.

Simultaneously, without a long-term contract, at least for 99 years, investing in these mills will not be feasible. Most of the mills and their equipments have become dilapidated to such degree that an investor will have to start from scratch. Moreover, accessing bank loans, importing and installing new machineries is time consuming matters. And if everything goes in the right direction, then the lease term will end just by the time when the investor will start drawing profits.

The point, however, had the government decided to use the mill premises lands for other industries, many Bangladeshi and foreign investors would have come forward. Since, the plans are to reopen and turn jute mills profitable, there must be an option open for foreign jute companies to participate in the bidding process under a joint venture scheme.

In terms of clearing piled up loans, before leasing out these mills, the government must clear all unsettled financial issues of the mills. Otherwise, there will be legal difficulties in availing bank loans , though the BJMC chairman has positively stated that the government will clear all dues by the next fiscal year. Additionally, it will be mentioned in the contract, that the investors will not be liable for unsettled financial issues.

One understanding is clear for sure, not much progress will take place until some months will have elapsed of the next fiscal year. Until then policy makers, industry experts and our private sector businessmen will have enough time to mull over win-win contracts to reopen and restore the closed jute mills.

The need of the hour is to hold a series of dialogue sessions between all stakeholders.

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