In an exclusive interview with the Dhaka Tribune‘s Niaz Mahmud, Chief Executive Officer (CEO) of the Business Initiative Leading Development (BUILD) Ferdaus Ara Begum discusses the stopping of production at state–owned jute mills. BUILD is a voice of the private sector supported by the three leading, pioneer chambers— Dhaka, Chittagong and the Metropolitan Chamber of Commerce and Industry (DCCI, CCCI and MCCI)—in the country.
The government recently decided to shut its 25 state-owned jute mills under the Bangladesh Jute Mills Corporation (BJMC). Do you think the decision will help the sector?
In some reports, it appeared that the government has a plan to modernize the age-old mills, some of which has been established in 1954 and the present government has taken it up in 1972, so it needs modernization. But we have not heard any plan from the government where there could be a detailed discussion among relevant stakeholders before taking the decision. We were of course aware that these jute mills were a burden for the government for recurring losses.
We have in front of us the example of transformation of Adamjee Jute Mills to Adamjee Export Processing Zone as the seventh EPZ in the country. So far, we have heard about 200 plots prepared and a number of foreign and local investors investing in this EPZ.
In the meantime, private jute mills are in operation and exporting jute goods from Bangladesh. If the government plans comprehensively to redesign the sector in a better way, it could contribute to the economy and generate more employment.
But the past experiences of privately-run jute mills are also not very promising, with many having closed down due to heavy financial losses. What will be the best result, if the 25 mills reopened refurbishing these with modern technologies under arrangements like PPP?
There are good examples in our neighbouring countries, in India there are no government-owned jute mills and the government creates an environment where the private sector can run efficiently. Some policy supports like strengthening concerned institutions and increasing better storage capacities are some of the support needed.
Internationally a favourable environment has been created for jute, especially in the post-Covid situation; demand for green products will increase. Some countries have banned plastic materials for food products, in order to grab these markets, the interest of jute and jute goods have to be protected.
The machineries of BJMC mills were in need of modernization for a long time to produce diversified products, which could not take place so far. Now with new and innovative models some good progress is foreseeable if planned activities are implemented properly.
In order to bring international standards to the quality of products produced from jute, there is a need for strong research.
There is limitation in the private sector mills but there is a need for a concerted effort to start a new journey for this key sector.
What were the major faults and weaknesses of BJMC in running the mills?
There was serious mismanagement and corruption. The people engaged for management were inexperienced, there were a number of ad-hoc arrangements without fully curing the problems. There was a lot of discussion to address these issues for a long time but no serious steps were taken to resolve the root cause of the problems. Timely steps could resolve the problems, but as usual delay in resolving the problems aggravated the situation.
How will the decision affect the government, jute sector, jute farmers, jute exports, and mill workers?
The announced amount to pay the bills of the workers will be a burden for the government, but the announced plan if implemented can reduce the recurring losses. The contribution of BJMC to the export was not so much; it was about 8-9%. If the competitiveness of the private sector jute mills can be improved then there is a possibility to offset the loss. But a supportive and enabling policy would be required.
Jute farmers may face a problem, but in the past also there were delays in getting their prices from government-owned jute mills, and farmers had to sell their goods because they could not store it properly. A comprehensive plan is required to mitigate the loss.
A total overhauling of the sectoral policy would be helpful towards modernization with updated technology. Strong home-based R&D can help to diversify the use of jute.
Some of our local scientists have tried in the past to do some research, but utilization of these research for commercialization of jute products has not happened.
