Shipbuilding sector awaits multi billion dollar export orders next year

http://www1.bssnews.net/newsDetails.php?cat=0&id=212919&date=2011-12-07

Shipbuilding sector awaits multi billion dollar export orders next year

DHAKA, Dec 7 (BSS) – The country’s burgeoning shipbuilding industry, which is now witnessing a slowdown against the backdrop of falling demand of ships from Europe, awaits multi billion dollar export orders next year.

Buyers of Europe, the major destination for Bangladeshi shipbuilders, are now reluctant a bit to provide local shipbuilders with export orders due to the continuous economic jitters that followed the global financial crisis.

Amid the crisis, local shipbuilders are doing extraordinary well because of the country’s unique characteristics of low cost of production and skilled engineers, welders and feeders, leading shipbuilders said.

The government support such as green channel and bonded warehouse facilities and reduction in import duty for raw materials led to the performance, they said and added that now the industry needs banking support to compete with archrivals India and Vietnam.

“We have advanced much in building small vessels. We are not out of the world market and those are placing orders mostly from Europe where financial condition is not well.we need banking supports to offset the slowdown,” KM Mahmood ur Rahman, Chairman of Bangladesh Shipbuilders’ Association (BSA), told BSS.

Rahman, also president of Highspeed Group of Companies, said banking supports are indispensable for competing with archrivals India and Vietnam. The supports include Bangladesh Bank’s Tk 200 crore refinancing scheme as committed earlier, scraping bank guarantees, exemption of L/C (letter of credit) conformation costs and arrangements of loans with low interest rates as working capital.

At present, bank interest rates stood at 20 percent including all charges, which is highest in the world, he said adding that the government should also ensure utilities and expand infrastructure for long-term sustainability of the nascent sector.

Highspeed Ltd, the country’s first shipbuilding company that started activities jointly with Japanese Mitsui and got international recognition by building four ships for Food and Agriculture Organisation (FAO).

Rahman described the global financial recession as for now and said it will come to an end soon and during this period local ship makers are expanding respective shipbuilding facilities.

Welcoming the government move to set up a shipbuilding zone to give a further boost to the industry, he favoured setting up it in Munshiganj district because of available shipyards ready.

“Right at this moment our company has orders worth 300 million US dollars and we have a plan to set up at least 10 shipyards investing Taka 150 crore each which will encourage more companies to start shipbuilding business,” said the BSA chairman.

Chairman of Western Marine Shipyard Ltd Saiful Islam said shipbuilding export growth (July-Oct current fiscal) shows
negative due to Eurozone debt crisis and it will further hurt the
sector if the crisis prolongs.

But local shipbuilders are now expanding facilities leaving aside the Eurozone crisis, he said. “We are expanding our Narayanganj Engineering and Shipbuilding Ltd at a cost of Taka 200 crore,” he added.

“There is no alternative to shipbuilding after readymade garments (RMG) to branding the country,” said Islam.

Managing director of Ananda Shipyard and Slipways Ltd Afroza Bari said European buyers don’t have enough money to give orders to Bangladesh. We will export ships of 10 billion US dollars once the global financial recession is over.shipbuilding sector will surpass all other sectors in the years to come”

“Although the order in the international market is relatively less, we continued our negotiations with buyers for our competitive price and costing,” Tofael Kabir Khan, managing director of Khan Brothers Shipbuilding Ltd, told the news agency.

Khan said Japan is going to be the new destination for Bangladeshi ship export as its market representatives are now carrying out studies to scoop out shipbuilding possibilities here.

Professor of Department of Naval Architecture and Marine Engineering of BUET, Dr M Rafiqul Islam said there is nothing for the shipbuilders to be worried about the ongoing slowdown in Bangladesh’s shipbuilding industry as European buyers will just delay to get back their ships built in Bangladesh.

Buyers will need huge number of ships and have to give orders from now on otherwise they will be in serious crisis, he said quoting the International Maritime Organisation (IMO) obligation to scrap all old ships by 2015.

If Bangladesh gets merely .05 per cent orders, our small shipbuilders will have to think at a large scale to absorb it, Prof Islam said adding that shipbuilding industry would contribute a lot to the country’s GDP in the days to come as some African countries likely to be added to export destinations in future.

Bangladesh is now receiving orders of oceangoing ships and ferries from Germany, Denmark and the Netherlands. At present Highspeed, Western Marine, Ananda, Khan Brothers, Dhaka Dockyard and Karnaphuli Shipyard are the leading companies that make ships for international buyers. They have received export order – worth $ 500 million with a deadline to deliver those by 2013, according to Export Promotion Bureau (EPB) data.

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