Potentials of shipbuilding industry

Bangladesh can have 2% of the worldwide small and medium size shipbuilding market share within the next five years if it gets proper government support, says shipbuilding industry specialist Mohammad Rafiqul Islam.

Mohammad Rafiqul Islam, who is a Professor of Department of Naval Architecture & Marine Engineering (NAME) of Bangladesh University of Engineering and Technology (BUET), told bdnews24.com, “Ships made in Bangladesh are 15 percent cheaper than even Chinese ships and are of the same quality.”

He said, “Shipbuilding is a labour intensive industry, Bangladeshi labours are still cheaper than Chinese, Korean and Japanese.”

Nearly 90 percent of the ships are made by China, Korea and Japan according to World Shipbuilding Statistics.

Since Bangladesh is not capable of making very large ships, so it will have to target the small and medium size shipbuilding, which has a yearly market of around 200 billion US dollar.

“If Bangladesh can capture 2 percent of 200 billion us dollar market of small and medium size shipbuilding, it will need twenty more shipyards. But this will require proper government support,” said Rafiqul.

Reduction of interest rate and cost

As shipbuilding industry requires huge capital, Bangladeshi shipbuilders need to have a large capital, and that is a major source of competitive disadvantage for Bangladeshi builders.

Bangladeshi shipbuilders can get loan at an interest rate of 16 percent whereas their Chinese counterparts can acquire loan at, on an average, 6 percent interest rate.

Rafiqul Islam said, “The interest rate should be less than 10 percent for this sector to grow. Also the government should made export development fund (EDF) for helping this sector with low cost fund as like the garment sector”

A Tk 2000-million export development fund (EDF) was envisaged for this sector in 2011 by the finance ministry.

“But I do not know any update about the fund yet,” said Mohammad Rafiqul Islam Professor of Department of Naval Architecture & Marine Engineering (NAME) of BUET.

Incentives

Now the sector get 5 percent incentive on export, but the sector will be benefitted, if it is increased to 10 percent.

“India provide nearly 25 percent incentive to this sector”, said Rafiqul Islam.

*Protecting the shipbuilding industry *

“Government should discourage import of ships which can be made by the shipbuilders of our country.” said Rafiqul.

“Bangladesh can make high quality small and medium size ship with lower cost. So why should we import the same?” Rafiqul asked.

Bangladeshi ship builders meet country’s internal demand for ships worth Tk 20 billion per year. Earlier through import most of the demands were fulfilled.

The future

“We will be able to design high quality ships if we can establish a towing tank in Bangladesh University of Engineering and Technology (BUET).” Rafiqul said.

Towing tank is a physical basin or tank used to carry out hydrodynamic tests of ship models, for the purpose of designing a new (full sized) ship, or refining the design of a ship to improve the ship's performance at sea.

“We need Tk 500 million to build this Towing tank, the industry owner will give us 10 percent of the required fund but the remaining ninety percent will have to come from the government. We are waiting for that money.” said Rafiqul.

Bangladeshi ship builders now add 30 to 40 percent value to a ship. If a Towing tank can be established, the value addition will improve.

If there is a normal population growth, by the year 2050 the world population will cross 9 billion and hence the need for transportation will increase. About 80 to 85 percent of the commodities will be transported by the ships.

“Is it not a bigger market for us?” Mohammad Rafiqul Islam posed.