Bangladesh: Shipbuilding industry sees growth spree

The country's fast growing ship building industry is likely to see another growth spurt within a year as a number of foreign companies are seeking local partners to develop backward linkage industries. Ship building owners said joint venture investment are likely to come from Denmark, Germany, France and few other countries that would help reduce the foreign dependence from ship designing to painting to make world class ocean-going vessels.
Officials of Danish Embassy said at least nine Danish entrepreneurs are working on establishing joint ventures to develop deck equipment, windows, generators, hydraulic system and marine electrical equipment.
Besides, some Danish Naval architect firms are also considering to set up design houses to help the Bangladesh shipyards develop their own design for which they spend about 10 per cent of the production cost.
Officials said a good number of German businessmen who visited the country in October also expressed their willingness to enter into joint ventures for setting up heavy tech industries to build engine and generator.
Though most of these deals are at negotiation level, they said, the joint ventures from Germany would help the country double its ship building capacity.
Md Shakhawat Hossain, Managing Director of Western Marine Shipyard, said joint ventures would be a win-win deal as foreign companies business costs will lower and Bangladesh would get home grown supply of allied products thus saving valuable foreign currency.
"This will help reduce production cost and increase value addition of Bangladesh made oceangoing vessels," he said and added that foreign investment here would increase value addition of the country's product to 50 per cent which is now 35 per cent.
The country now has some 10 shipyards which have capacity to make trawlers, containers ships, multipurpose vessels, tankers, various types of tugs, patrol boats, passenger vessels seismic vessels and fisheries research vessels.
Morten Siem Lynge, Programme Coordinator of Danish Embassy to Bangladesh told the FE that though the investment would not create big employment, it would help the country get skilled workers and experts of international level.
He said within a short time, memorandum of understanding (MOU) would be signed between a few Danish and Bangladesh companies to start joint ventures in the country.
Shakhawat Hossain said at present the country's carpentry and electrical industries can support the needs of different sectors other than ship building as they have lack of technology and skill to do so.
"The joint venture deals would ensure technology transfer and building capacity of these companies to carry these carpentry and electric works especially for the growing industry," he added.
According to a study of Danish Embassy, investment cost in the ship building industry in the country is 15 per cent lower than other ship building nations due to cheaper labour cost.
It shows that the country can supply only 10 per cent components for building exportable ships but its support to the domestic inland and coastal vessels manufacturing is around 40 per cent, most of which are believed to be by small and medium enterprises (SMEs) with low skill and training.
The Danish study says that though cost of labour in ship building is typically around 20-30 per cent of the total ship manufacturing costs, the study says that the value of the local items which is 40 per cent of the total ship cost could accordingly be upgraded to 70 per cent.
Among the 200 shipyards, the country has four shipyards capable to build ocean going small vessels but there are six others which would be able to reach the same category by a year or two.
The Danish study finds potentiality to develop 18 backward linkage industries in the country which include ship's out fittings, safety accessories, marine lighting, maritime signs, symbols and posters, piston rings, switch gear, furniture, marine cables, anchor and chain, electrical and electronic items and shipbuilding steel plate.