Shipbuilding sector: investments increase despite the gloom

Entrepreneurs in Bangladesh have poured billions of dollars into the shipbuilding industry in recent years to meet their own demand for ships as well as to regain the international market.

Their entry came despite the sinking of ship exports from Bangladesh, driven by the global financial crisis of 2007-2008, collapsing demand and failure to maintain international standards and deliver ships on time.

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Ship exporters recouped just $0.2 million in the past fiscal year, the lowest in a decade, according to data from the Export Promotion Bureau.

Export earnings were $0.18 million in the July-April period of the current fiscal year, up slightly from $0.16 million in the same period a year ago. one year old.

Although the export of ships is in a difficult situation, a large market has been created, thanks to the booming international trade of Bangladesh through the maritime routes.

More than 90% of the country’s $110 billion in international trade is done by sea. Hundreds of ships are needed every year to provide the service.

Today, Bangladesh has more than 100 shipyards, most serving the local market, worth more than Tk 3,000 crore.

According to the latest report of the United Nations Conference on Trade and Development, Bangladesh has risen from 13 places to 14th place in the shipbuilding industry in five years, ahead of the United States, India, Singapore and Spain.

Success has been achieved by major industrial groups, including Meghna Group, City Group and Delta Shipyard, a joint investment of TK Group and Seacom Group.

Meghna Group has so far manufactured the largest number of vessels to international standards.

The group started investing in the sector in 2008 and has so far built 110 vessels at Meghna Shipbuilders & Dockyard, a subsidiary of the group, in Meghnaghat in Sonargaon of Narayanganj.

Over the past three years, the company has produced 45 ships operating in coastal areas.

“In order to get raw materials from Chattogram port to factories or warehouses through inland waterways, a bigger ship is needed instead of a lighter ship,” said Mostafa Kamal, president and CEO of the Meghna group.

“As the movement of goods increases, it is not possible to handle them in small ships, so I have invested heavily in building relatively large ships.”

The group has invested Tk 700-800 crore so far and employs more than 1,200 people.

“After meeting our own needs, we are now ready to export ships,” Kamal said.

City Group, one of the largest raw material processors in Bangladesh, entered the industry in 1996 to transport goods and raw materials from Chattogram to Dhaka.

He had a shipyard at Rupganj from Narayanganj which has now been transferred to Meghnaghat.

So far he has built 60-65 ships. Another 20 to 25 vessels are currently under construction, Biswajit Saha, the group’s director of corporate and regulatory affairs, said recently.

It has injected around Tk 2,000 crore into the sector and employs 4,000 to 5,000 people.

Despite sluggish activity, shipbuilders are expected to continue their investment frenzy due to the potential of local industry.

Another reason is that market leaders in the global shipbuilding industry are not interested in producing small vessels under 25,000 DWT (DWT) where Bangladesh can lead the way.

Globally, the market size of the shipbuilding industry is $1.6 trillion, while the small vessel market is worth around $400 billion.

If Bangladesh can grab 1% of the market, the amount will be $4 billion, according to Prof. NM Golam Zakaria, Head of Department of Naval Architecture and Marine Engineering at Bangladesh University of Engineering and Technology .

Recently, the government signed a contract with two foreign companies to set up a shipbuilding facility at Payra seaport in Patuakhali with an investment of $1.58 billion to reduce the import dependency of ships and commercialize ships around the world.

The state-run Bangladesh Steel and Engineering Corporation under the Ministry of Industry will provide land to Gentium Solutions, a Singapore- and Australia-based company, and Damen Shipyards Group, a Dutch company, to build the shipyard.