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Shipbuilding Industry

Bangladesh, a coastal country abundant with rivers, has more than 100 shipbuilding yards. Bangladesh has a strong shipbuilding tradition. In Bangladesh more than one hundred shipbuilding and repaire yards (including three public shipyards) exist within various locations. Out of these shipyards, approximately 80% are located in and around Dhaka. These yards are mainly engaged in building and repairing of inland and coastal vessels, up to 3,500 DWT (Dead Weight Tonnage).

The government transferred the Khulna and Chittagong shipyards to the Ministry of Defence (MoD) in the late 1990s, and the Narayanganj dockyard was transferred to the MoD in 2006, providing the navy full administrative control over domestic facilities to repair, service and maintain its hulls and propulsion systems. BN Dockyard in Chittagong is the major repair establishment to provide repair and maintenance support to ships of Bangladesh Navy. It is situated on the bank of river Karnuphully. It has the capability to undertake all sorts of repair, refurbish and maintenance work related to BN ships and establishment with its own expertise and manpower.

More than 100,000 skilled workers and 150,000 semi-skilled workers are employed in the shipbuilding industry. At present more than 10,000 inland/coastal ships are plying all over the country, carrying more than 90% of total oil transportation, 70% of total cargo transportation and 35% of all passenger transportation. Recently few of these firms specially Ananda Shipyard and Slipways Limited (ASSL), Dhaka and Western Marine Shipyards Limited (WMS), Chittagong have attained the capability to manufacture ships to international buyers.

By 2012 Bangladeshi component manufacturers could manufacture 50% of the total material, machineries and equipment of the inland/ coastal vessels built. This proportion for an international classed vessel to be built in Bangladesh is at present 10% and there is a strong need to build the backward linking industry if the Bangladeshi shipbuilding sector is to gain a higher world share of all new buildings.

Since 2005 Bangladesh has been building and exporting ships to owners from Denmark, Mozambique, Germany, The Netherlands and Finland. Germanischer Lloyd has declared in September 2008 Bangladesh as a shipbuilding nation of international standards. The optimism about this industry arose from the success attained by a number of local entrepreneurs who brought the name and fame to Bangladesh as a country with great potentials in shipbuilding by building and handing over some ocean-going vessels to overseas buyers. Since then, the shipbuilding in Bangladesh did not have to look back and now new opportunities are knocking at the door to flourish this industry further.

Bangladesh already stepped into international arena. On 15 May 2008 a ship of 2.900 DWT was handed over from the local producer to a Danish company. This ship was valued at US$ 7 million. A second ship was handed over in early 2010 and the Danish buyer has placed further ship orders in Bangladesh. Also German, Dutch and Finish buyers has placed orders in Bangladesh of ships up to 6.000 DWT. The first ship to one of the German buyers was handed over in summer 2010.

Before the financial crises the international ship builders were reluctant to build smaller vessels of up to 25,000 DWT. This created an opportunity for countries like Bangladesh to make a breakthrough in the ship building industry. And Bangladesh succeeded in doing so and have shown that it can be done very cost effectively.

In a long term perspective shipbuilding is both a promising and a challenging industry. Until very recently the average increasing rate of ships in tonnage was approximately 21 million GT (Gross Tonnage) per year. Considering US$ 7,620 as construction cost per GT, total market size is US$ 1,600 billion. If only 1% market share can be captured by Bangladesh it will be equal to US$ 16 billion. In worst case if Bangladesh can grab only one per cent of the global order for the smaller vessels the local value could be US$ 4.0 billion annually.

Scopes for adding value for Bangladesh? Bangladesh has few thousands of SMEs (Small and Medium Enterprise) which are mostly land based, which if supported and trained would be able to contribute in the manufacturing and supply of components and services required for manufacturing of ships.

Bangladesh have some comparative advantage which makes the country a good place to attract foreign investment in shipbuilding sector:

  • Cost-effective human resources in comparison with other shipbuilding nations
  • simple importation facility of raw materials
  • duty free market and access for Bangladeshi ships to other countries etc.
  • enthusiastic entrepreneurs willing to invest in shipbuilding industry

On top of that, Bangladesh Government has taken initiatives and expressed keen interest to promote this sector with a view to including a new item in the export basket and considering its huge capability to develop countrys multi-dimensional production base as linkage industries. The government has declared shipbuilding as a priority area and is set to declare a 5 years tax holiday for the industry with the aim of transforming the industry into a major export earner. A Green Channel method of clearance has also been sanctioned in favour of the sector which allows an easy and quick import for different items against any export order.

Bangladesh is traditionally a sea fairing nation and has a rich heritage of timber shipbuilding for many hundred years. Ibne Batuta traveled back in 14th century in a timber ship built in Sonargoan, Bangladesh. Caesar Fredrick, the European traveler, reported Chittagong as one of the best places for building timber commercial vessels in 15th century. In the 17th century, the entire fleet of ships of the Sultan of Turkey was built at Chittagong. During the Mughal period, Bengal was at the top in building ships and boats. The Mughal naval force had a huge number of ships of this region and the ships built at Chittagong were used in the battles. In the first part of the nineteenth century, the shipyards of Chittagong manufactured ships up to 1,000 tons. Bangladesh built timber warships which fought in Trafalgar in 1805.

In the 19th Century the ships built in Bengal were cheaper, more durable and safer than those built in England and the British shipbuilders faced competition with the local shipbuilding industry. Although Lord Wellesly, Governor General of India, encouraged building of standard ships at cheaper costs for the English traders, the owners of the shipbuilding farms of England succeeded in getting a bill passed in their favor in the British Parliament. Discriminatory import duties were imposed on transshipments by the British and non-British ships. The duty was heavier for goods transshipped by non-British ships.

The shipbuilding industry however, survived to meet local demands and gradually, the dockyards at Chittagong and other places of Bangladesh lost competitive edge in the face of modern technology adopted by the industry abroad and had turned into more a service centre than a manufacturing area. Bangladesh could not keep pace with the evolvement of new technologies such as, use of man made materials replacing natural building material timbers and fuel burned power pushing away wind power, i.e. sails. Bangladesh did not have well developed fleet for seaborne commerce nor adequate inland or coastal carriers at her independence in 1971. There was nearly no serious shipbuilding in steel in Bangladesh then.

However only over a period of 40 years after independence, Bangladesh has developed a large fleet of about 20,000 vessels comprised of inland & coastal commercial vessels, and various types of working and fishing craft. There are indigenous shipyards, more than 200 in numbers building and repairing these vessels and in turn have provided a strong prepared base for building ships of international standards.

Bangladesh is presently contributing to the shipbuilding industries globally through its exported workforce. These facts do not speak only of a heritage but of an inbuilt ability of shipbuilding of people of this region which had been for ages dependent on waters. Shipbuilding, an ancient assembling industry producing tailored products, accordingly having the largest human input per unit of produce, is always moving to countries with lower wages of required skills. Bangladesh has comparatively a lower cost of human inputs and can offer the best combination of cost, quality and productivity with its fast growing young workforce.

Unfortunately the shipyards in Bangladesh are facing exorbitantly high financing charges as compared to foreign yards. Unlike other manufacturing industries the product takes two years to be delivered and requires high cost finances over a long period. This weakens the competitiveness of Bangladeshi yards. However in general, government policy in Bangladesh is to encourage and attract foreign investments.

Western Marine is the countrys best-known shipbuilder and makes everything from cargo and passenger ships to ferries and fishing trawlers. The company was started in 2000 by Bangladeshi marine engineers and mariners who saw the need for safer ships in light of old, outdated ones in Bangladesh breaking down or sinking. It became a publicly listed company in Bangladesh in 2014.

Western Marine began making ships for Germany in 2009 and also became the first non-Scandinavian shipbuilder to supply ferries to Denmark. Western Marine has also delivered ships and ferries to Finland, Tanzania and Ecuador, and is building ships for New Zealand, Kenya and Pakistan. Bangladeshi-made ships appeal to international buyers because they are roughly 10 to 30 percent less costly than ships made in Korea, China and India.

Western Marines workers who are welding, running powerful saws and other heavy equipment wear blue coveralls, yellow hard hats, heavy shoes, goggles and gloves. Signs throughout the shipyard have slogans such as Wear Boots and Wear Face Shields". Safety is not something to be taken for granted in Bangladesh, a chaotic developing country where protective gear is an alien concept.





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