Public sector jute mills are in a bad shape. Their production has gone down for want of raw jute according to their needs. The traders are not willing to sell raw jute on credit to the Bangladesh Jute Mills Corporation (BJMC). Some of these mills may have to be closed down for want of raw jute. Wages and salaries of labourers and staff are in arrears. Therefore, there is labour unrest in mill areas. The BJMC has a legacy of past liabilities, many irregularities and corruption. Main problem of the mills now is the procurement of raw jute. They have asked for government cash support to buy raw jute. Preparations are being made to purchase raw jute at the beginning of the next jute season.
During 2011-12 fiscal year, a quantity of 2.09 million quintals of raw jute was purchased. In 2012-13 fiscal, the quantity purchased stood at 1.47 million quintals. During the current year, the target of hessian production was at 40,365 metric tons as against net production 19,387 metric tons. Shortfall in production was 52 per cent. Sacking production stood at 88,896 metric tons as against the target of 1,07,059 metric tons. Carpet production was 4,234 metric tons compared to the target of 6,505 tons. This shows the falling trend in production for want of raw materials.
The BJMC mills have a total payment liability of Tk 7,000 million. This is in addition to their past liabilities. In the current year, there is no allocation for buying raw jute. The Jute Secretary sent a letter to the Finance Secretary for Tk 6,000 million in last November for buying raw jute and paying for other liabilities. In February this year, he again requested for Tk 2,000 million for buying raw jute. No reply or money was received by the BJMC.
During 2012-13 fiscal, Tk 1,000 million was provided in the budget for buying raw jute. That money was released in two instalments but not in the right time. In 2011-12 fiscal, Tk 2,000 million was released in September and not in July which is the season for buying raw jute from the farmers. The State Minister of Jute is lobbying with the Finance Minister for releasing money for the current jute season.
Political instability is prevailing in many importing countries. As a result, export orders are not available. This year, India has stopped import of jute from Bangladesh. There are many unpaid bills from India, Iraq and Sudan. The BJMC has submitted a project to the Jute Ministry for Tk 10,840 million for rehabilitation of jute mills. As a matter of principle, the BJMC must not ask for government money to meet the cost of running business. They should arrange their own funds. The private sector jute mills are not coming to the government for fund allocation for purchase of raw jute.
In spite of best efforts, it was not possible to stop the losses of the BJMC. It has been mentioned that the Corporation can not buy jute in right time. Good quality jute can be bought in July at reasonable prices. It is said that private sector jute mills are making profit on a regular basis but the public sector ones are incurring loss. There are many irregularities in jute purchase centres of the BJMC. Public sector mills have to learn from its private sector counterparts.
Although the government has spent a huge amount of money from the public exchequer from time to time to salvage the jute sector, the outcome is disappointing. The BJMC can never be a viable organisation with loss-making jute mills. There are 130 jute mills in the private sector. They are running their mills without coming to the government for financial support. They come to the government for different kinds of support. The Bangladesh Jute Association (BJA) has urged the government to provide bank loans at 8.0 per cent interest and a cut in advance income tax deducted on the value of exported raw jute.
The BJMC is losing money because of falling exports. They can not buy raw jute in time for want of funds. The government is reluctant to give them more money after it has taken over the past liability of the BJMC. The Corporation must find its own resources to buy raw jute in the way the private sector jute mills do. Jute goods worth Tk 7.0 billion have been piled up in the BJMC mills, which is a big burden.
The BJMC project for rehabilitation of jute mills is a non-starter. This project was there for a long time in different shapes. The government perhaps is not in a mood to make capital investment in the sick jute sector. The BJMC may run the viable mills only and other mills may be considered for privatisation. As the government has no appetite for privatisation, the loss-making mills may be auctioned for disposal.
In the economic survey for 2013, the loss of the BJMC for the year 2012-13 was estimated at Tk 3.80 billion. The BJMC's loss has been the highest among the state-owned enterprises. The mills are running with old machineries for which the productivity is low. The Jute Commission could not find a viable solution for the jute sector. The next budget may address the problems of the sector in a comprehensive manner.
Jute was once known as the golden fibre but after liberation of Bangladesh we could not sustain its glory. Wholesale nationalisation of all jute mills is blamed for the ills of this sector. It is now a burden on the economy. Businessmen are not willing to sell jute on credit to the BJMC as they have no confidence in the organisation. The traditional policy on jute is not successful. We have the example of the private sector before us. Guidance of the private sector may be useful for a solution.
The writer is an economist and columnist.
jamaluddinsyed23@ yahoo.com.au
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