Traditional market leaders of world shipbuilding industry are over-booked mainly for construction of large ships and they are not interested in building small scale ships leaving a golden opportunity for countries like Bangladesh which can make ships up to 12,000 DWT (dead weight tonnage).
On the other hand, the market of small ships and vessels of various types remains unaffected by the recent global recession. Recession has caused a drop in demand for large ships. In Bangladesh, the long coastline and mouths of rivers falling to the sea offer excellent geographical endowment for development of shipyards and shipbuilding zones.
Engineer Sakhawat Hossain, managing director of Western Marine Shipyard made such disclosures in an interview with The Financial Express.
Apart from completely depending on foreign market a huge demand of various types of ships has been noticed in Bangladesh in the recent years. Being a very fast developing country, shipping trade is booming on the back of economic growth at a rate of approximately 6 (six) per cent, he said.
In the ship building business past track record is very important. Local builders have made ships for Finland, Germany, Pakistan and Denmark. As Bangladesh is very new in ocean-going vessel export industry, stepping into new countries is very important.
"The ships that we have already built will be testifying our credibility and bringing in new orders. Experts forecast that if the growth continues in this momentum, then only from this single industry Bangladesh will turn into an MIC (Middle Income Country) from its current status of LDC (Least Developed Country)," he said.
Strong Domestic Demand
In 2010-11 fiscal we saw around 40 per cent growth in both export and import activity. The growth over that year is expected to be 15 per cent this year. Bangladesh has been importing second hand ships for its water communication. But as the shipyards in our country now can produce world quality ships, these demands can be met locally, he said.
In 2011 Chittagong Port handled around 1.5 million containers and it will grow at a rate of 10 per cent to 15 per cent annually. There are around 700-800 lightering ships working to load and unload cargo. These ships being very old will require servicing and replacement in the coming days.
Moreover, Bangladesh Government has recently undertaken a project of developing fuel generated power plants to meet the power shortage. Oil tankers are required to transport fuel to those power plants as water way is the most convenient way of transporting the fuel from the depot to the production site, in terms of cost, bulk quantity, time and safety. The BPC (Bangladesh Petroleum Corporation) has issued 43 tanker licenses through Padma Oil Company, Meghna Oil Company and Jamuna Oil Company. Each of these tankers is of 1,500 DWT and each will cost Tk 130 million if built in a local shipyard.
Engineer Sakhawat said that approximately 20 per cent of its cost includes import duty on raw materials. The government has given 100 per cent exemption on import duty of materials which are being used in construction of these power plants.
The demand for marine vessel is increasing everyday. Building the Padma Bridge will require 150 to 200 barges and Bangladesh needs a lot of dredgers to keep the navigability of its rivers. Local ship builders can build them. Increasing trade activities will also require more ships. Fishing ships are also another growth area.
Currently, Western Marine has orders to build four oil tankers, 10 fishing trawlers, six cargo ships, four port utility vessels totaling around 29 ships for export and local buyers. The yard has already delivered two oil tankers recently and one fishing trawler is ready to be handed over to its owner very soon.
"Made in Bangladesh"
He said that after a century Bangladesh has once again emerged as a modern and hi-tech ship building nation making a place in the shipbuilding globe. The industry has made a positive image of the country in the western world by building ships for European buyers. Today these ships sail in the seven seas with brand name "Made in Bangladesh". This emerging industry is contributing to the national GDP (Gross Domestic Product) through earning foreign currency, mass employment, and development of backward linkages. Western Marine Shipyard is a renowned name in this sector.
They delivered the first export ship "Bay Cleaner-2" on 11 February, 2010 to its Finnish buyer LAMOR Corporation. This was an oily waste collection vessels, a specialized vessel built for port use. On 5th of January 2012 the shipyard delivered two passenger ships to Karachi Port Trust in Pakistan. That was another great achievement for Bangladesh as ships built in Karachi were once used in our country but this time it was the other way round.
The milestone by Western Marine was created on the 26th of November 2010 by delivering two 5200 DWT ice class MPC ships to the German owner Grona Shipping. They were the first two from the series of eight sister ships. The other six ships were delivered in phases and the project was completed upon final delivery in March 2012. This was the successful completion of the biggest and highest worth shipbuilding project in Bangladesh having delivered eight ships to a single owner in row.
Further, Western Marine had built two more high graded ships for Danish owners. One of them is a 4100 DWT heavy lift MPC ship costing more than Tk one billion (100 crore) which will be one more signpost by Western Marine and the other is a 50m Ro-Pax ferry which is also ice class. Western Marine is also building ship for island and coastal use designed from Europe which includes tugboats, tankers, fishing trawler, container ships, cargo ships and dredgers.
The only IMS certified company in BD
Ships made in Bangladesh have attained international quality. Increasing orders from abroad is the testimony that the quality of ships built by local shipbuilders is internationally accepted. Western Marine Shipyard has recently received two certificates from BV: one is OHSAS 18000 for health and safety and the other is ISO 14000 for environment. They already have ISO 9001 certificate from GL (Germanisher Lloyd) for quality. This has made them the only IMS (Integrated Management System) certified company Bangladesh. It has helped them in gaining more confidence to secure greater share from the international market.
The WMS MD said his yard has been visited by many high profile dignitaries which includes local ministers, secretaries, ambassadors, IMO Secretary General, UN Commissioner, Ministers from Denmark and Germany and many more. Recently US Ambassador in Bangladesh paid a visit to Western Marine.
"The US Ambassador had visited the shipyard in the past but this time he was even more interested to learn about the growing yard's capacity. He has witnessed that the yard is using US made main engine and gen-set in the newly built ships. This has impressed him greatly to find that local shipyards are contributing in the US economy by procuring machineries from them which is enhancing the bilateral trade between both the nations," he said.
He has also spoken that there is a huge demand for small ships in North America which would be the prime target for shipyards and the embassy will do the utmost to promote the local ship builders in that region. Western Marine is already in negotiation with certain potential buyers for new orders from North America.
Bangladesh, a destination for shipbuilding
There are several reasons why ship owners from all over the world are getting more and more interested to invest in Bangladesh. The main strength of Bangladesh's shipbuilding industry is the country's vast and cost effective labour force.
"Shipbuilding is an industry both labour-intensive and technology-based. The pools of workers are readily available in our country. Standard of living is less expensive in Bangladesh compared to other shipbuilding nations like Japan and Korea. This gives us a huge cost advantage while quality and time is managed in the most efficient manner. Bangladesh offers 15 per cent cost saving in shipbuilding than the shipbuilders in other nations. Energy prices, utility prices, land prices are much lower than major shipbuilding countries."
A chance to stand proud
He said that major shipyards are in the world are not interested in building small scale ships. It creates a scope for countries like Bangladesh which currently makes ships up to 12,000 DWT. Local players plan to take this capacity to 25,000 DWT in future.
The role the shipbuilding industry is playing in the economy of the country is not well known by many. In a small developing country like Bangladesh it is a great issue that a few shipbuilders have set off for making a greater change by creating employment opportunity, development of backward industry, foreign currency earning and the most important is, a new image of the country is being created. We are known all over the world for natural calamities and political disturbance but this industry has given us a chance to stand proud claiming ships built in Bangladesh are plying in seven seas.
But, for its better continuation in the long run government patronization is much required in today's date. The industry is not rich yet having delivered a number of ships in the international market while the domestic market is growing. In this stage the government should provide certain benefits to the ship builders so that they get more encouraged in the business.
"We must say the government is providing some facilities like bonded warehouse and a cash incentive of 5 per cent on export of ship. But there are some vital issues to consider. The return on investment is very small. So it is very difficult for a shipyard to bear credit facility from the market at 18 or 20 per cent rate of interest which other industries are bound to do as per existing market. In other shipbuilding nations the government has made policy for shipbuilders, one of which is to provide them credit at only single digit rate of interest," he said.
This industry also requires a special economic zone with the facilities that shipyards require, like heavy logistics, river mouth, access to nearby port and many more. This way the foreign buyers will feel secure to invest rather than depending on one or two shipyards dispersed in different places of the country.