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10. November 2008 1 10 /11 /November /2008 03:02
Bangladesh set to emerge as new shipbuilding hub




FE Report

Ship building i
ndustry 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.

Experts said the country has become a new destination for companies seeking construction of small ocean-going 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.

The Export Promotion Bureau (EPB) said it does not have any data on the size of export orders by individual exporters.

The company then went on to sign two more deals worth $82 million in October and December last year. Bari said later this month his company would sign deal with another German company to build four ships, each worth $17.5 million.

"We are now investing about Tk 1.10 billion to set up two dry docks in our shipyard. We hope by early next year when the docks will be built, we can take order worth $500 million," Bari said.

Western Marine, which was inspired by professor Bari's venture has also had a remarkable year in 2007 during which it signed deal worth over $80 million including the construction of five multipurpose cargo vessel for a Danish owner, each weighing 4100 tonnes.

The company, which has set up a modern slipway on the bank of the river Karnaphuli, has also signed a letter of intent with two foreign companies to construct 14 small vessels at a cost of around $150 million.

It hopes a full agreement with the two companies can be signed later this month.

"To be frank, we are now swamped with orders. But with the existing capacity, we can only build vessels worth around $100 million a year," Hossain said.

The sudden explosion of orders came after vigorous inspection by the shipping companies in the two shipyards. The shipyards had to upgrade their infrastructure to meet international standards the shipping companies were looking for.

"They're now convinced we can build ships and deliver them on time. We have also enough skilled workforce," said Bari, adding he planned to double his 700-strong workforce to fill the order.

"Ship building is in our blood. We have been doing it for thousands of years. Even today, majority of the workers in Singapore and Dubai shipyards are from Bangladesh," Hossain said.

According to the industry estimates, more than 100,000 Bangladeshis are now employed in Singapore, Korea and Dubai shipyards. "Some of them are now well-placed in mid-management," Hossain, who worked in top shipyard, said.

The country has also been known for its small shipbuilding industry, which churns out dozens of launches every year. Most of the nearly 3,000 launches, oil tankers and cargo ships that ply in Bangladesh waterways were made there.

Experts said it was only a matter of time before Bangladesh emerges as a major hub for building small ocean-going ships.

"The country has always had enough skilled and cheap workforce. Now it has the know-how and facilities," said C.F. Zaman, Bangladesh head of worldwide ship inspection agency Germanischer Lloyd.

It was the Germanischer Lloyd, which prompted Ananda and Western Marine to look for international order, offering them technological help to construct ocean-going vessels.

Now after several years of hard-work and promotion, Zaman said, he was seeing the fruits of his labour.

"I can easily foresee local shipbuilding emerging as a billion-dollar industry in four to five years' time. It can easily be a global leader in the small-ship making industry."

At GL's insistence, three more shipyards, High-speed at Meghnaghat, Karnaphuli shipyard in Chittagong and Narayanganj dry-dock have started upgrading their infrastructure to build seafaring ships.

"These three companies have ready-made manpower and the skill to build ships. Together, they built hundreds of launches and tankers for local market. With some technological help and upgraded infrastructure, they will soon be able to build ocean going ships," Zaman said.

Ananda chief Bari and Western Marine's Hossain said the industry even had the potential to dwarf the country's garments sector, the biggest export earner, in the long run.

"It took us 25 years to earn $10 billion a year in the garments sector. The shipbuilders can do it in less than 10 years," Bari said.

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