Entrepreneurs can now make textile products in leased jute mills

Infographic: TBS

Entrepreneurs will now be able to set up textile industries by leasing state-owned jute mills as the authorities have softened stance for jute-related activities only due to a low response.

The Bangladesh Jute Mills Corporation (BJMC) has made necessary changes to the terms and references and recently floated an international tender to lease out all nine jute mills under its supervision to the private sector.

The BJMC – controller and supervisor of the state-owned jute mills – has also extended the lease tenure to 30 years.

The amended terms now allow private sector entrepreneurs to produce jute, jute-related goods, or textile products, with both forward and backward linkages to the jute or textile industries.

The corporation had previously allowed the private sector to produce only jute or jute-related goods in its existing jute mills, and the lease tenure was 20 years, with the possibility of further extension.

BJMC Chairman Anis Mahmud told The Business Standard, "We have received only a few responses from the private sector to produce only jute and jute goods in the existing jute mills. That is why, the decision has been taken to allow the setting up of textile industries.

"Now entrepreneurs are not willing to invest in jute and jute goods only. In addition, textiles is a promising sector with export potential."

The government has so far leased out three jute mills to produce jute and jute products, which have already returned to production.

When asked whether the new terms and references would be applicable to the mills that have already been leased out, the corporation chairman said, "No decision has been made regarding the mills that have already resumed jute production.

"However, if we receive applications from them, a decision will be made later."

On 1 July 2020, the government shuttered all the state-owned jute mills at once due to heavy losses and excessive production costs and sent around 25,000 workers into retirement through a golden handshake.

After the closure, the government decided to reopen closed jute mills in the private sector and floated a first international tender in January 2021 to lease out 17 of the 25 state-owned jute mills.

On the tender, the conditions were that a lessee would be able to use the jute mill premises to produce only jute goods, jute-related goods, and jute-diversified products.

Now, the third tender is ongoing, but the nine jute mills have remained yet to be leased.

Jute mills lease out in a slow lane

The process of leasing out the closed jute mills and reopening them under the private sector started two years ago, but only three jute mills have reopened to date.

BJMC officials said despite ample demand from local and foreign entrepreneurs at the beginning, leasing out has been slow because of economic uncertainty and the sudden dollar crisis.

Even if new pieces of machinery are needed to start the old mills, it will not be possible to bring them amid the dollar crisis, they added.

At the beginning of the international tender floating in 2021, the country's big conglomerates, including Pran, Bay, and Akij groups, expressed the intention to get leases of state-owned jute mills that are doing business in the jute sector.

Also, some entrepreneurs from India and the UK were eager to get the jute mills on lease.

According to the BJCM, to date, three jute mills have resumed operation with an investment of around Tk400 crore.

KFD Jute Mills in the Chattogram region operates under the Unitex Group, Bangladesh Jute Mills in Narsingdi under the Bay Group, a joint venture, and Jatio Jute Mills under Rashid Group.

The products of KFD Jute Mills and Bangladesh Jute Mills have now been exported, and Rashid Group is using the mill's products, basically sacks, for its own as the group is one of the largest suppliers of rice throughout the country.

BJMC officials said a joint inspection is on the cards for the six jute mills to resume production. After the joint inspection among the BJMC and selected entrepreneurs, the mills will be handed over.

Three new entrepreneurs picked for lease

According to the BJMC, three private-sector entrepreneurs have been picked for three jute mills in Khulna and Chattagram zones.

Four H Apparel is selected for leasing out Mills Furnishing Limited, a non-jute mill in the Chattagram zone; Uni World for Doulatpur Jute Mills, and Akij Jute Mills for Jashore Jute Mills.

Recently, the corporation picked the firms. The mills will now be handed over after they pay 24 months' rent to the BJMC.