[WATCH] Shipbuilders eye good spot in $500b market

When marine engineer Sakhawat Hossain tossed a plan in 1995 to his friends to build cargo vessels—it was an idea that was never tried in the country before. With a few of his friends who believed in his vision, in 2000, he set up the first ship building yard “Western Marine Shipyard” on the eastern bank of Karnaphuli river in Chittagong.

While others made only boats and ferries, Hossain and his friends were wooing international customers to try them in building small scale ships. In 2008, they got the first order to build a cargo vessel for Germany.

Shipbuilding used to be one of the earliest industries in Bengal that expanded over the oceans from the Indian sea to the Persian Gulf. But it had died down centuries ago with the advent of industrial revolution.

Just like old times, from 2008, the country began manufacturing small scale ships for international market. Within the last eight years Bangladesh is emerging as one of the top small scale ship building nation. Western Marine and nine other companies have built ferries, cargo vessels, and multi-purpose ocean liners for countries like Denmark, Netherlands, Germany, India, Kenya, Finland and many others.

You will be surprised to know that Bangladesh is making each and every materials of a ship’s parts ranging from tiny nuts and bolts to the ship’s outer surface. It means the product we are making here is entirely “Made in Bangladesh”.

“Our labour cost is cheaper than many other countries. On average, ship owners can save at least 15 percent of their production cost if they choose to build their ships in Bangladesh,” says Sakhawat Hossain, also general secretary of the Bangladesh Shipbuilding Association.

Despite the industry's strengths and promise for the future, it is also facing some internal headwinds.  Bangladeshi shipbuilders can get loans at an interest rate of 15 to 16 percent whereas their Chinese counterparts can acquire loans at an average of 6 percent interest rate. Shipbuilding Association says, Bangladesh government should follow the Chinese example to make our ships cheaper in the global market. Bangladesh can net at least 10 percent of the $500 billion shipbuilding market that way.

“The shipbuilding industry is fetching much needed foreign currency while also generating employment opportunities within the country. So we expect government’s support to make it a big industry,” says Sakhawat Hossain.   

It is a humble beginning when compared to giant shipbuilding economies such as South Korea, China, and Japan. South Korea alone builds 41 percent of the world’s ships. In this highly competitive environment, China is now emerging as a major builder.

Though, in terms of export earnings we are way behind Korea or China but cheap labour cost gives Bangladesh a major edge. The average hourly labor charge in Bangladesh is only $1.00 whereas China and India’s charges are $7 and $2 per hour.

As Bangladeshi economy is growing at about 6 percent a year, its demand is rising for smaller ships and cargo carriers to transport goods and raw materials from the Chittagong port to different parts of the country.

Engineer Sakhawat Hossain explains that as more than 50 percent of the world's ships are over 20 years old and need to be replaced, Bangladesh can have a significant role to play in ensuring their replacement. Moreover, since the shipbuilding giants, Japan, South Korea and China are busy building big, specialised and hi-tech ships, the shipbuilding industry of Bangladesh can be expected to construct smaller vessels.

"Globally, this market is worth around $500 billion. If Bangladesh can get even 1 percent of this market, then it would amount to $5 billion in revenues. Policy support which includes low interest rate can help the industry to flourish," engineer Sakhawat Hossain adds.

According to the European traveler Caesar Frederick, during the middle of the 15th century, Chittagong was the centre of building ocean-going vessels. At that time many countries of Asia and Europe would regularly buy ships built in Chittagong. It has been said that Ibn-e-Batuta went back in a wooden ship built in a dock located at Sonargaon, Dhaka. In the 17th century AD, a fleet of ships of the Sultan of Turkey was built in Chittagong. During the first half of the 19th Century, the shipyards in Chittagong built ships that could carry up to 1000 DWT (deadweight tonnage).

However, this glory faded with time but fortunately, has once again been revived with the initiative of a few businessmen in the country. A little bit policy support can make Bangladesh a major player among the ship building nations today.