In a move that is expected to generate annual net profits of $119 million and 24,000 new jobs, the government of Bangladesh has decided to modernise 24 public sector jute mills with Chinese funding. For several years, state-owned jute mills have been loss-making units and in the last fiscal year their losses amounted to Tk 588 crore.
The production capacity of these mills is 275,500 tons but the actual annual production is 108,656 tons. This yields Tk 1,041 crore in revenue. About 82,000 people are employed in the mills and the government has to give subsidy every year to keep the mills running.
Subsequently, the government has decided to take up a project worth Tk 2,800 crores for balancing, modernising, rehabilitating and expanding the mills. China will put in about Tk 2,240 crore in this investment. China Textile Engineering Corporation has already conducted a feasibility study on jute mills. Due to a lag in technology, low efficiency, obsolete equipment, single product focus, lack of competitiveness and confused management, Bangladesh is losing its position in the global jute industry, said the Chinese company's feasibility study.