China seeks to invest in 24 BJMC mills

The government of China has sought to invest nearly US$ 1.0 billion in modernisation and repair of 24 mills under the Bangladesh Jute Mills Corporation (BJMC) under a government-to-government (G2G) arrangement.

The state-run China Northeast Electric Power Engineering Company (NEPC) sent a letter to Finance Minister AMA Muhith in this connection last month.

"We learnt that China's NEPC had given a proposal to the finance minister. But no initiative is still visible," a high official of the ministry of finance (MoF) told the FE.

"It is a long process. The government will take a decision in this connection on assessment of the advantages and disadvantages of the proposal," he added.

However, despite attempts, Major General (retd) Humayun Khaled, chairman of the BJMC, could not be reached on his phone for comments.

The BJMC is planning to modernise its 23 jute mills and one non-jute mill to produce eco-friendly jute goods, according to the letter.

The letter reads: "We came to know that for modernisation of the 24 mills under BJMC, Bangladesh government with the assistance from the Asian Development Bank (ADB) has conducted a study."

"We know Bangladesh's history about jute. Due to lack of improvement in the production line over the decades, Bangladesh government-owned jute mills are facing a problem. To regain fame of jute modernisation is very essential," the letter says.

"On this backdrop, we, China NEPC through its ground team has recently identified the project, found it as an interesting one to develop (modernisation of 24 government-owned jute mills) through using Chinese government's finance, maybe, G2G finance," the letter has mentioned.

"We are confident that we would be able to arrange financing of US$ 800-900 million to revamp the project. This is in addition to government of Bangladesh's own budget allocation or resources," the letter adds.

"We are pleased to inform you that to raise financing for the project, we will utilise Chinese government fund, in combination with a part of its low interest-based commercial loan funds/soft loan funds," the letter further says.

However, according to the letter, it would be mostly Chinese EXIM fund, to be repaid in 12 years plus a grace period of two years.

The NEPC mentioned in the letter that the funds proposed to be made available ultimately proved to be reasonably competitive compared to other sources of credit.  

The Chinese firm has requested for a Memorandum of Understanding (MoU) between the government of Bangladesh or authorities concerned and the EXIM/NEPC.

The NEPC has also requested the finance minister to expedite the process and start the work within the next six months.

The industry needs to improve quality of finished goods by using modern machinery and technology. To keep up with the invention of modern technology and maintain the quality of product and productivity, there is no alternative to modernisation, sources say.

The modernisation will help produce eco-friendly jute goods of international standard by increasing efficiency of the workforce and the capacity of mills, they observe.

The BJMC has long been facing financial and other problems in the absence of modern machinery and technology at different mills of it across the country, industry insiders say.

The BJMC is managed by a board of directors headed by its chairman. Now the organisation is operating 26 mills (including 3 non-jute mills). There are 7 mills in Dhaka zone, 10 mills in Chittagong and 9 in Khulna zone. The BJMC has two zonal offices.