Home ›› 28 May 2022 ›› Editorial
Against the backdrop of a beleaguered world shaking off the two-year impasse induced by the virus and grappling with the current calamity of the war in Europe, the news of a Tk. 2000 crore refinance scheme by the Bangladesh Bank to support the shipbuilding industry is heartening.
The two-year-long global stalemate of the Covid-19 pandemic has scarred almost every industry with the sudden conflict in Ukraine adding more woe to global trade. Fortunately, the move by Bangladesh bank to aid the industry, which has already received worldwide acknowledgement, will ease the pressure on the industry, helping it come out of the pandemic-induced slump.
As per a TBP report, the loans will be provided at 4.5 per cent interest, which will be for 12 years including a three year grace period. However, this loan cannot be used for construction of dockyard, lease or land purchase. The loan application deadline is set for June 30, 2024.
The step by Bangladesh Bank deserves kudos. According to the report, if the business is solid then loans can be renewed.
Bangladesh has made a global mark with ready-made garment exports although the contribution of the country in other industries has not received the required exposure. The common understanding is that in the last two decades, shipbuilding in Bangladesh received attention of the world but the not widely known fact is the industry has been around for more than five hundred years. In the 15th century, travellers from Europe recorded that the port city of Chittagong and Sandwip were manufacturing points for large ships. This expanded in the Mughal period.
In the 17th century, shipyards of Chittagong built battle ships for the Sultan of Turkey. As per the noted economic historian Indrajit Ray, between 1769 and 1771, shipbuilding output of Bengal was 223,250 tonnes compared to 23,061 tonnes in 19 North American colonies.
The Bengal rice ships introduced the revolutionary flush deck designs in the locally made vessels, which were later copied by East India Company ships to strengthen the hulls of their vessels. Battleships made in Bengal were used in the Battle of Trafalgar by the British while the modern shipbuilding was established here in 1922.
The industry has a very rich, fascinating and diverse history behind it, which needs to be included in academic texts and publicised.
Of course, one of the reasons why many other countries look to Bangladesh for building ships is because of low labour cost, similar to the RMG sector. However, the safety factor for the ship-building is an issue that cannot be overlooked. For garments, the Rana Plaza tragedy opened our eyes to the need to comply with international standards of safety and labour rights. The last thing this country needs is an accident in the ship building or scrapping sector for the world to sit up and focus on safety matters.
The loan by Bangladesh Bank should also have thorough assessments of working conditions as part of the due diligence done before sanctioning funds. It’s believed that loans are usually given based on bank-customer relations, which is possibly the unwritten norm everywhere. However, if relation is the sole pre condition then this facility can be abused by a handful of entities while those trying for first time loans may be left out.
The process should have as much transparency as possible because the industry cannot be allowed to slip into the clutches of a syndicate.
The loan is currently for big ship building industry while the government may think about similar incentives for mid and small level vessel construction that are used in the country for transport plus goods shipment.
In addition, to seek out more orders from African plus South American nations, vigorous publicity of the history of Bangladesh’s ship building is essential.
