The New Nation - Internet Edition

Syful Islam

State-run jute mills are heading towards closure as most of the concerns are making loss over the years due to less utilisation of their full production capacity and many other factors, informed sources said.

On an average the jute mills are making loss of Tk 250 crore each year. During the last five years the mills incurred loss of Tk 1,200 crore, sources said.

Experts said, mismanagement, government's reluctance to provide fund for timely jute purchase, stoppage of raw jute procurement, using of old model machineries of 1960s and the burden of accumulated loans results in the loss making of the mills.

Out of 18 BJMC-run jute mills, 14 are now in production while three others are closed due to fund crisis and the remainder-stopped operation as the government had decaled it laid-off.

The Bangladesh Jute Mills Corporation sought Tk 302 crore to procure jute for the mills but got allocation of only Tk 150 crore from the government this year. With the allocation the BJMC bought raw materials for 14 jute mills.

The jute mills stepped in a bank debt of Tk 2,000 crore. A BJMC official said the jute mills already have paid the banks more than Tk 2,000 crore as interest of the loans. The jute sector have no chance to revive unless the government frees the jute mills from the long standing debt and arranges new working capital, he said.

There was a consensus that the state-run jute mills will get Tk 138 crore as working capital on bank client relationship but did not get as those failed to pay the arrears.

Despite the jute mills are facing shortage of working capital and are incurring loss ever year the banks each year are cutting 25 per cent of the export earnings as the interest of previous loans. The average export earnings of BJMC-run jute mills now stands at Tk 6,00 crore.

An official of the BJMC preferring anonymity said balancing, modernisation, rehabilitation and expansion (BMRE) of the jute mills became necessary as those were running with machines of 1960s. These machines are not capable to produce goods up to the present day demand, he said.

Last June the Government closed down four jute mills in line with the prescription of the World Bank. Those are People's Jute Mills in Khulna, Kawmi Jute Mills in Sirajganj, Karnafuli and Forat Karnafuli jute mills in Chittagong. The Government also closed 35 jute mills between 1980 and 1985. With the World Bank and IMF prescription the government closed 10 jute mills from 1992 and 1996. The government terminated 30,000 jute mill workers in 1994 to get some loans from the World Bank.

Meanwhile, when the Bangladeshi jute industry is dying due to losses, new investments in Indian jute sector is registering higher over the year. When the multilateral lending agency World Bank is pressing Bangladesh for closing the jute mills here, it is providing new loans to start new jute mills in India. The double standard policy of World Bank and the IMF is being criticised by the local economists and civil society organisations.