Final nail in jute mills’ coffin?

Three years after the closure of state-run jute mills, Bangladesh Jute Mills Corporation (BJMC) is still failing to attract investors to re-open its jute mills.

Now, BJMC is leasing out the mills to textile mills and RMG factories.

Worker leaders and industry experts are seeing this move as the dead end of state-run jute industries from which reopening of the jute mills may never be possible.

BJMC has devised such a plan that would leave hundreds of thousands of jute mill workers permanently unemployed as there is no doubt that these mills will ultimately be taken over by the non-jute industries.

— Ruhul Amin Coordinator of Sramik-Krishak Oikya Parishad

BJMC took the initiative to lease out 19 of its jute mills in 2021. So far, only five jute mills went into production under private management.

Many manufacturers who completed the bidding process and were given notification of awards (NoA) ultimately backed down from taking over these mills.

For instance, on April 27, 2021, BJMC published an expression of interest (EoI) to lease out 17 of its jute mills. BJMC published NoAs against five jute mills. In the end, two bidders backed down and their NoAs were cancelled as they could not pay the security deposits.

On February 7, 2022, BJMC published a second EoI to lease out 13 of its mills but none of the mills could start their operation. Although the corporation published NoA to seven of its bidders, five of them backed down in the end due to fund shortage and their disagreement with the ToR. Only two bidders applied for an extension to pay the security deposit.

Due to a similar experience in the 3rd EoI, BJMC published another EoI on May 16 to lease out nine of its mills and added that RMG manufacturers now can also compete in the bidding process.

According to BJMC officials, despite the repeated publication of EoIs, only three of its mills went into full production under private management. The leasing process could not be finalised against six to seven mills as the bidders have not paid the security deposit yet. Consequently, these mills could not be included in the fourth EoI.

Due to the economic situation all over the world, private jute mills and jute goods exporters are also struggling. Under these circumstances, we received a policy decision from the higher authority to lease out the mills to non-jute manufacturers.

— Golam Kabir Chairman of BJMC

According to the ToR, successful bidders have to deposit 36 months' rent as security money, which has proven too high for some bidders. For instance, Saad Musa Group, a Chattogram-based conglomerate was supposed to pay around Tk 15 crore to finalise the leasing process of Hafiz Jute Mills.

Initially, the group paid a deposit of Tk 50 lakh but could not pay further. As a result, their NoA had to be cancelled by BJMC.

The experience was the same for Mimu Jute Mills Limited who wanted to lease the Crescent Jute Mills, the largest jute mills in the country in terms of area and production capacity. However, the initiative failed ultimately.

Mohd Shafiqul Islam, chairman of Bangladesh Jute Goods Exporters' Association, said, "The terms and conditions for leasing these mills are so strict that most of us, who work exclusively on jute, cannot afford to take them. We have to invest a lot of money just to maintain the huge property of these mills."

"Again, the machineries of these mills are very old and cannot be used anymore. It will take a lot of time just to remove these machineries and make the establishments operable," he added.

Md Abul Hossain, chairman of Bangladesh Jute Mills Association (BJMA) said, "We have tried several times but ultimately we get rejected as BJMC expects an impossible price for quotation."

Leasing the mills to jute-based manufacturers is our priority. However, if we do not get capable bidders from the jute sector, we would like to open the door to textile and RMG manufacturers who are also under the purview of this ministry.

— Abdur Rouf Secretary of Ministry of Jute and Textile

"We could have taken these mills if we could take bank loans on a reduced interest rate. However, we also do not get any preference in getting bank loans. As a consequence, only very large groups of industries, that can spare millions of dollars, will be awarded ultimately. In this way, these mills might be taken over by the non-jute sector. Considering the current state of the jute industry, very few mill owners are in a position to take these mills under the current terms and conditions," added Hossain.

However, BJMC says jute mill owners are largely uninterested to invest in these mills.

Golam Kabir, chairman of BJMC, said, "We tried a lot to lease the jute mills to private jute mill owners and jute product manufacturers but the response was not satisfactory. The recent EoI is the fourth attempt to lease out these mills to the private sector."

"Due to the economic situation all over the world, private jute mills and jute goods exporters are also struggling. Under these circumstances, we received a policy decision from the higher authority to lease out the mills to non-jute manufacturers," he added.

Abdur Rouf, secretary of the Ministry of Jute and Textile, said, "Some of our mills have already gone into production and they are producing jute-based products. It is not true that we are leasing all our mills to non-jute industries. "

"Leasing the mills to jute-based manufacturers is our priority. However, if we do not get capable bidders from the jute sector, we would like to open the door to textile and RMG manufacturers who are also under the purview of this ministry."

"At present, our priority is to lease out these mills to the private sector at the soonest possible time. As soon as we can lease out these mills, we shall be able to generate employment for the public and revenue for the government," he added.

Nevertheless, workers are seeing this step as a direct betrayal of the promise of reopening the state-run jute mills that were made in 2020 while shutting down the mills.

According to Ruhul Amin, coordinator of Sramik-Krishak Chhatra-Janata Oikya Parishad, "BJMC has devised such a plan that would leave hundreds of thousands of jute mill workers permanently unemployed as there is no doubt that these mills will ultimately be taken over by the non-jute industries."

"These workers have been waiting for more than three years, as BJMC promised that they would reopen the factories and re-employ the former workers. They are skilled in this sector and many of them will not find suitable employment elsewhere. The new EoI is just sheer treachery with these impoverished workers," he added.