The jute sector in the country has been in a state of entropy as described in physics. A state where there is permanent order or disorder, and the latter reigns supreme in case of Bangladesh.

With order books bulging mainly from Europe and North America, the country’s jute sector should have been smiling and shinning.

Alas, the state of the industry in general is neither here nor there.

Recently, some eight Khulna jute mills that were ’sick’ were reopened to satisfy the orders booked, so far. Buyers are eager on getting jute goods and carpet backing, however to their dismay, the working mills and factories both in public and private sectors are still not geared to cater to these orders.

It is said that even if all the mills stretch beyond capacities, they would unable to clear backlogs.

This despite closed mills being restarted and running at a huge loss!

On one hand Government invests money in restarting the closed mills and on the other mill workers are required to be paid their cash incentives to the tune of Tk 3.0 billion to ensure the mills run smoothly.

In dire straits, the government is faced with no alternatives but to dole out incentives in order to produce the required quantity of jute goods.

Bangladesh Jute Mills Corporation (BJMC), on the other hand, is buying jute at a higher price (this year, jute sells in the market at a higher price).

Thus, government is being drained off valuable finance that could help exploit the industry of the sector to its maximum.

Note worthy is the case of Indian jute industry where jute mills rake profits buying jute from Bangladesh and yet profiting from jute business.

It is said that privatization process began in the mid-seventies went through several transformation missing the imagination of and attention of the industrial policy makers.

So what went wrong in the privatization process carried out during 1976 and 1992, when about 500 SOEs were sold off or returned to their original owners?

The reasons are many and a few to name are lack of sincere efforts on part of the government professionalism, labour unrest etc. that have derailed the entire privatization process.

Add political will deficient infrastructure miss-management rendering SOEs economically unviable added with financial indiscipline, political interference that caused decadence of the industry in general.

Even World Bank has found in its studies that SOEs were a drag on the economy and noted that SOEs over the years have registered reduction in contributing towards the growth of the country’s economy.

Coupled with disproportionate employment, state enterprises have not consistently served equity objectives.

They proved a drain on public treasury registering net losses averaging Tk 9.2 billion annually during fiscal 1991-2001, with an accumulated loss of Tk 101 billion.

Last but not the least, state enterprises encumbered public financial institutions'' burden of non-performing loans with state enterprises, public banks suffer saddled with huge burden of non-performing assets and loans leading to capital inadequacy.

A classic example is the recent closure of Adamjee Jute Mills which was losing over Tk 1.0 billion (or 11 per cent of gross losses of SOEs) during recent years, with accumulated losses running equivalent to Tk 11.4 billion, and adding Tk 3.2 billion in liability to four nationalised commercial banks (NCBs), with no hope of salvaging principal amount.

While it was exporting goods worth about $ 20 million annually, at the same time it was running up losses of almost the same amount each year.

So much so for government extending a 100 per cent export subsidy to the mills!

Adamjee Mills case just one off and there are several that can easily run up about 11 per cent that calls for government prudence and need to enforce discipline over government finances.

Overall, the government shake itself form the morass as rise above narrow political meandering and provide necessary direction and will to raise the confidence of the industry and foreign investors.