Bangladesh: BB set to form Tk 5b fund for shipbuilding

The central bank is likely to form a Tk 5.0 billion fund for the country's emerging shipbuilding industry in a bid to turn into a substantial export earning sector similar to ready-made garments, officials said. "The Bangladesh Bank (BB) has agreed in principle to create the fund. Within a short period the fund might be introduced through a circular," a senior central bank official told the FE.
Following a government order, a sub-committee led by the BB Deputy Governor Nazrul Huda is working to mobilise necessary support of the banking sector needed by the booming shipbuilding industry.
The central bank will create the Tk 5.0 billion fund under a "refinancing scheme". The commercial banks will take money from the proposed "fund" and lend it to the shipbuilders, the BB official said.
"If the fund is created, one of our major problems will be solved," shipbuilder Abdullahel Bari of Ananda shipbuilding said adding, "Funding is a major obstacle to expand our shipyard to secure more export orders."
The country's booming shipbuilding industry has so far bagged nearly US$800 million worth of export orders for making some 50 ocean-going vessels and cargoes. Three companies -- Ananda, Western Marine and the Highspeed - have obtained those orders.
The Ananda Shipyard until last year 2008 have received orders for making 40 ships and ferries worth $450 million from different European and African countries.
"Creation of such a fund of the BB was imperative for the shipbuilders. Commercial banks are often reluctant to finance us as we are new in this business," said Tofayel Kabir Khan, managing director of Khan Brothers Shipbuilding Ltd.
"I have knocked at the door of a dozen banks but failed to convince them for financing. I need nearly Tk 30 million to complete setting up of country's biggest shipyard beside the river Meghna in Munshiganj," he said.
If we get government support properly we will be able to fetch billions of dollars worth of export orders from the international shipping companies within a couple of years, Ananda's chief Abdullahel Bari said.
We are trying to secure at least one per cent of the world's $400 billion shipbuilding market within few years, as traditional shipbuilding nations such as South Korea, Japan, Singapore and China are now focussing on making large vessels, he said.
Seeing boom some other local companies are on the pipeline for setting up shipyards. Among those Karnaphuli Shipbuilding, Dhaka Shipyard, Bengal Electric, Desh Shipbuilding of Rangs Properties and state-owned Dockyard & Engineering Works Limited (DEWL) are mentionable.