Shipbuilding boom in Bangladesh

A Business Corresponden Meghna Group of Industries, headquartered in Dhaka, Bangladesh, has decided to invest in the country's promising shipbuilding and dockyard sector, it is learnt. To begin with, the $600-million diversified conglomerate intends to construct four 15,000-tonne ships a year in the proposed facility. Meghna Ship Builders and Dockyard Ltd, a group company, plans to establish a $40 million facility at Meghnaghat in Naryanganj, Dhaka, to build ocean-going vessels. The company has signed an agreement with STX Shipbuilding Company Ltd of South Korea to construct the shipyard. Plans are afoot to raise investment in the shipyard to $100 million in coming months. The mega investment opens up opportunities for Indian companies engaged in the business of shipbuilding, shipyards and repairs. Already, several foreign companies are contacting Meghna Group seeking lucrative orders and contracts. Bangladesh's shipbuilding industry is reportedly executing some $300 million worth of orders for constructing ocean-going ships for European and Southeast Asian clients (see box). STX Shipbuilding Company, which has expertise in building ocean-going oil and chemical tankers, container ships, bulk carriers, LPG carriers, pure care carriers and special ships, will provide technical support to Meghna for constructing the shipyard. The shipyard will come up under a tight schedule with commercial operations slated to begin within 15 months. Mostafa Kamal, Chairman and Managing Director, Meghna Group of Industries, has been reported as saying that his company will first introduce a robotic welding and automatic painting facilities in the upcoming shipyard. Danes in Dhaka waters The Danish shipping sector recently placed orders with Bangladeshi shipyards, the Embassy of Denmark in Dhaka announced. In the first case, Ananda Shipyard & Slipways Ltd, a leading shipbuilding company, has signed an agreement with CS & Partnere A/S, a Danish ship consortium, for building up to 14 ships. The first ship, a 2,900 DWT multi-purpose vessel, was to be delivered early 2008. In second order, Western Marine of Chittagong is building up to five 4,100 DWT multipurpose vessels, for delivery to a Danish ship consortium. "The orders will be instrumental in bringing Bangladesh into the picture as a serious player for building ships for the international shipping market," Einar Hebogrd Jensen, Danish Ambassador to Bangladesh, has said. "If these assignments prove successful, the spin-off would clearly be for the shipbuilding industry in Bangladesh to play an important role in future competition against shipbuilding nations like Vietnam and China."

Shipbuilding Industry Of Bangladesh

Ship building industry in Bangladesh is set to emerge as new export leader after two ship builders said Monday they have already grabbed order worth over $250 million last year.

Meghnaghat-based Ananda Shipyards said it signed agreements worth around $180 million while Chittagong-based Western Marine put its total orders to more than $70 million.

"It's a huge leap forward for us. If the trend continues, ship building in Bangladesh will be the second largest exporter after garments in 2015," chairman of Ananda Shipbuilders Abdullahel Bari said.

"If we can grab one per cent of the global order for small ships, the amount will be worth $4.0 billion. The global market for small ships is now about $400 billion," said Shakhawat Hossain, managing director of Western Marine.

Their comments follow what the experts said an epoch-making year for the country's ship building industry, which earlier had been languished in building smaller launches and tankers for local operators.

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Experts said the country has become a new destination for companies seeking construction of small oceangoing vessels as traditional shipbuilding nations such as South Korea and China now focus on building large ships. Even Vietnam, which is relatively new in ship building, is no longer interested to build small ships weighing upto 25,000 dead weight tonnes. "They want to build bigger vessels because it is relatively cheaper and requires fewer people," Hossain said, adding their reluctance has made India and Indonesia the new destinations for small shipbuilding. The focus on Bangladesh came in April last year when Ananda signed deals worth around $100 million with two German shipping companies to build eight vessels with capacity for 325 containers by June 2010. "As far as I know this was the single biggest export order for the country. The contract sealed our name as a new ship building country in the global map," Bari, a former professor of naval engineering, said....

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Shipbuilding History of Bangladesh Bangladesh has a strong background in building ships since ancient times. Bangladesh has more than 200 rivers with a total length of about 22,155km plus a long coast line on the Bay of Bengal. Between the 15th and 17th century Bangladesh was the center of building ocean-going vessels in Asia. In the early 19th century, the shipyards of Chittagong built many commercial ships of up to 1,000 tons and also British navy vessels that participated in the battle of Trafalgar in 1805. Due to this historic prosperous background and also a natural geographical advantage, there are presently more than 200 shipbuilding and ship-repair yards in Bangladesh. Among them, I visited two, ASSL and WMS, which are the most modern and largest shipyards in Bangladesh. My first impression was that both of them are well organized in terms of production and assembly flow lines, and that the facilities (welding, steel cutting and design office software) and their size (up to about 10,000 tons) were better than I had expected. Education It was good to note that in NAME, there are a large number of well qualified professors who studied overseas. The students are active, and can speak English very well, which is a very important factor

in the shipbuilding industry. However, there were no valuable experimental facilities which can be effectively used in qualitative education and good research. Potentials and Challenges Local shipbuilders should go for making large ocean-going vessels having 10,000DWT capacity utilizing the unique opportunity of cheap labor force. Proper nurturing of the promising sector surely help bolster up the economic growth of the country, said the RINA regional manager (South Asia, Middle East and Australia). Habibur Rahman said, the country should go for making large vessels. I call upon all shipbuilders to build big ships with 10,000 dead weight tonnage (DWT) capacity to prove that Bangladesh can do it as well.At present, Ananda Shipyard and Slipways (ASSL), Highspeed shipbuilding, Dhaka Dockyard and Engineering Works, Western Marine, Khan Brothers Shipbuilding Ltd and Karnaphuli Shipyard are the leading shipbuilding companies that make ships for foreign buyers. These companies have received export orders of world-class seagoing vessels both small and medium worth $478 million with a deadline to deliver those by 2013, according to Export Promotion Bureau (EPB).

Starting a big sail - Shipbuilding in Bangladesh

Starting a big sail

Faizul Khan Tanim looks back at shipbuilding history and examines the enormous potential of Bangladesh as an emerging shipbuilding nation photo by Al-Emrun Garjon Ship building and breaking has been going on in this country for a long time and we have such a highly experienced labor force that even today, the majority of the workers in Singapore shipyards are from Bangladesh, says Kazi Salimul Kibria, manager of finance and accounts of WMSL. Bangladesh, a riverine country with huge coastal areas that are frequently lashed by cyclones and natural disasters, can, according to sources in the shipbuilding industry, actually generate vast amounts of revenue from its extensive coastline. Before becoming a ship building nation, there are four mandatory conditions in order to produce oceangoing vessels: international standard shipbuilding practice, quality management system, coastal and riverine country, and infrastructure with proper sheds and skilled manpower. Bangladesh scores full marks on all these counts. With global shipbuilding orders of very large vessels increasing everyday, a market is emerging in Bangladesh for shipbuilding yards that can concentrate on producing smaller sea-going vessels as the

industry leaders like China, South Korea and Vietnam go for the larger container ships, bulkers and tankers. According to shipbuilding experts in this country and abroad, Bangladesh can emerge a surprise competitor in the small to medium ocean-going vessels market. This particularly applies to shipyards that until now were best known for scrapping and breaking ships, and not building them. Two shipbuilders Meghnaghat-based Ananda Shipyard and Slipways Ltd (ASSL) emerged in 1999 with 80,000 square metre (or 20 acres) of total area and Chittagong-based Western Marine Shipyard Ltd (WMSL) 40,000 square metres, which formed in 2002, said they signed agreements and received foreign orders, with a combined worth of around USD 250 million. They are currently the only two shipyards receiving international orders. These companies are mainly producing multipurpose container vessels of 4500 dwt (dwt stands for Deadweight Tonnage, is a measure of how much mass or weight a ship can carry) up to 6100 dwt. They have customers ranging from the local investors such as BIWTA (Bangladesh In Land Water Transport Authority), Roads and Highways, Chittagong Port Authority, Bangladesh Institute of Marine Technology (BIMT), Bangladesh Police and local tours and travels organisations like Hotel Sarina, Keari Sinbad through to international companies like Stella Shipping and Sea Consult Ltd of Denmark, Wessels Reederei GmbH and Komrowski Maritim GmbH of Germany. The heads of both ASSL and WMSL said that at least 50 crore Taka is needed to build a decent setup or a shipbuilding yard which can grow to become a company capable of taking both foreign and local orders. Due to the high prices involved in air transportation and the huge cargos that can be transferred by sea, shipbuilding remains one of the most important businesses today. And yet there is a growing crisis of in the production of cargo carrying vessels in the global market. Ship building industry sources said since major ship manufacturing countries like South Korea, Vietnam, China and Singapore are becoming less interested in building small ocean going vessels, European buyers are now coming to Bangladesh and India. Experts emphasised that ship building in East Asian countries has become costly due to the high wages of workers. The industry is gradually shifting towards developing countries mainly because of the availability of a cheap labour force. Managing director of WMSL Shakhawat Hossain said no shipbuilding country could catch at least 25 percent $400 billion market of the global order $1600 billion for small ships. And according to my calculation, if we can bring home an order of one percent of that 25 percent, it is $4 billion and then hopefully our GDP will increase by at least 2 percent within the near future. Adding to Shakhawats views, chairman of ASSL Abdullahel Bari said If this development can continue with another 12 to 13 shipbuilding yards producing ships for international customers, ship building in Bangladesh will be the second largest exporter after garments by 2015. The focus on Bangladesh came as ASSL and WMSL signed deals with mainly Danish, Netherlands and German companies. ASSL received its first order in 2005 from Stella Shipping of Denmark and WMSL in 2007. The flow of orders came after a comprehensive inspection by the shipping companies in the two shipyards, followed by embassy visits from the European nations. The shipyards had to upgrade their infrastructure to meet the international standards that the shipping companies required. For example, fabrication yards with covered sheds where the weather wont affect production, shipbuilding halls, experienced workforce, concern for environment, and most importantly absolutely no child labor and plenty of safety measures like the mandatory usage of helmets, goggles, gloves, boots and special suits inside the premises. Companies that place orders even go to the extent of having representatives living on the shipyard premises to constantly check the quality of production and working environment, said both Md Nasim Uddin, GM Shipyard of WMSL and Md Rakibur Rahman Chowdhury, director of administration, ASSL. Bangladesh is also renowned for its local shipbuilding industry, which produces launches, ferries and small boats, including tourist and cruise boats every year. And almost all of the nearly 3,000 launches, oil tankers and cargo ships that ply their trade in Bangladeshs waterways were made from these shipyards. When asked about what government support these shipbuilders are seeking, they said if the government allows duty free import of the specific categories of steel only used to build ships (which are so expensive that they do not have value in companies other than shipbuilding), for example a back to back letter of credit system for importing steel; the basic raw materials for the ship building industry, draft ports, duty exemption for import of capital machinery, bonded warehouse facilities, special financial subsidy and providing green channel for importing raw materials with this assistance, it would help the industry flourish. Duty free import of steel can be allowed against a bond system providing that the material would be used only for export purposes, and it would create scope for huge export orders, facilitating use of the countrys cheap labour force, experts from the shipyards said. They said that once the industry grows, this industry can have value added when local sanitary items, nuts and bolts and even steel plates will be manufactured in this country. It is not a difficult job for local experts to build large ships on the basis of plans and drawings provided by foreign buyers, said M Saiful Islam, technical director of ASSL.

Ship designs are always bought from design houses paying high amount of money and this ensures not only a high quality of management while producing, but also a presentation package of the highest standards which will attract more foreign and local clients each day.