Starting a big sail - Shipbuilding in Bangladesh

Starting a big sail

Faizul Khan Tanim looks back at shipbuilding history and examines the enormous potential of Bangladesh as an emerging shipbuilding nation
photo by Al-Emrun Garjon

‘Ship building and breaking has been going on in this country for a long time and we have such a highly experienced labor force that even today, the majority of the workers in Singapore shipyards are from Bangladesh’, says Kazi Salimul Kibria, manager of finance and accounts of WMSL.
Bangladesh, a riverine country with huge coastal areas that are frequently lashed by cyclones and natural disasters, can, according to sources in the shipbuilding industry, actually generate vast amounts of revenue from its extensive coastline.
Before becoming a ship building nation, there are four mandatory conditions in order to produce ocean-going vessels: international standard shipbuilding practice, quality management system, coastal and riverine country, and infrastructure with proper sheds and skilled manpower. Bangladesh scores full marks on all these counts.
With global shipbuilding orders of very large vessels increasing everyday, a market is emerging in Bangladesh for shipbuilding yards that can concentrate on producing smaller sea-going vessels as the industry leaders like China, South Korea and Vietnam go for the larger container ships, bulkers and tankers.
According to shipbuilding experts in this country and abroad, Bangladesh can emerge a surprise competitor in the small to medium ocean-going vessels market. This particularly applies to shipyards that until now were best known for scrapping and breaking ships, and not building them.
Two shipbuilders — Meghnaghat-based Ananda Shipyard and Slipways Ltd (ASSL) emerged in 1999 with 80,000 square metre (or 20 acres) of total area and Chittagong-based Western Marine Shipyard Ltd (WMSL) — 40,000 square metres, which formed in 2002, said they signed agreements and received foreign orders, with a combined worth of around USD 250 million. They are currently the only two shipyards receiving international orders.
These companies are mainly producing multipurpose container vessels of 4500 dwt (dwt stands for Deadweight Tonnage, is a measure of how much mass or weight a ship can carry) up to 6100 dwt.
They have customers ranging from the local investors such as BIWTA (Bangladesh In Land Water Transport Authority), Roads and Highways, Chittagong Port Authority, Bangladesh Institute of Marine Technology (BIMT), Bangladesh Police and local tours and travels organisations like Hotel Sarina, Keari Sinbad through to international companies like Stella Shipping and Sea Consult Ltd of Denmark, Wessels Reederei GmbH and Komrowski Maritim GmbH of Germany.
The heads of both ASSL and WMSL said that at least 50 crore Taka is needed to build a decent setup or a shipbuilding yard which can grow to become a company capable of taking both foreign and local orders.
Due to the high prices involved in air transportation and the huge cargos that can be transferred by sea, shipbuilding remains one of the most important businesses today.
And yet there is a growing crisis of in the production of cargo carrying vessels in the global market. Ship building industry sources said since major ship manufacturing countries like South Korea, Vietnam, China and Singapore are becoming less interested in building small ocean going vessels, European buyers are now coming to Bangladesh and India.
Experts emphasised that ship building in East Asian countries has become costly due to the high wages of workers. The industry is gradually shifting towards developing countries mainly because of the availability of a cheap labour force.
Managing director of WMSL Shakhawat Hossain said ‘no shipbuilding country could catch at least 25 percent — $400 billion market of the global order $1600 billion for small ships. And according to my calculation, if we can bring home an order of one percent of that 25 percent, it is $4 billion and then hopefully our GDP will increase by at least 2 percent within the near future’.
Adding to Shakhawat’s views, chairman of ASSL Abdullahel Bari said ‘If this development can continue with another 12 to 13 shipbuilding yards producing ships for international customers, ship building in Bangladesh will be the second largest exporter after garments by 2015.’
The focus on Bangladesh came as ASSL and WMSL signed deals with mainly Danish, Netherlands and German companies. ASSL received its first order in 2005 from Stella Shipping of Denmark and WMSL in 2007.
The flow of orders came after a comprehensive inspection by the shipping companies in the two shipyards, followed by embassy visits from the European nations. The shipyards had to upgrade their infrastructure to meet the international standards that the shipping companies required. For example, fabrication yards with covered sheds where the weather won’t affect production, shipbuilding halls, experienced workforce, concern for environment, and most importantly absolutely no child labor and plenty of safety measures like the mandatory usage of helmets, goggles, gloves, boots and special suits inside the premises.
Companies that place orders even go to the extent of having representatives living on the shipyard premises to constantly check the quality of production and working environment, said both Md Nasim Uddin, GM Shipyard of WMSL and Md Rakibur Rahman Chowdhury, director of administration, ASSL.
Bangladesh is also renowned for its local shipbuilding industry, which produces launches, ferries and small boats, including tourist and cruise boats every year. And almost all of the nearly 3,000 launches, oil tankers and cargo ships that ply their trade in Bangladesh’s waterways were made from these shipyards.
When asked about what government support these shipbuilders are seeking, they said if the government allows duty free import of the specific categories of steel only used to build ships (which are so expensive that they do not have value in companies other than shipbuilding), for example a back to back letter of credit system for importing steel; the basic raw materials for the ship building industry, draft ports, duty exemption for import of capital machinery, bonded warehouse facilities, special financial subsidy and providing green channel for importing raw materials – with this assistance, it would help the industry flourish.
Duty free import of steel can be allowed against a bond system providing that the material would be used only for export purposes, and it would create scope for huge export orders, facilitating use of the country’s cheap labour force, experts from the shipyards said.
They said that once the industry grows, this industry can have value added when local sanitary items, nuts and bolts and even steel plates will be manufactured in this country.
‘It is not a difficult job for local experts to build large ships on the basis of plans and drawings provided by foreign buyers’, said M Saiful Islam, technical director of ASSL.
Ship designs are always bought from design houses paying high amount of money and this ensures not only a high quality of management while producing, but also a presentation package of the highest standards which will attract more foreign and local clients each day.