Govt moves to reopen textile mills thru PPP
With the goal of attracting local and foreign investment to modernise and reopen closed textile mills, the government has called for open international tenders for four out of 16 textile mills through public-private partnerships (PPP).
The move comes after the Bangladesh Textile Mills Corporation (BTMC) initiated a process of handing over two textile mills through PPP.
As per an announcement from the BTMC, some factories have been lying dormant for the past 30 to 40 years.
The mills were shut down after facing huge losses, according to officials of the BTMC.
However, a business leader questioned the move to open the mills in such a manner, raising doubts over its sustainability.
The four mills are: RR Textile Mills, Dost Textile Mills, Rajshahi Textile Mills and Magura Textile Mill. The tender process has already entered its second phase, according to a BTMC official.
The BTMC will be the major partner of the PPP. The project will be distributed as per the partnership agreement and the government will only issue the land for building infrastructure.
The private parties will implement the project, maintain the mills and market the textile products produced, the official said.
The expected bidders or bidding consortiums have been asked to submit their proposals by March 7.
The tenure of the partnership may be up to 30 years but could be renewed further.
"The tenders will be offered only for textile related activities, no options to run other activities," said Kazi Feroz Hossain, project director and general manager for commerce of the BTMC.
"We hope that each factory will generate around 5,000 jobs and that thousands of people will be able to benefit financially from it," he said, adding that the use of these mills will have a positive impact on the country's gross domestic product.
However, Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), criticised the PPP system.
"The PPP project for the state's closed textile mills is not a long-term solution because the government has imposed a complex structure and no 'real' or renowned institutions have come forward to invest here," he said.
"This is because no company can do any work according to their wishes," Khokon added.
Most of the mills' infrastructures have been abandoned or become obsolete and so, they could be demolished first but this contract is also contingent on the government's long-term viability.
But if the government changes, the overall system may change sooner or later.
He did, however, suggest that if any well-known companies or groups wanted to sign on for the partnership, they could do so.
Earlier in the first phase, the first two mills -- Ahmed Bawany Textile and Quaderia Textiles -- signed deals with Tanzina Fashion Ltd and Orion Consortium respectively.
In 2017, the cabinet committee on economic affairs approved the proposals of textile mills in the textiles ministry. The BTMC has 636.38 acres of land across the country that is perfect for building industrial units.
On October 12, 2014, Prime Minister Sheikh Hasina issued a directive for installing machinery at the mills which were closed down while visiting the Ministry of Textiles and Jute.
Of 16 textile mills, a total of 10 units are waiting for the next phase to call for tenders.
One of the ongoing projects is Magura Textile Mill, which was shut down several times after failing to make profits ever since its inception in 1985.
The mill authorities blamed a shortage of "running capital" and outdated machinery for the losses.
Another is RR Textile Mills Ltd, which was established in 1963. Renovating the mill, as well as Rajshahi Textile Mills and Dost Textile Mills, located in Feni, is estimated to cost about Tk 1,200 crore each.
The BTMC was established by Presidential Order No 27, 1972, under the Ministry of Textile and Jute, according to the BTMC website.
It began with 74 nationalised mills and expanded to 12 mills under the annual development plan between 1975 and 1985, according to the BTMC website.
Between 1977 and 2010, the government was forced to de-nationalize 65 mills due to globalisation and the free market economy.
Currently, the BTMC operates 23 mills in various zones across the country. However, a majority of them aren't making as much money as they could.
Contacted, Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, also expressed concern over the issue.
"When the government expects a major share of profits [at least 51 per cent], it may discourage investors as the government is only issuing land," he said, adding that it may be costlier for investors in 30 years because of the increasing cost of infrastructural development.
He also urged the government to consider small-and-medium investors instead of just giving the tenders to larger groups or consortiums, adding that the issuing phase-based textile mills may be a part of mini-economic zones or specialised areas.
He also termed it as alternative industrialisation.
However, Moazzem expressed concern over the fairness of tender processing, citing the previous bad history of mismanagement in this regard.