The government has floated an international tender to lease out 25 state-run jute mills for a period of five to 20 years even though industrialists seem uninterested in the short-term deals. The tender, issued by Bangladesh Jute Mills Corporation (BJMC) on April 27, aims to encourage both domestic and foreign entrepreneurs to join the jute industry through an open bidding system. The jute mills may open up scope for Foreign Direct Investment FDI and new employment opportunity for the unemployed youths.
The government closed all state-run jute mills on 1 July last year, because of heavy losses and excessive production costs, laying off more than 50,000 workers in three categories — permanent, temporary and substitute. The jute sector’s contribution to the economy is expected to increase due to the productivity and management strategies implemented by private owners. The government said this move will create new employment opportunities for able and skilled workers.
After signing lease agreements, the lessees shall display and operate under their own names without prejudice to the original owner. The lessees have to pay monthly rent throughout the entire lease term. The monthly rent shall be payable from the 10th month after the date of singing and shall be increased by 10% after five years. The government shall not take part in the operation of the mills under lease and shall not share the profit or loss of this operation.
The 25 government-owned jute mills may fare better if they are freed from bureaucratic red-tape and lethargy. BJMC should help create conditions for the leasees to take initiatives as they deem fit to run those profitably. If jute mills can run profitably in India there is no earthly reason why they would not be viably run in Bangladesh too. Bangladeshi jute mill have the advantage of getting the supply of the finest fiber from local farmers. They can diversify production and market those based on demand.
