Home ›› 19 Aug 2022 ›› Front
The country’s shipbuilding industry is passing through a tough time as entrepreneurs of the sector are now struggling to survive due to a sharp decline in purchase orders caused by one after another unavoidable disastrous situations.
No sooner had the impact of the coronavirus pandemic on the shipbuilding industry subsided, than the ongoing global economic crisis triggered by the Russia-Ukraine war dealt another blow to the already fragile sector, drastically reducing the number of shipbuilding due to lack of export orders, said the industry insiders.
Besides, they said, BIWTA, Navy and Coast Guard, who are among the regular buyers of the ships, have also halted buying ships following a government decision made to tackle the recent economic crisis.
“In addition to declined purchase orders, continued price pressure on shipbuilding materials has added insult to injury, severely affecting the Tk 50,000 crore once booming local industry,” said Bangladesh Ship Builders Association Vice President Shahidul Islam Bhuiyan, adding that the shipbuilding costs have almost doubled in last 15 years.
“Compared to 3-4 years ago, shipbuilding has declined to one-tenth now. Many entrepreneurs invested in the shipbuilding industry without understanding the business. But, due to various problems, they fail to carry on the business in the long run. Instead of building new ships, they survive by repairing ships,” he said.
Dhaka Ship Builders Group President Md Nazmul Haque told The Business Post that in the past around 30-40 new ships were built annually in the country’s main shipbuilding hub of Keraniganj. But due to the increased prices of shipbuilding materials and lack of purchase orders, only 10-12 ships were built in the last financial year.
“Around 100 shipbuilding companies are based in Keraniganj, most of them are out of business now,” he added.
Sources said shipbuilding has become a promising industry mainly through the export of locally built ships during the last one and a half decades. At present, Bangladesh has around 200 small and large shipbuilding companies based in Dhaka, Chittagong, Narayanganj, Barisal and Khulna.
Ananda Shipyard and Slipways Ltd is the pioneer in exporting ships in Bangladesh’s shipbuilding industry. In 2005, it received a purchase order from Denmark, and handed over the ship in 2008. Besides Ananda, Western Marine Shipyard Ltd and several other companies manufacture ships that are exported to different European countries including Germany, Netherlands, Denmark, Norway, Finland, and Sweden.
Industry insiders said as European countries are the main buyers of Bangladeshi ships; the shipbuilding industry has been affected severely due to the ongoing economic crisis in Europe triggered by the Russia-Ukraine war. No purchase order has been placed in the last few months.
Mentioning that they have to deliver a ship to Germany in September this year, Ananda Shipyard and Slipways Ltd’s Executive Director Dr Tariqul Islam told The Business Post, “The price of imported shipbuilding materials have increased by 20 per cent to 25 per cent, compared to the time when we received the order. Usually, we make 7-8 per cent profit from a project, but I will have to count losses from this project.”
“The various government agencies including BIWTA, Navy and Coast Guard are the main purchasers of ships. In order to tackle the recent economic crisis, government institutions have stopped buying ships for their different projects. The shipbuilding industry is counting huge losses following this directive,” he added.
The shipbuilder said the number of buyers from the private sector has also decreased in recent years as they are now building ships themselves. Different groups of companies including Meghna, Bashundhara, and Abul Khair are now making ships for their own usage to minimise the cost, although they do not sell ships.
Karnafuly Ship Builders Limited (KSBL) Managing Director M Abdur Rashid told The Business Post that they built 112 dredgers and ships for the BIWTS, between the end of 2017 and the middle of 2020. They have delivered the dredgers and ships, built maintaining international standards, to BIWTA.
“However, during recent years, many inexperienced businessmen have invested in the industry. They are receiving work orders but failing to complete the work in time. They fail to build a ship even in five years that actually needs one and a half years’ time at best,” he said.
“The situation of shipbuilding industry has worsened to such an extent at present that if a new entrepreneur invests, he would incur loss due to the increased prices of shipbuilding equipment in the international market as well as in the domestic market. The increased shipbuilding costs have affected the industry so much that the businessmen are now fighting for survival,” he added.