Economists and business leaders have said the decision to shut down public sector jute mills will help expand private jute business in the country and save the exchequer a huge amount of taxpayers' money.
Calling the government’s decision farsighted, they have mentioned that the 26 jute mills under the Bangladesh Jute Mills Corporation (BJMC) could be turned profitable if they are divested and run by the private sector.
They cited the case of Adamjee Jute Mills, which was turned into an export processing zone after being shut down in 2002.
Adamjee, which rendered 24,916 people jobless through its closure, now employs more than 62,200 people through different local and foreign firms as it is being run under the Bangladesh Export Processing Zones Authority (BEPZA ).
The government on July 2 announced its decision to shut down production at all jute mills under the Bangladesh Jute Mills Corporation (BJMC). It also announced a revamping of the mills under the Public-Private Partnership (PPP) initiative and vowed to clear the service benefits of all mills’ staff within the shortest possible time.
BJMC Chairman Abdur Rouf believes the saga of state –owned jute business will come to an end soon as per desire of the government.
“We are working relentlessly so that all dues of the workers at 26 mills are cleared at the latest by next month,” Rouf told Dhaka Tribune.
He said that after clearing the dues, the government would devise strategies on how to utilize the mills’ infrastructure and machinery, and the mechanism to resume the factories under the PPP initiative.
Former finance adviser to the last caretaker government AB Mirza Azizul Islam has welcomed the government decision.
He said these mills had been incurring huge losses and were heavily subsidized. All state owned businesses that made losses must be closed down, he added.
“They need to have a new vision,” Aziz remarked.
Centre for Policy Dialogue Research Director Khondoker Golam Moazzem said the decision to shut down production at state-owned jute mills would boost the jute sector remarkably.
He noted that developing the jute industry through the private sector was a right step, as the public sector jute mills had long been distorting the market and discouraging increased private sector investment.
“The BJMC had never tried to run its mills in a disciplined way. Rampant corruption, inept marketing strategy and large scale subsidy from the government made the mills unfit for doing business in a competitive way,” Moazzem said.
He said despite huge subsidies, 26 mills under the BJMC had failed miserably to emerge free of losses due to mismanagement, political appointments and lack of direction.
‘Though late, the decision on shutting down production will help private jute mills to grow,” Moazzem added.
Metropolitan Chamber of Commerce (MCCI) President Nihad Kabir has hailed Prime Minister Sheikh Hasina for her bold and right decision.
“I think the government has taken the right decision in shutting down the state-owned jute mills under the BJMC. I congratulate Prime Minister Sheikh Hasina for taking the brave decision while she was visibly deeply saddened (with the public sector jute mills). This decision in fact should have been taken a long time ago, and it would not only have saved the exchequer a huge amount of taxpayers' money, but the resources could have been used too for much more productive enterprises and many more, better paying jobs could have being created,” Nihad said.
“Adamjee Jute Mills is a point in case. Indeed, for us sentimentally it is a hard decision, but sometimes hard decisions must be taken in the interest of the country's economy and even the industry concerned, when its marginal return and utility to the economy is no longer positive. Also, the jute industry itself is not being closed down. There are excellent financially viable mills in the country in the private sector, and I am sure they will continue to do well.”
DCCI President Shams Mahmud told Dhaka Tribune, "We welcome this move by the government. It will bring about a level playing field in this sector. Textiles and Jute Minister Golam Dastagir Gazi has made a courageous and farsighted decision. Money which was given as subsidy can be used for aiding new market exploration and innovation.”
Former President of FBCCI Abdul Matlub Ahmad stated that the decision was a courageous and bold one on the part of the government.
“No government in the past ever dared to take such a huge step. They did not have the funds ready. Nor did they get offers to develop this sector from home and abroad. I believe this will solve a huge problem for the nation,” Matlub says.
“The Jute and Textile Minister is a businessman and knows how to make profits. He knows that the current methods can never bring profits and happiness for workers and the country. A huge amount of plans and strategies have gone into this so far,” added Matlub.
Former President of Dhaka Chamber of Commerce and Industry (DCCI) and Chairman of Chittagong Stock Exchange (CSE) Asif Ibrahim called the decision ‘a very good move’ by the government.
“These mills have been incurring losses and were heavily subsidized. All state owned businesses that make losses must be closed and efforts must be made to divest them towards the private sector,” said Asif Ibrahim.