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AL govt shuts 31 mills, inefficient management blamed

Four state-run corporations incurred losses of about Tk 28,238 crore in the past 28 years mainly because of inefficient operation forcing the successive governments to close down 37 mills and factories of the corporations in the period.

Of the closed mills and factories, the immediate past Awami League government ousted on August 5, 2024 amid a mass uprising shut down 31 units — 25 of the Bangladesh Jute Mills Corporation and six of the Bangladesh Sugar and Food Industries Corporation — during its third five-year tenure between 2019 and 2024 following the AL government’s failure to check growing losses of the units shown in the economic reviews of the Finance Division.

Economists blamed the inefficient operation of the mills and factories by bureaucrats for the growing losses that were shown as reasons by the successive governments to close down the mills and factories which had been contributing to the country’s industrialisation before and after independence.

On July 20, 2020, the closure of 25 jute mills which had been operating under the BJMC since 1972 was announced, leaving 24,886 workers to retire voluntarily under the golden handshake policy.

Of the closed factories, 10 were located in Chattogram, six in Dhaka and nine in Khulna.

While the capital city Dhaka and the port city Chattogram had received private investments to develop other industries especially the export-oriented readymade garments factories since Bangladesh’s independence in 1971, the majority of entrepreneurs in Khulna, located in the country’s south western region, had to remain active only with businesses centring the state-owned jute mills, most of which were established before independence.

Din and bustle of industrial activities on the bank of River Bhairab was almost silenced as most of the laid-off jute mills, including Eastern Jute Mills Limited, Crescent Jute Mills Limited, Platinum Jubilee Jute Mills Limited, Star Jute Mills Limited, Khalishpur Jute Mills Limited and Daulatpur Jute Mills Limited are located there.

Six months later after the closure of the jute mills, the suspension in production of six state-run sugar mills was directed on December 20, 2020.

Pabna Sugar Mills Ltd, Shyampur Sugar Mills Ltd, Setabganj Sugar Mills Ltd, Kushtia Sugar Mills Ltd, Panchagarh Sugar Mills Ltd and Rangpur Sugar Mills Ltd had to stop sugarcane processing — one of the few industrial business activities in the northern part of the country.

Many of these sugar mills, established before independence, had operated under the BSFIC since 1972.

In the past 28 years till the financial year of 2023-24, the BSFIC, which is under the industries ministry, made operating profit only twice — in FY 1999-2000 and FY 2005-06, according to a Finance Division’s economic review.

The corporation incurred losses in the remaining 26 years with the accumulated losses reaching Tk 9,658.46 crore.

Centre for Policy Dialogue executive director Fahmida Khatun said, ‘I’m not surprised at all at the pathetic situation of the corporation. It was bound to happen.’

There was no reward and punishment under the management system, she observed.

The accumulated losses of the BJMC established under the Bangladesh Industrial Enterprises (Nationalisation) Order, 1972 by the then government stood at Tk 9,496.7 crore in the past 28 years.

It counted profits of Tk 14.59 crore only once in the financial year of 2010-11 against losses in 27 years, recording highest losses of Tk 773.82 crore in the financial year of 2019--20.

Economists said that none should expect better performances from inefficient bureaucrats and policymakers that deteriorated further in the past 15 years under the AL regime.

The White Paper on State of the Bangladesh Economy prepared by the interim government that assumed power on August 8 presented some pictures of the inefficiency of bureaucrats and their contribution to the kleptocracy regime of the AL.

‘Public enterprises lack commercial incentives and accountability,’ said the white paper in its macroeconomic chapter to highlight how a lethal interplay of politics, business and governance caused a near breakdown of integrity in economic management.

By enacting a new law, the Awami League regime also transferred idle funds from state-owned enterprises to the government exchequer to increase the non-tax revenue, as its share in gross domestic product declined from 1.5 per cent in the 2013-14 financial year to 0.9 per cent in the 2018-19 financial year.

However, the Bangladesh Petroleum Corporation, Chattogram Port Authority, Power Development Board and Rural Electrification Board were the main contributors of idle money to the exchequer as the industries under the BJMC, BSFIC, Bangladesh Chemical Industries Corporation and Bangladesh Textile Mills Corporation have been struggling to reduce growing losses.

Former World Bank Dhaka office chief economist Zahid Hussain, also one of 12 writers of the white paper, said the continuation of operation of many mills and factories by bureaucrats in the age of privatisation was unnecessary.

It only causes wastages of taxpayers’ money, sad the economist, indicating growing losses of the state-owned corporations against the profit-making private corporate groups.

The cumulative losses of BCIC responsible for operating fertiliser factories such as Ghorashal Palash Fertiliser Public Limited Company, Shahjalal Fertiliser Company Ltd and Chittagong Urea Fertiliser Factory, stood at Tk 8,162 crore over the past 28 years despite making profits on eight occasions.

Industries ministry officials said that many state-owned mills and factories were divested after the change in regime in 1975, but none of the government entity was laid off until 1999 when the country’s largest steel mill — Chittagong Steel Mills Ltd — was closed due to persistent losses.

They said that the then government had tried to sold it to international buyer, but failed to so because of bank liability of Tk 700 crore accumulated over years due to low productivity amid labour unrests, mismanagement and excess manpower.

On the other hand, labour unions accused the government of poor corporate policy and corruption, they said.

Khulna Newsprint Mills Limited factory was closed in 2002 and the North Bengal Paper Mill on the bank of the River Padma near Hardinge Bridge at Pakshi in the same year due to losses.

Dhaka Match Factory was closed in 2005 while Chittagong Chemical Complex was closed in 2002.

However, the closure of the Adamjee Jute Mills, the largest jute mill in the world, under the BJMC in 2002 sparked huge protests.

Referring to the Economic Review 2002, it was reported that the BJMC in the 2001-2002 financial year incurred losses of Tk 406 crore, to which Adamjee Jute Mills alone contributed Tk 190 crore.

Blaming inefficiency of the management and conspiracy of vested groups for the growing losses of the state-owned industries, economist Anu Muhammad said that the all the state-run industries should not be closed down.

The presence of state-owned industries is imperative for the national interests, he said, referring to the current domestic sugar market dynamics in which private refineries rely on imported raw sugar-dominated production to meet over 90 per cent of the annual demand in the country.

The country will face a severe shortage of sugar if imports is disrupted, said the economist.

He said that the interim government should at least find out causes of the sorry state of the government-run industries.

The sorry tale of the state-run industries also involves the performance of the BTMC that could not make any profits in the past 28 years.

However, the BTMC’s accumulated losses are far lower than the other state-run corporations — Tk 922.73 crore incurred between the 1996-97 financial year and the 2023-24 financial year.