Infusing a new dynamism into the jute sector
Thursday, 17 July 2008
THE rising demand for jute products in the overseas markets, as being environment-friendly, and also for other reasons, has been indicating a way for the recovery the country's jute industry for a while. The jute mills in neighbouring West Bengal in India have been exploiting the optimistic developments and boosting their production for both their expanding domestic market and the favourable overseas one. The gains to be made from some higher exports have been also experienced, of late, by the jute mills in both the private and the public sectors in Bangladesh. But these experiences are not yet as promising as the case with the ones in the neighbouring country.
Thus, the question naturally arises why Bangladesh with its position as the producer of the finest quality jute in the world is still not yet in an advantageous position to reap these opportunities of manufacturing jute products and making greater gains from exporting the same under the present favourable externalities. The answer needs to be searched in the mismanagement, corruption and other ills that have been plaguing jute industries in the country, particularly those in public sector. Many state-run jute mills in the public sector were closed down in the face of large accumulated losses. Some of these were later privatised. But the privatisation experience, for many reasons, also was not a happy one on the whole. The privatised mills in some cases failed to maintain production at a reasonable level or to meet gradually the liabilities acquired through change of ownership.
In this backdrop, the government has, of late, taken a new move to resume production in the closed down public sector jute mills. The new model is one of leasing out the management of running the mills to a private party for a period with option for extension of the lease period. The lessees would not acquire the past liabilities of the mills that would remain with the government. But they would be under an obligation to operate the mills efficiently and pay a stipulated amount to the government during each year of the lease period. They would also be expected to make good use of the advisory and other expertise, whatever it is, of the public sector corporation which was responsible for their functioning in the past. Thus, under this model, the People's Jute Mill at Khulna resumed production the otherday under private management. The relevant ministry is planning to lease out four such closed down public sector jute mills fairly soon in a bid to resume production in them. Gradually, on finding the new model satisfactory, it may be extended to cover all the closed down mills or loss-making ones in the public sector.
The new system is really one of public-private partnership. It promises to be more fruitful than the earlier premature bids at complete privatisation from the outset. Some of the erstwhile privatised jute mills could not operate effectively and had to shut down operations in the face of unabated losses, because of various unfair unconditionalities and also for reasons of other lingering problems. Meanwhile, a good number of the newly set-up jute mills in the private sector have been operating reasonably well because of the entrepreneurial skill of their owners and the productive efficiency of their workforce.
Under the circumstances, the lease model which is being introduced for resuming operations of the closed-down public sector jute mills is expected to provide an answer to the long-lingering problems being faced by most of public sector jute mills by helping them to reap the benefits of both private management and government's continuing support to make them viable through various ways. The relationship between the two sides can be a complementary one leading to profitable or gainful production in the mills. While welcoming this model, all concerned would express the hope that both sides would be sincere and watchful to address effectively any operational problems that may crop up after its introduction at People's Jute Mill and the ones to come under similar arrangements imminently.
Thus, the question naturally arises why Bangladesh with its position as the producer of the finest quality jute in the world is still not yet in an advantageous position to reap these opportunities of manufacturing jute products and making greater gains from exporting the same under the present favourable externalities. The answer needs to be searched in the mismanagement, corruption and other ills that have been plaguing jute industries in the country, particularly those in public sector. Many state-run jute mills in the public sector were closed down in the face of large accumulated losses. Some of these were later privatised. But the privatisation experience, for many reasons, also was not a happy one on the whole. The privatised mills in some cases failed to maintain production at a reasonable level or to meet gradually the liabilities acquired through change of ownership.
In this backdrop, the government has, of late, taken a new move to resume production in the closed down public sector jute mills. The new model is one of leasing out the management of running the mills to a private party for a period with option for extension of the lease period. The lessees would not acquire the past liabilities of the mills that would remain with the government. But they would be under an obligation to operate the mills efficiently and pay a stipulated amount to the government during each year of the lease period. They would also be expected to make good use of the advisory and other expertise, whatever it is, of the public sector corporation which was responsible for their functioning in the past. Thus, under this model, the People's Jute Mill at Khulna resumed production the otherday under private management. The relevant ministry is planning to lease out four such closed down public sector jute mills fairly soon in a bid to resume production in them. Gradually, on finding the new model satisfactory, it may be extended to cover all the closed down mills or loss-making ones in the public sector.
The new system is really one of public-private partnership. It promises to be more fruitful than the earlier premature bids at complete privatisation from the outset. Some of the erstwhile privatised jute mills could not operate effectively and had to shut down operations in the face of unabated losses, because of various unfair unconditionalities and also for reasons of other lingering problems. Meanwhile, a good number of the newly set-up jute mills in the private sector have been operating reasonably well because of the entrepreneurial skill of their owners and the productive efficiency of their workforce.
Under the circumstances, the lease model which is being introduced for resuming operations of the closed-down public sector jute mills is expected to provide an answer to the long-lingering problems being faced by most of public sector jute mills by helping them to reap the benefits of both private management and government's continuing support to make them viable through various ways. The relationship between the two sides can be a complementary one leading to profitable or gainful production in the mills. While welcoming this model, all concerned would express the hope that both sides would be sincere and watchful to address effectively any operational problems that may crop up after its introduction at People's Jute Mill and the ones to come under similar arrangements imminently.