The Business Standard 13 July 2020
Of the total, Tk5,000 crore will be spent on golden handshake, Tk800 crore against outstanding bank loans, Tk400 crore on the head of outstanding bills against raw jute purchase and the remaining Tk400 crore in unpaid utility service bills
The Bangladesh Jute Mills Corporation (BJMC) has sought Tk6,600 crore from the finance ministry for offering golden handshake packages to its regular mills’ staff and clearing other liabilities of the loss-making corporation.
Of the total, Tk5,000 crore will be spent on golden handshake, Tk800 crore against outstanding bank loans, Tk400 crore on the head of outstanding bills against raw jute purchase and the remaining Tk400 crore in unpaid utility service bills.
Currently, the BJMC has around 25,000 regular (permanent) workers and another nearly 30,000 casual (temporary) workers at its 26 jute mills.
“We have sought an amount of Tk6,600 crore from the finance ministry to pay off bank debts and outstanding bills and bear expenses related to the golden handshake,” Md Abdur Rouf, Chairman of BJMC, told Dhaka Tribune.
He said if the ministry sanctioned funds then the disbursement process could commence at the end of this month.
Additional Secretary of the Textile and Jute Ministry Abu Bakar Siddiq told Dhaka Tribune, “As per instructions from Prime Minister Sheikh Hasina, 50% of the golden handshake amount will be disbursed soon, and the remaining 50% in the form of savings certificates.”
“Savings instruments will act as a social safety coverage for the jute mills workers and other staffers.”
He said the jute mills under the BJMC had failed to compete with the private sector despite huge subsidies provided by the government since 1972.
“Let the private sector do jute business. We have plans to revamp the jute mills under the Public Private Partnership (PPP), or any other feasible models.”
The financial packages under the golden handshake include arrear salaries, provident fund, gratuity and 27% extra liquidation allowance.
Besides the existing manpower, the BJMC has to provide service benefits to another 8,954 workers who have retired since 2014.
The production cost of the BJMC mills per metric ton of jute goods is roughly Tk one lakh, against its retail sale price of Tk70,000, making a net loss of Tk30,000 on each ton, BJMC sources have said.
The country exported jute and jute goods worth $882.35 million in FY20,while the local market for the jute goods is below Tk100 crore.
The BJMC has counted a staggering around Tk11,000 crore in losses since its birth in 1972 till the last financial year, as corruption, incompetence, lack of accountability and inept leadership caused the government to spend a huge amount of taxpayers’ money.
The BJMC chairman said salaries for June would be disbursed this week, while salaries against a two-month notice period would be cleared soon.
Meanwhile, the finance division under the finance ministry last week formed a committee, headed by its additional secretary Sheikh Mohammad Salim Ullah, to scrutinize the demand for Tk6,600 crore made by the BJMC.
The committee will also examine relevant documents of the textile and jute ministry with regard to sanctioning allocations to make the handshake process faster and transparent.
“We have included two senior officials of the Comptroller and Auditor General of Bangladesh in the committee so that the task of auditing with regards to the BJMC’s liability is perfectly done,” a senior finance official said.
Meanwhile, a senior finance official said the Economic Relations Division (ERD) under the finance ministry would soon request the Chinese government to scrap a MoU the two countries inked in 2014 on modernizing public sector jute mills at a cost of $300 million Chinese credit.
Under the deal, jute mills under the BJMC are supposed to get modernized.
The China TextMatek Company (CTMC) is supposed to undertake the Balancing, Modernization, Rehabilitation and Expansion (BMRE) work at these jute mills.
In addition, the government of China under the memo will also provide technology support for manufacturing the latest and diversified jute items at the BJMC jute mills.
As per the MoU, the Chinese government will provide credit at 1.5% interest to Bangladesh for executing BMRE work.
Officials at the ERD said the two sides were supposed to sign a commercial agreement soon on the $300 million Chinese Preferential Buyer’s Credit.
“After getting instructions from Finance Minister AHM Mustafa Kamal, we will request our counterpart to scrap the deal,” a high official at the ERD said.
