The government has turned down a proposal of the ministry of textiles and jute seeking Tk 3.0 billion for the Bangladesh Jute Mills Corporation (BJMC) for buying raw jute and providing gratuity to its workers. A finance ministry official said that the BJMC asked Tk 2.0 billion for procurement of raw jute and Tk 1.0 billion for paying gratuity to workers and officials.
The BJMC's claim for money is not new. Every year it moves the finance ministry for fund allocation. The corporation failed to meet the conditions with respect to an earlier financing arrangement.
The BJMC is supposed to meet its operating costs from its own earnings. The finance minister has recently suggested abolition of the BJMC. The government has finally realised that the corporation is not a viable organisation.
The finance minister said that the BJMC mills are supposed to be run under public-private partnership arrangement. He added that the BJMC controls the mills and creates barriers to jute procurement in time. It often delays various positive activities of the mills. The BJMC mills are passing through a hard time due to fund shortage and are incurring heavy losses. Performance of the mills is unsatisfactory.
About 35,000 new workers have been appointed in the BJMC mills. Of them, 22,000 are surplus. The corporation is spending Tk 2.50 billion annually for these workers. Most of them are not properly trained. Excess labour and old machinery are responsible for high cost of production. Production cost is Tk 1,30,000 per ton whereas selling price is Tk 80,000/90,000. The loss is to be owned by the BJMC.
This year the private sector jute mills could not fulfil their export target because of slowdown in world market. Crisis continues in the Middle East for a long time. At present, 45 private sector jute mills are closed. Many others are on the way to closure. The government is giving money to the BJMC to keep its mills running. But who is going to assist the private mills?
The ministry of textile and jute has taken steps for overall development of the jute sector, particularly for reducing losses and increasing production of jute products. Twelve task forces have been set up to oversee the public sector jute mills. These task forces will inspect the jute mills, look into demand production and stocks, and ensure transparency of income and expenditure as well as accountability. Each task force will have 25 members from the level of assistant secretary to the level of additional secretary. They will also implement the government order for packaging different products with jute bags. The BJMC will provide all assistance to the task forces.
According to jute directorate, raw jute export declined by 26.37 million bales during the last five years compared to previous five years. From 2005-06 to 2009-10, jute export stood at 111.08 million bales whereas it stood at 84.37 million bales from 2011-12 to 2014-15. Because of import restrictions by the Indian government, export of raw jute and jute products to India declined.
According to the Bangladesh Jute Association (BJA), the government has so far subsidised the BJMC jute mills to the extent of at least Tk 55 billion. But private sector jute mills have hardly received any support. As a result, 45 private jute mills out of a total of 147 have been closed down. About 80 per cent of jute exports are made by the private sector jute mills. Jute exports have declined due to rise in use of plastics, turmoil in the Middle East, slowdown in Eurozone and restriction on imports by India.
In order to boost the sales of jute products locally, the government has decided to make the use of jute bags compulsory for paddy, rice, wheat, fertiliser, maize and sugar by November 30. The government has also banned export of raw jute for one month. Raw jute exporters are in difficulty because of this ban. According to the Bangladesh Jute Association, raw jute is exported to some 30 countries. Bangladesh is going to lose some of these markets. Mill owners are happy because of this decision.
The ban on export of raw jute is intended to ensure its timely availability in the domestic market and to implement use of jute products for packaging
The writer is an economist and columnist
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