The country’s shipyards ended 2017 with the slogan ‘Let’s turnaround’ and aimed to starts the New Year 2018 with a new motto, ‘Increase Productivity’.
The emerging shipbuilding sector, which was struggling to survive from 2008 to 2016 due to a global and local economic slump, had a more productive 2017 that revitalized the sector and dragged it out the depths of a crisis.
The country’s leading shipbuilding company, Western Marine Shipyard Limited (WMSL), got several foreign and local orders last year. WMSL said the sector had turned around now. In 2017, the company exported four ships—one to the United Arab Emirates (UAE), two to India, and one to Kenya.
The WMSL is at present building 38 ships for local and foreign buyers. They have to build the vessels within the next two years. Of them, 27 are for the local market with buyers such as the Bangladesh Army, Chittagong Port, Bangladesh Water Transport Authority (BIWTA), and 11 ships for export to India, Norway, and the Netherlands.
“During the economic slump across the world from 2008 to 2016, foreign and local orders began to drop. Many shipyards in China were shut down and about five shipyards were shut down during the economic slump in Bangladesh. We had taken many steps to sustain ourselves. The WMSL was supposed to shut down, too. However, by negotiating with the banks, we managed to survive,” said Md Sakhawat Hossain, managing director of WMSL and the general secretary of Export Oriented Shipbuilding Industries.
“Owing to the economic crisis, many businessmen had sold their ships and many shut down their shipyards. The order to build ships had decreased globally—in the Euro-zone as well as in Bangladesh,” he recalled.
“Till 2008,” he said, “the shipbuilding business was a booming business across the world. At that time, the economic conditions maintained a bullish trend. The ship building business is directly related to world economic trends.”
“With the blessings of the Almighty, the sector has turned around now. In 2017, Bangladesh exported four ships—one was exported to United Arab Emirates (UAE), two were exported to India and one Kenya. Now WMSL is building 38 ships, 27 for local buyers and 11 for exporting. All the ships are high tech ship,” Sakhawat Hossain added.
“We are building inland passengers ships for the BIWTA; they will ply on coastal routes,” he added.
There are about 100 shipyards, of them about 20 yards are capable of building ships of international standard. The Bangladeshi yards have manufactured and exported ferries, cargo vessels, and ocean-going multipurpose ships.
The country, traditionally known for exporting jute (which was called golden fibre), readymade garments, frozen foods and tea in the last 40 years, has emerged with a great potential for building ships for export.
The labour-intensive sector employs over 150,000 skilled and semi-skilled workers.
The sector, which made its mark despite a difficult time since 2008, has made ships that are now plying the world’s waters except those of Antarctica.
In the last eight years, through many ups and downs, Bangladesh has exported 44 ships including cargo vessels and multipurpose ocean liners to 14 countries—the Netherlands, Denmark, Norway, New Zealand, Finland, Ecuador, Kenya, Tanzania, Gambia, Uganda, India, and Pakistan as a new nation with an emerging shipbuilding sector.
By exporting ships, Bangladesh earned USD $170 million, while WMSL alone earned USD $118 million.
“All the ships were of world-class, international standard. The performance of all the ships exported by Bangladesh since 2008 has been A1. Of the 44 exported ships, the WMSL has exported 27,” said Sakhawat Hossain.
Meanwhile, an Offshore Patrol Vessel (OPV) with a 35 nautical miles per hour speed (70kmph), made in Bangladesh and exported to Kenya for their Ministry of Fisheries (MOF), bagged the Work
Boat World best large patrol builder
award in 2017.
As Bangladesh is a riverine country, an estimated 90 per cent of oil products, 70 per cent of cargo and 35 per cent of passengers are ferried by waterways. Hence, there is a huge domestic demand as well for ships.
The potential of vessels made in Bangladesh is growing, as shipbuilding in Bangladesh is cost-effective due to the availability of cheap labour.
However, the emerging shipbuilding sector is facing some challenges like the absence of comprehensive government policy and lack of long-term investment loans or loan subsidies unlike its Chinese, Korean, Japanese and Indian counterparts.
“If we resolve these challenges and the government extends support to the sector, we can earn USD1 billion per year within next two-three years and within next five years we can earn USD $2 billion from this sector,” said Sakhawat Hossain.
Fight to survive with high bank interest rate
Being a heavy industry, shipbuilding needs huge capital. A shipyard is established to last for a long time. A shipyard requires an investment of at least USD $100 million.
Here a major competitive disadvantage for Bangladeshi shipbuilders is that they have to take loans at an interest rate of 10 per cent to 16 per cent, whereas their Chinese, Korean, and Japanese counterparts can get loans at an average of 6 per cent interest, while India offers a subsidy on interest to shipbuilders.
“Here, the government needs to promote the shipyards. If the government gives at least USD $50 million at a low-cost rate of interest or offers subsidy to 20 shipyards, it would be possible to earn USD $2billion in foreign exchange by exporting ships,” added Sakhawat Hossain.
“We want the government to give an interest subsidy or investment loan at low interest. With the present rate of interest on loan, this sector will not survive. To save the industry, the government has to give loans for 20 to 25 years at low interest,” the shipbuilder urged.
A shipyard’s lifetime is at least 200 years after investment. It could keep manufacturing for 200 years. It takes at least 20 years to establish a shipyard with all modern technologies, infrastructure, good governance, and good management. Shipbuilders say, in 2018, they have started finding their footing and it would take more than 10 years to learn, to know, and to work at full-steam.
Jobs potential
The labour-intensive sector currently employs over 150,000 skilled and semi-skilled workers. The shipbuilders said, within the next five years, they would need total of 300,000 employees in this sector, if the present trend were to continue.
The Bangladesh Ship Building Association is also empowering women along with men in this heavy industry. They have set a target to employ at least five per cent women. Many women are already working in the WMSL.
Image branding
As a shipbuilding nation, Bangladesh now compares with China, Japan, Korea and India. By competing with these nations, Bangladesh is bringing in foreign orders.
Bangladesh is now exporting high-tech ships to14 countries. On August 2017, WMSL exported an Offshore Patrol Vessel (OPV) to Kenya for their Ministry of Fisheries (MOF).
The 35 nautical miles speed (70km) OPV bagged the Work Boat World best large patrol builder award 2017.
It is the most capable OPV boat in the Kenyan MOF and is being used to patrol the Kenyan Exclusive Economic Zone, keeping an eye on illegal fishing and unauthorized attempts to access Kenyan natural recourses as well as responding to natural disasters along the coast and islands.
Now, the world knows Bangladesh to be a country capable of building world-class ships.
A high-tech fishing trawler of 3,300 DWT, named Norwegian Fishing Trawler (NFT), is being built by the WMSL for Norway. It is supposed to be the largest NFT and it will be handed over by 2019,” said Sakhawat Hossain.
Future
Globally, the shipbuilding market is worth around $500 billion. Bangladesh aims to get orders of about $2 billion.
Moreover, with the increasing infrastructural development of Bangladesh to meet the target of Vision 2021, transportation needs, too, will increase. About 80 to 85 per cent of the commodities and materials for development projects will be transported by ships.
“The cargo volume has doubled due to infrastructure building and it would triple in future. For carrying the materials such as machinery and instruments for infrastructure work, Bangladesh will need more than 200 ships. But the country lacks an adequate number of shipyards to build that many ships. So, government has to promote shipyards if shipbuilding is to forge ahead,” Sakhawat Hossain added.
India, for its infrastructure development, would need 600 ships in the next ten years. They have selected some Bangladeshi shipyards to build ships for them. “We hope will get orders for 100 ships from India. Moreover, there is a demand for LNG ships in the international market. We are getting orders for LNG ships. If all the problems are resolved, at least 20 shipyards would bloom in Bangladesh to meet the growing demand for ships,” he added.
EA