BTMC drafts divestment policy for its sick units

The Bangladesh Textile Mills Corporation (BTMC) has drafted a policy on the divestment of the loss-incurring state-owned textile mills, allowing foreigners along with local investors to buy those mills. The draft policy, to be finalised this week, will also allow the employees' associations of the mills to participate in the bids, official sources said. The BTMC drafted the policy to dispose of its 27 textile mills. Some of the mills have remained closed for several years after incurring substantial loss, and some mills are running under service charge system. "We will sit next week for finalisation of the policy," jute and textile secretary Ashraful Moqbul told the FE Thursday. He said the ministry had earlier planned to lease out the old textile mills, and a policy in this regard was under preparation. But, later the textile minister scrapped the plan, and suggested framing of a divestment policy for those mills. According to the draft policy, the government departments or agencies will get priority over other in purchasing lands of the mills for establishing industries. However, none will be allowed to set up housing projects in the lands of the textile mills. Buyers will have to sign a bond that they will not use the lands for other purposes rather than establishing industries. If any buyer does not follow the policy, the government will have the right to take back the mills and take legal actions against the buyer concerned, according to the draft. The total money, obtained from the sale of those mills, will be deposited with the bank account of the Ministry of Jute and Textile. After settling the issues, regarding debt of the mills, the money will be given to the public exchequer, it added. The policy mentioned that a fair, accurate and rapid privatisation policy will play a pivotal role in attracting investments from home and abroad. An increase in investment will also help exchange of skills and technologies. The policy also said the country has to bear huge financial burden due to the continuous losses, incurred by the textile mills. Privatisation of the mills will help the government to discontinue payment of subsidy. Officials said the government has very bad experiences regarding leasing out jute and textile mills. Once the sale policy is framed, the mills will be transferred to the private sector through the Liquidation Cell of the ministry, instead of the government's Privatisation Commission. According to the BTMC website, eight textile mills -- Amin Textile-2, Dost Textile, Darowani Textile, Sundarban Textile Unit-1 and Unit-2, Dinajpur Textile, and Bengal Textile Unit-1 and Unit-2 -- are now in operation. The mills, being run under service charge system under the management of BTMC, incurred a total loss of Tk 2.283 million in November 2010, and Tk 1.971 million in October. Besides those mills, 11 other state-owned textile mills are fully or temporarily closed. The mills incurred a total loss of Tk 3.202 million in last November. Besides, Khulna Textile Mills have been laid off to set up the proposed textile village. Jute and Textile Minister Abdul Latif Siddiqui recently informed the parliament that the state-owned textile mills incurred a total loss of Tk 5.24 billion from 2001-02 fiscal to 2009-10 fiscal.