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The Financial Express

Jute mills under PPP arrangement

| Updated: July 11, 2020 22:38:44


Jute mills under PPP arrangement

The decision of the government to close all the state-owned jute mills under the Bangladesh Jute Mills Corporation (BJMC) and run them under Public Private Partnership (PPP) arrangement did come as a surprise at a time when the government is struggling to secure livelihoods of small income earners across the country. Shutting down the 22 state-owned jute mills means more than 25,000 workers have been added to the long list of income losers in this time of the Covid pandemic. Jute and textile minister in an online press conference said the government was going to shut down the public jute mills due to huge amounts of recurring losses year after year. He added that the mills would reopen under public-private partnership (PPP) within the next six months.

One can not miss the note of self-assurance in the minister's statement about how things are going to be reshaped in the near future. Given that the state-owned jute mills were a burden on the government thanks to the mismanagement of BJMC, there was hardly any choice but to look for an alternative management modality to help the jute industry ride out the long lingering crisis. But what makes the minister so optimistic to run the mills under PPP within months makes one wonder for the simple reason that this is an unusual time, and relying on PPP in the time of pandemic, which is yet to kick-start in the country in any form, sounds all but realistic.

The public jute mills were trouble shooters for long. It all traces back to the decision of the then government immediately after liberation to nationalise all jute mills-- close to eighty, including the world's largest jute mill -- Adamji Jute Mills. That the decision was not backed by a clear roadmap was evident in the years that followed. The result was gradual phasing out of the nationalisation scheme through privatisation-- a process that continued for decades until finally BJMC was left with 22 mills before the announcement of closure last week. Meanwhile, staggering amounts used to be routinely dished out from the state exchequer to rescue the mills but with no improvement at all. A local daily reports that in 2009, the government allocated Tk 52.41 billion to BJMC to revamp the sick industry so that the mills became self-sufficient.  However, within six years, the BJMC asked for Tk 7.0 billion to purchase raw materials and in 2018, it asked for another Tk 10.0 billion to pay workers' wages and other perks.

Clearly, the government had hardly any other option. Still, it is not understood how it plans to go for PPP for all the sick mills. In the past, there was an attempt for PPP under a project, but that did not work. Revamping the mills with massive BMRE (balancing, modernisation, rehabilitation and expansion) is not all. There has to be a strategic shift in raising productivity, product development including diversification, and of course, a dynamic and innovative drive in marketing. The fact that PPP scheme is yet to work in the country does not mean it will not, if thoughtful planning is in place along with an effective overseeing mechanism to ensure that private investors do not stray away from the plan.   

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