BMJ Volume- 1, Issue- 1 ISSN 2519-5972

Problems & Prospects of Bangladesh Shipping Industry: A Comparative

Overview
Wahidul Sheikh Shemon1
Abstract
Bangladesh is traditionally a ship building nation and has a rich heritage of
timber shipbuilding of many hundred years. Germanischer Lloyd has declared
Bangladesh as a shipbuilding nation of international standards in September
2008.She is presently contributing to the shipbuilding industries globally through
its exported workforce. These facts do not speak only of a heritage but of an
inbuilt ability of shipbuilding of people of this region. For the development of
shipbuilding industry we need to generate adequate demand in the local and
foreign market, elevated engineering skills, reasonable infrastructure, long term
government policy support along with attractive investment climate. National
and international issues and factors which apparently do not encourage
shipbuilding in Bangladesh need to be addressed. Impacts of those issues will be
evaluated and measures towards finding a solution will be incorporated. In this
paper at first, an overall picture of this industry has been depicted by identifying
the actual shipbuilding practice in both public and private sector. Relevant data
have been explored through extensive review of literature, field visits, interacting
with shipyard and ship owners. The potentiality, capability and problems of the
shipbuilding sector of Bangladesh have been identified.
Keywords: Shipbuilding, Class ship, potentiality, labour cost, productivity.
Introduction
Shipbuilding is a growing industry in Bangladesh with great potentials.
Bangladesh has a long history of shipbuilding dating back to the early modern era.
However, shipbuilding has become a major promising industry in recent years
when the locally made ships began to be exported. The optimism about this
industry arose from the success attained by a number of local entrepreneurs who
brought the name and fame to Bangladesh as a country with great potentials in
shipbuilding by building and handing over some ocean-going vessels to overseas
buyers. Since then, the shipbuilding in Bangladesh did not have to look back and
now new opportunities are knocking at the door to flourish this industry further.
It has 9,000 sq km of territorial waters, 720 km long coastline. It has 700 rivers
that come down from the surrounding countries and which provide 24000 km
long inland waterways.
At present about 10,000 inland and coastal ships have been working all over the
country, which carry more than 90% of total oil product, 70% of cargo and 35%
of passengers. More than 150,000 skilled and semi-skilled workers are employed
in this labour intensive sector. Two million people are related directly or
__________________________________________________________________
1
Lecturer, Department of Business Management, Bangabandhu Sheikh Mujibur Rahman Maritime
University, Bangladesh
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indirectly with shipbuilding industry. All inland and coastal ships are constructed
and repaired locally in Bangladeshi shipyards. Recently Bangladesh has
successfully exported her first ocean going ship to a high-end market like
Denmark competing with giant competitor like China, India and Vietnam in 2008.
Bangladesh has now over 200 shipbuilding companies, mostly concentrated in
Dhaka, Chittagong, Narayanganj, Barisal and Khulna. However, due to global
nature of this industry, an assessment of suitability to modern shipbuilding in
terms of global standard is of prime importance.

In this report, an effort has been made to evaluate the present shipbuilding
industries in Bangladesh. At first, an overall picture of this industry has been
depicted by identifying the actual shipbuilding practice in both public and private
sector. Relevant data have been explored through extensive review of literature,
field visits, interacting with shipyard and ship owners. The potentiality, capability
and problems of the shipbuilding sector of Bangladesh have been identified &
some recommendations have been made in line with this report.

Methodology Used For Data Collection

Data were collected through extensive review of literature, field visits, survey,
consultations and meetings with Government Authorities, Shipbuilding
Associations, existing and upcoming shipyards and its related stakeholders.
Private and public shipyards around the country were visited to collect primary
data and information about the local shipbuilding practice through interacting
with structured, unstructured and open ended questionnaires. Secondary
information about shipbuilding tradition and potentiality of Bangladesh and other
nation of the world were collected from both external and internal means.
Shipbuilding process (such as ship design, steel treatment, plate and section
preparation, welding quality, steel work, fabrication, outfitting work, hull erection
and launching) was observed to assess the standard of work. Primary and
Secondary data about labour, labour hour and labour cost were collected to assess
the labour productivity of local shipbuilding industries and to evaluate the
standard of local shipyards and comparing them with other shipbuilding nations.

Professional participations were conducted through Information, Questionnaire

and Interviews. The organizational set up, working environment; management
practices, performance and future vision of local shipyards were compared with
other shipbuilding nations.

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Historical Background

Because of the revering geography of Bangladesh, ships have been playing a

major role in the trade affairs of the people of this country since the ancient times.
According to the accounts of the 14th century Moroccoan traveller Ibn Batuta,
there used to be large fleets of warships docked in various ports of the country. A
medieval European traveller Caesar Frederick documented that the port city of
Chittagong was a manufacturing hub of large ships during the mid-15th century.
The volume of shipbuilding swelled extensively during the Mughal period.
During the 17th century, the shipyards of Chittagong used to build warships for
the Sultan of Turkey.

The Royal Navy had many warships built in Chittagong, some of which were also
used in the Battle of Trafalgar in 1805. Khulna Shipyard, the first modern
shipyard of Bangladesh, was established in 1957, constructed by a German firm.
Initially a private concern, the shipyard was later nationalized and came under the
control of Bangladesh Navy in 1999.

During Pakistan period public sector enterprises dominated the shipbuilding

Industry. There are more than fifty shipyards concentrated at Dhaka, Chittagong,
Narayanganj, Barisal and Khulna regions where inland costal and fishing fleets
are being built. In 1979, FAO funded contract for supply of 8 food grain carrying
vessels to Bangladesh Inland Water Transport Corporation (BIWTC) was secured
by High Speed Shipyard, Narayanganj. Mitsui Engineering and Shipbuilding
Industry of Japan entered into a joint venture in shipbuilding with High Speed
Shipyard and constructed 4 deep sea fishing vessels. Recently some shipbuilding
industries including Ananda Shipyard and Slipways Ltd, Dhaka and Western
Marine Shipyard Ltd, Chittagong have come up with modern shipbuilding
facilities that enabled them to receive export orders. However in 2008, Ananda
shipyard exported her first ocean going ship Stilla Marriage to Denmark and
earned reputation for Bangladesh as the ship exporting country in the world.
Present Status of Bangladeshi Shipbuilding Industry
There are more than fifty shipyards in Bangladesh and a hundred of shipbuilders
or contractors and marine workshops are actively involved in shipbuilding
activities. 70% of the shipyards are located in and around Dhaka, 20% are in
Chittagong and 10% are in Khulna and Barisal. Almost all inland/coastal/bay
crossing ships are constructed and repaired locally in these shipyards. Local
shipyards can design and fabricate ship up to 3500 DWT to fulfil the demand of
local market. Few local shipyards are capable of making ships up to 10,000 DWT
(deadweight tonne) as per international standard. Most of the Shipyards are
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operating under individual management with nominal supervision of government.
All inland and coastal ships are built by local shipyards, and the number of
vessels built per year counts an average of 250. They employ huge number of
skilled, semi-skilled and unskilled labour. Most of the private shipyards use plate,
engine, component and machinery of old merchant ships which are collected from
Bhatiary ship breaking industries.

Recently few local shipyards have attained the capability to manufacture the ships
of 10000 DWT. Nearly fifty thousand skilled workers and one lac semi-skilled
workers, are now working in these industries. There are eleven local shipyards of
international standard capable of making ships up to 10000 DWT. These are:

a. Ananda Shipyard and Slipways Limited, Dhaka;

b. Western Marine Shipyard Limited, Chittagong;
c. Khulna Shipyard Limited, Khulna;
d. Karnafuly Slipways (Pvt) Limited, Chittagong;
e. Highspeed Shipbuilding and Engineering Works Limited,
Narayanganj;
f. Dhaka Dockyard and Engineering Works Limited, Dhaka;
g. Dockyard and Engineering Works Limited, Narayanganj;
h. Chittagong Dry Dock Limited, Chittagong;
i. Narayanganj Engineering and Shipbuilding Ltd, Narayanganj;
j. Chittagong Shipyard Ltd, Chittagong; and
k. Basundhara Steel and Engineering Ltd, Narayanganj.

On the basis of modern shipbuilding requirement, the shipyards of Bangladesh

can be categorized into 4 classes. Figure 1 shows the distribution.

a. Class A - Shipyards which are ready for construction of ships

(Small & Medium Category) of international standard.

b. Class B - Shipyards with some renovation & expansion program

will be ready for construction of ships (Small & Medium Category) of
international standard.

c. Class C - Proposed shipyards which are coming in production of

ships (Small & Medium Category) of international standard very soon.

d. Class D - Remaining shipyards which can make inland vessels

under local regulatory standard.

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Class A Class B Class C Class D

8%

21%
52%

19%

Fig.1: Categorization of shipyard in Bangladesh shown in the Pie-Chart.

Type and Sizes of Ships in Bangladesh

On the capability of the technological compatibility of shipbuilding, past &
present trend, ability of the existing shipyards of Bangladesh and the interest of
new comers in shipbuilding, it is anticipated that Bangladesh can build various
types of ships (small & medium category) for both inland and sea going. The
present facilities will limit the size of the vessel up to 10,000 DWT, but if
expansions programme of various shipyard are taken in consideration, Bangladesh
will be able to build up to 50,000 DWT vessels in near future.

A number of diversified types of vessels are built in various shipyards around the
Bangladesh, such as: multipurpose vessel, fast patrol boat, container vessel, cargo
vessel, tanker, dredging barge, ferry, passenger vessel, landing craft, tourist ship,
tug boat, supply barge, deck loading barge, pleasure craft/hatch, crane boat, speed
boat, deep sea trawler, self-propelled barge, inspection vessel, cargo coaster,
troops carrying vessel, double decker passenger vessel, hydrographic survey boat,
pilot boat, hospital ship, water taxi, etc.

Identification of Existing Shipyards

There are hundreds of shipyards and workshops in Bangladesh of which 124 have
been reported to be registered with the Department of Shipping (shipyard
statistics, 2012). Out of these shipyards, approximately 70% are located in and
around Dhaka and Narayangong along the side of the river bank of Buriganga,
Shitalakha and Meghna. About 20% shipyards of Chittagong division are located
along the side of Karnapuli River and 6% are located along the bank of Poshur
river of Khulna division and remaining 4% are located in Barishal division
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(Shipyard Statistics, 2012). Almost all inland/coastal/bay crossing ships are
constructed and repaired locally in these local shipyards.

Type and Sizes of Ships that can be built in the Short, Medium and Long run

On the capability of the technological compatibility of shipbuilding, past &

present trend, ability of the existing shipyards of Bangladesh and the interest of
new comers in shipbuilding, it is anticipated that Bangladesh can build various
types of ships (small &medium category) for both inland and sea going. The
present facilities will limit the size of the vessel up to 10,000 DWT, but if
expansions programme of various shipyard are taken in consideration, Bangladesh
will be able to build up to 50,000 DWT vessels in near future.

Global trend of Shipbuilding Industry

In the past, shipbuilding industry of the East enjoyed superiority and made the
region leader of civilization. After World War II shipbuilding becomes a
European Industry in which Britain took the lead. This is followed by Japan
(1960s to 1980s). Then South Korea took the lead. Thus the world shipbuilding
market is moving east and presently Japan and South Korea have nearly equal
shares of 70 percent of that market. Now, the most rapid growth in market share
observed and planned is in China. But, the countries where labor costs are going
up are shifting their role from small to medium and large ships. The other
emerging forces are Vietnam and India. In fact, emergence of Vietnam is largely a
result of efforts by European countries to relocate their shipbuilding industry to
low labor cost countries. India is another rising giant in shipbuilding industry
where private entrepreneurs started establishing shipyards with government
support and by now the country has come to a good position in the world’s
shipbuilding countries and receiving orders of hundreds of millions of dollars.
Thus, shipbuilding has shifted from Europe to Japan to Korea and these days are
shifting to China and Vietnam and India and now in Bangladesh and the single
most driving force behind this phenomenon is lower labour cost and overhead.

Potentials of Shipbuilding in Bangladesh

Workforce
Shipbuilding, an ancient assembling industry producing tailored products,
accordingly having the largest human input per unit of produce, is always moving
to countries with lower wages of required skills. Bangladesh has comparatively a
lower cost of human inputs and can offer the best combination of cost, quality and
productivity with its fast growing young workforce.
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Table-1: Comparison of Labour Costs
Country Average hourly rate of wage
(in US$)
Bangladesh 0.5
India 1.0
China 1.5
Singapore 3.0
South Korea 6.0
Japan 12.0
Italy 13.0
France 13.0
Norway 14.0
Finland 15.0

Figure 2: Hourly Labour Charge (in USD) for shipbuilding industry in Bangladesh

Productivity and Working hour in Shipyards

The productivity of Bangladeshi Shipbuilding labours is 11.43 which has been

shown in Table 2as compared with other countries. But proper training and
automation of work will definitely improve the productivity. On the other hand
average hourly labour charge in Bangladesh is only US$ 0.50 which has been
shown in Table 1 as compared with other countries. This is also the lowest in the
world.

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Table 2: Comparison of productivity
Country Productivity
Japan 1
European countries 2
United States 4
India 10
Bangladesh 11.43

So, the relative labour rate in Bangladeshi Shipyards is 0.50 which has been
shown in Table 3 as compared with other countries. A drawn comparison of the
coast and productivity of few shipbuilding countries and Bangladesh reveals that
India and China, the nearest competitors, are 2.5 times away and Korea is 4 times
away in terms of labour cost alone.

Table-3: Cost-effectiveness
Country Weighted Weighted Weighted average
labour rate productivity output cost
Bangladesh 0.5 1.0 0.50
India 1.5 1.2 1.25
China 1.5 1.4 1.07
Korea 6.0 3.0 2.00
Singapore 4.0 2.0 2.00
Germany 15.0 5.0 3.00

Cost Analysis of Export Ship Manufacture

Additional financial cost of ship manufacture in Bangladesh is about 15% to 20%
(Bank Interest 3% to 6% + Bank Guarantee 8% to 16% + L/C Commission 4 to
8% + other charges 1%) higher than the other competing countries like China,
Korea, Japan, India, Vietnam etc. Again tax on imported shipbuilding machineries
and components enhances the costing to a further extent. On the other hand, India
has only 10% financing cost and a 30% cash subsidy and is altogether about 30%-
40% ahead in ship building business of Bangladesh. So, only low labour cost
cannot promote the survival of Bangladesh in the shipbuilding industry. Again, at

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present Bangladeshi component manufacturers and shipyards can manufacture
50% of the total material, machineries and equipment for the local inland and
coastal vessels built in Bangladesh and the rest must be procured either from
foreign market or second hand market at Bhitiary. This proportion for an
international standard vessel to be built in Bangladesh is at present 10%-15%,
which if properly ventured by experienced foreign manufacturer, can be taken to
45%. Share of the local contribution for export quality ship built by the
Bangladeshi shipyards is about 40% of total ships' cost.

2% 5%
13% South Korea
44% China
Japan
Europe
others
36%
Figure 3: Global shipbuilding share in million DWT by nations, 2012

Once Europe was the market leader but now it is replaced by South Korea and
China. If consider the shipbuilding industry with a product life-cycle perspective,
the prospect and challenges of Bangladesh can be easily realized at a glance.

Figure 4: Shipbuilding Lifecycle around the world

Demand of global shipbuilding

Shipyards in Japan, China, Korea, India, Singapore and Vietnam are booked up to
2012 with minor exception as some yards have been affected by the cancellation
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of orders due to economic recession. Presently the demand for new shipbuilding
has superseded the capacity of the shipyards. However, traditional market leaders
of world shipbuilding industry are over-booked primarily for construction of large
ships. So the ships' buyers/ entrepreneurs are in search of new, suitable and
reliable markets in Vietnam, Bangladesh, India, Brazil, Pakistan, Turkey, etc. As
a result shipbuilding capacities are rapidly expanding in Asian Countries. It is
estimated that shipbuilding demand increases 5% annually and number of
shipyards is not increasing. Again new regulations of International Maritime
Organization (IMO) have made it almost impossible to have the older ships
upgraded and thus have to be replaced by new ships. Presently world turnover and
movement of goods has been increased manifold in the last few years. As a result,
demand of ship and shipbuilding activities have been increased multifariously.

Trend Analysis of Shipbuilding in Bangladesh & World

As per World Trade Organization (WTO), global shipbuilding market size is US$
1,600 billion. If only 1% market share can be captured by Bangladesh, it will be
worth US$ 16 billion. If we can grab 1% of the global order for only small ships
market the amount will be worth US$ 4 billion. Two leading local shipyards,
Ananda and Western Marine have bagged orders to make 41 small vessels worth
about US$ 0.6 billion mainly from European buyers. Again, by 2025the world
will need more than 20,000 vessels, mostly small to medium sized and all single
hull tanker will be replaced by double hull as per IMO rules. So small and
medium shipbuilding market is flourishing and future of Bangladeshi shipbuilding
is brightening day by day. Bangladesh is suitable for small and medium combine
cargo vessel, multipurpose vessel and oil tanker up to 15000 DWT and some
extend to 25000 DWT, However it predicts that small cargo and containership
market will also be feasible for Bangladesh in coming years.
Table 5 shows year-wise contract for number of vessels in world shipbuilding
market and the share received by some major shipbuilding countries and
Bangladesh during 2007 to 2014.
Table 5: Year-wise contract for number of vessels and country’s share
Year World Total China Japan Korea Bangladesh
(Vessel Number)
2007 2500 16.00 20.80 9.20 0.08
2008 2250 11.11 22.22 10.00 0.00
2009 2850 16.29 22.58 16.45 0.10
2010 3000 20.25 21.79 13.08 0.10
2011 3950 20.78 13.25 12.73 0.03
2012 5050 29.38 14.85 14.85 0.35

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Year World Total China Japan Korea Bangladesh
(Vessel Number)
2013 6600 33.33 11.21 19.70 0.08
2014 5400 30.00 16.50 13.33 0.57

The table shows how China and Korea takeover Japan after 2010. The world
market shows an upward trend and so does the relative share of Bangladesh.
Bangladesh got a jump in receiving orders in 20012 and got a little slack
afterwards due to the world recession. But in 2014 it bounced back as the demand
for small and medium vessels increased due to recession.

7000
Share of Bangladesh (%)
6000
0.6
5000
World 0.5
4000 0.4
Total
3000 (Vessel 0.3
Banglade
2000 Numbe 0.2 sh
1000 r) 0.1
0 0
2007
2009
2011
2013

Figure 6: Year-wise contract for number of vessels and country’s share

Global Recession and Position of Bangladesh

It is nice to mention that the market of small-ships and vessels of various types is
remaining unaffected by ongoing global recession. Recession has caused a drop in
demand for large vessels. Global giant shipbuilders cannot capitalize on this new
market demand, as their projects will prove to be unfeasible because of the high
overhead costs they already bearded. So far Bangladesh does not face any blow
like cancellation of orders.

Expert views that orders for small ships have gone up because of the global
financial crisis; so demand for small vessels will continue and activities of
Bangladeshi shipyard will remain on. It is good time for us to prepare for the
future with the help of government so that local shipyards can receive orders after
recovery from current recession.

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Forecast of Local and Global Shipbuilding in Gross Tonnages

It may be said that in the year of 2025 shipbuilding capacity of Bangladesh and
world will be 1.0 and 92.5 million gross tonnages respectively. So Bangladesh is
going to achieve the capacity of 1.50% of global shipbuilding share within 2025.
Forecast of local and global shipbuilding in gross tonnages.

Underlying Problems of Shipbuilding in Bangladesh

a. General Problems in Bangladeshi Shipbuilding. In the past,

shipbuilding industry of Bangladesh failed to keep pace with consistency
due to lack of proper government and private initiatives as well as anti-
industry mindset of the nation. This has ultimately caused non-penetration
in international business as a shipbuilding nation. In future, some issues
like safety, efficiency and environmental concerns will turn this sector into
a more innovative one, which may enable the new generation to face the
challenges to resolve the problems arising out of it. Countries with large
population like Bangladesh may feel encouraged to come forward in
labour intensive shipbuilding sector due to their abundant manpower.
Currently the world is passing through economic recession. Shipping and
shipbuilding of the world are affected from this recession resulting
cancellation of new building orders at least for the time being. The present
shipbuilding sector in

Bangladesh is not that big industry and only a few ship yards are involved
in exporting ships, but revenue generated from this sector is promising. In
spite of enormous possibilities of expanding shipbuilding industry in
Bangladesh there are also some problems. These existing problems of this
sector may be categorized13 in the following broad headings:

 Financial problem
 Human Resource Development problem
 Infrastructure problem
 Marketing problem
 Management problem
 Technical problem
 Quality control problem
 Delay delivery problem
 Pricing problem
 Safety, health, and environmental aspect
 Economic recession and its effect on Bangladeshi shipbuilding
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b. Financial problem. Shipbuilding is capital and labour intensive
industry. The local commercial banks are not individually capable of
making required investment in this industry. There is dearth of capital and
investment especially when the scale of investment is to the tune of 100 to
1000 crore or more because of the risk is considered too high for both the
entrepreneurs and bankers
Besides, consortium financing is time consuming and a complex process,
which is not so favorable for making investment in this sector. There is no
standard framework for forming consortium and as a result when a
shipbuilding contract is obtained, the time lag of securing finance by
forming consortium kills the contract.
High rate of interest is applied on industrial and working capital loan.
Existing rate of interest, ranging from 12% to 16% for industrial and
working capital loans, is not suitable for the development of this sector.
Whereas 7% rate of interest on export credit is prevailing for other export
sectors like ready-made garment sector.
As the buyers do not accept the guarantee provided by the Bangladeshi
commercial banks, counter guarantee has to be given from the foreign
banks. As a result, guarantee from both local and foreign banks is
mandatory for export of ships from Bangladesh. The prevailing cost of
bank guarantee due to double bank guarantee system has become a real
burden for local shipyards. Bank guarantee for export of ships from
Bangladesh is about 16% (local 4% and foreign 4% for two year period).
Such bank guarantee requires equivalent amount of advance payment and
price of raw materials received by the builders from the importing
company. Bank guarantee commission for other sectors in Bangladesh is
charged at the rate of 1% - 2%. On the other hand, it is 0% in other
competing countries like Korea, China, Japan, India etc. Commission at
the rate of 0.20% is charged by banks of other competing countries for
opening import L/C whereas 1% per quarter i.e. 1×4 %× 2 years = 8% is
charged by the Bangladeshi commercial banks. The breakup of the cost
incurred for payment of interest and service charges indicates that the
additional financial cost of ships built in Bangladesh is about 15 to 25%
(bank interest 3 to 6% + guarantee 8 to 16% + L/C commission 4 to 8% +
other charges 1%) higher than the other competing nations like China,
Korea, Japan, India, Vietnam, Brazil etc.

c. Human Resource Development Problem. The number of

available graduates, skilled supervisors, foreman, specialized welders,
cutters, fitters, machine operators and other technical skilled manpower
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that are required for shipbuilding and allied industries are far less than the
minimum requirement. Substantial number of skilled manpower leaves the
country for overseas employment for better opportunities. The local
shipyards lack of dedicated human resource department. Government also
does not have long-term vision as well as accomplishing her mission for
human resource development for the country. In fact, everything is
running in Bangladesh on ad-hoc basis.

d. Technical Problem. There is insufficiency in the number of

ancillary industries to support the shipbuilding industry as backward
linkage by providing service and supplying ships’ components. The local
shipyards are having lack of research and development (R&D), which
ultimately fail to bring about any innovation and technological
development for price competitiveness in international ship markets. At
present Bangladesh is not working in the field of ship design, though
skilled manpower is available. As a result, lack of adequate and expert
design firms and expertise in design are an impediment for high value
added product. Moreover, most of the local shipyards are lacking of
modern shipbuilding tools, machineries and technology. At the same time
lack of expert machine operators is found in the most local shipyards.
Local shipyards owner consider every human resource development
program as money drain, not gain. That’s why they are maintaining poor
training facilities of the technical personnel. Despite long heritage,
Bangladesh has failed to keep pace with consistency with the continuous
technological development of global shipbuilding industry.

Bangladesh does not produce inert gases. Therefore production with

aluminium and other similar works suffer. Importation of inert gases is
insufficient and schedule of import is planned for monopoly profiting.
Non-availability of inert gases in local market put obstacles for these
projects. Other required gases are also not easily available.
In a ship, there are about 4000 different components, which are to be
installed within a very limited space of the ship. Unlike land installation,
electrical fitting and installation are very delicate in ships and needs more
precision. There is a lack of skilled manpower in Bangladesh in such
specified field and particularly in electrical installation and fitting.

Lack of model testing and other facilities in Bangladesh also matter. The
age of the Department of Naval Architecture and Marine Engineering in
Bangladesh University of Engineering and Technology is 35 years.
Towing tank was expected by the Department since its establishment. But
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the hope has never seen the light. NDT and Design Lab facilities are also
poor in every institutions and shipyards around Bangladesh.

e. Infrastructure Problem. Access to the rivers and sea, that is,

foreshore for shipbuilding entrepreneur is restricted by bureaucracy
problem like unfriendly attitude of the administration toward local
shipbuilding. Impositions of foreshore charges, which are abnormally high
as well as the charges on erected installations such as service jetty, etc. are
also high and in some cases duplicate charges are imposed. The lack of
electricity and gas supply is a major impediment which hinders the setting
up of shipbuilding industries in Bangladesh. Existing ban on importation
of rail and sheet pile imposed by railway authority also obstructs
developing this industry. Under the present import policy and foreign
currency regulation, import on CIF basis is not permissible. But this
industry cannot run under such a rule. Shipbuilding industry needs a lot of
components, parts and accessories leading to emergency import during the
construction period. Existing facilities are not adequate for emergency
import requirements14.

There should be a proper association of export oriented shipbuilding

industries in the country to maintain mechanism for proper
implementation, monitoring and updating strategy for ship export Other
than government owned dry-dock, none of the shipyards have the dry
docking facilities. Most of the shipyards are located in and around Dhaka,
far away from the sea. This is not a good approach to develop shipyards
for building sea going vessels. The rivers and channels are frequently
silted. It is very difficult to maintain channel for desired level of
navigability for ships manoeuvre. The restricted draught (Maximum 4.0 to
4.5 Meters) is the limitation to the size of a ship that can be built in these
shipyards. Bridges and overhead cables may induce new restriction to the
ship size that may be built in a shipyards located in the hinterland. There is
no adequate backup industry to produce required standard of MS plate
need for ship construction.

So, a proper and long term planning is required to promote this industry in
coastal area like Patuakhali, Bhola, and Chittagong etc. When this industry
evolved, most of the shipbuilding firms concentrated in Dhaka because
they were to meet the local demand which was not more than 5000 dwt.
But now we are to build ship more than 10000 dwt for international
market. So gradually the international market oriented shipbuilding firms
have to shift their facilities towards coastal area mentioned above.
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f. Management Problem. Most of the local shipyards do not
follow corporate management culture. Family members and friends
occupy the important managerial appointment like director, executive
committee member etc. of the local shipyards. Such family and friend
management culture is one of the hindrances to the development of the
industry and also will not commensurate with international arena. Poor
communication between upward and downward grid in the managerial
chain exists. Middle management neither enjoys any financial authority
nor decision-making process (with little exception in few shipyards). As a
result, poor command and control as well as negligible dedication of the
employees toward the organization observed16. Most of the local
shipyards practice one man show management culture. Every decision
comes from owner as per his/her desire and wish.
Many of the owners do not care about the welfare of the employees. So
poor job satisfaction observed in most of the shipyards and employees do
not feel belongingness to the organization. As a result huge absenteeism
and turnover of labours and skilled manpower observed. Workforce never
enjoys fringe benefit and other labour welfare activities like medical,
pension, travel and daily allowance, accident and other compensation etc.
Most of the labours are employed in casual basis. Every valued customer
looks at the quality of management. How is the management performing?
What are the managerial tools that are using by the yards to ensure
continuous improvement of product? Are the managerial staffs responsible
and capable enough to solve the day-to-day problems? Is the management
prompt to solve the daily problem? But it is really discouraging that
answers to those questions are negative for most of the local shipyards.
The government policies are complicated and not very pleasant in
supporting the expansions of the industry as a whole.
g. Safety, Health and Environmental Aspect. Safety, health
and environmental (SHE) aspects of using various shipbuilding materials
in the shipyards including the affect of harmful substances and related
exposure in movement of materials and also the required measures were
identified. Only a few shipyards have been found to be conscious about
safety, health and environmental aspects, which are again at average level.
The shipbuilders are more engaged in enhancing their skill in technology,
financing and marketing. Safety, health and environment are yet to be
recognized as important issues in all spheres of the society. The long term
effect of safety, health and environmental measures are yet to be
understood. Proper awareness and training and govt. regulations are
required for improvement of the SHE aspects.
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The regulations are to be made in a way that the prospective shipbuilders
do not take these as hindrance. These aspects should be shipbuilder
friendly, specially, because Bangladesh has just started developing the
export oriented shipbuilding industry. The foreign buyers have a major
role in enhancing the level of SHE in the builders yard. Currently,nothing
allures more public attention than the environmental aspect. In the
shipbuilding process, many working procedures are polluting if proper
preventing measures are not in place. Among them, the process of shot
blasting, plate and section preparation, welding and painting is the most
significant troublemaker. In case of shot blasting in open air, the
controlling and diminishing of waste, which is dust and sound, require
expensive appliances. The costs to reduce pollution absolutely go to the
accounts of the shipyards. Such additional expenses are unavoidable in
developed countries. In shipyards paints are widely used. These paints
contain volatile organic compound (VOC). VOC is an element that
produces Ozone by responding to sunlight. Developed countries like
countries in European Union limited the quantity of emission or disposal
of contamination of this kind. It is possible to use the paints that contain
no VOC, but the expenditure for painting of the ships will go high.

h. Quality Control Problem. Lack of quality control groups and

their work and capability are in question. A number of questions against
them are raised by the foreign ship owners or by their representatives. But
many of the local shipyard owners are failed to satisfy them. Shipyards
must remember that quality accelerate entire process to get the next
contract18. Lack of sincerity of workers due to poor job satisfaction and
working environment limits the opportunity of further development. The
owners do not bother about working environment due to the availability of
labour with lower cost.

Quality is the prime requirement of shipbuilding industry. A ship, which

plies on the sea far away from the shore for quite a many days at a stress,
must have to be flawless. Quality in a shipyards usually maintain by
quality control group of shipyard itself, by the classification society and by
the owners’ representative. This is very demanding that everyone in the
system must be cautious, dedicated as well as prepared to undergo
strenuous activities. A chain of such professionals is necessary. But it is
missing in local shipyards. It needs time to develop such quality assurance
activities in local shipyards19.

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Bangladesh is lacking in the safety culture. Safety is a long-term
investment. Though the initial cost for safety assurance may be high, the
gain in the long run is accumulative and it adds to the quality. Bangladesh
has to be competitive with the other shipyards around the world.
Government may sponsor benchmarking activities.

Challenges in Bangladeshi Shipbuilding

Challenges of Bangladeshi shipbuilding have been illustrated below:

a. Like Bangladesh, many other countries such as Vietnam, Brazil,

India, Indonesia and Turkey are also trying to capture the surplus global
shipbuilding market.

b. Draining out skilled manpower from local to foreign shipbuilding

industry is a usual and unavoidable threat for local shipyards.

c. More than 80% of raw materials and ship’s components are in

import-based for export oriented Bangladeshi shipbuilding. Ultimately
unit price of export ships and foreign dependency increases.

d. Most of the shipbuilding nations have developed close links

between shipbuilding and support industry for reducing delivery time. But
due to non-availability of industries of classified marine equipment and
limited infrastructure in Bangladesh the delivery time is deferred and
shipbuilding cost in increased as compare to the competitors.

e. To accelerate the shipbuilding activities, most of the shipbuilding

nations maintain a good relation between shipbuilding industry and other
supportive industries. But due to lack of quality local marine industries
and poor infrastructures, local shipbuilding fails to achieve her goals. As a
result, shipbuilding cost and ship delivery time increases.

f. Overall management practice and planning process for most of the

shipyards is not up to the international standard. Lack of expert financial
personnel, absence of corporate management culture, poor forecasting
process and central decision-making culture in day-to-day matter make
local shipyards handicapped.

g. Absence of adequate backward linkage industries is also a main

cause of delaying delivery and adding extra cost of export ships.
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h. Scarcity of sufficient land in Bangladesh, deficiency in power
supply and weak infrastructure facilities are the major impediments for
rapid development of shipbuilding industry.

i. Due to the global economic recession both ship and steel market
have become unstable. As a result cancellation of a contract in
shipbuilding industry is one of the recent enormous threats to local
shipyards.

j. Europeans are the valued customers for Bangladesh. They put the
condition that 60%-65% of the total contract value is to be imported from
abroad. But the equipment manufacturers of foreign countries do not place
competitive offers for Bangladeshi shipbuilders; rather they quote higher
cost on imported items that increases ship’s price

k. Most of the shipyards are located at the banks of few rivers around
Dhaka, which are far away from the sea. These rivers are losing their
navigability due to continuous filtration. As a result the restricted draught
(maximum 4.0 to 4.5 meters) dictates the size of a ship that can be built in
these shipyards. Again bridges and overhead cables may induce further
restriction to the ship size built in most of the local shipyards.

l. Now-a-days quality is very demanding and everyone in the system

must be dedicated. A chain of such professionals is necessary, but it is
missing in local shipyards. Again lack of adequate quality control group
and their performances and capabilities in the local shipyards are in
question.

m. Financial matter like lack of adequate working capital, high rate of

interest on industrial and working capital loan, high bank guarantee
margin and high import LC margin make shipbuilding industry of
Bangladesh a cumbersome and complicated enterprise.

Shipbuilding is a semi high-tech and capital-intensive sector. It is both promising

and challenging industry in the World. Bangladeshi shipbuilding is not in
competitive and international standard and also is in vulnerable stage.

Conclusion
Shipbuilding industry plays an important role in assisting national defence,
promoting shipping and industrial development, increasing employment and
foreign currency inflow. It is therefore an attractive industry for Bangladesh.
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Bangladesh shipbuilding is capable of producing international standard ship of
small to medium category and at present, more than 25% shipyards are ready or to
be ready with little renovation for construction of small and medium sized vessels
of international standards. Productivity of Bangladeshi work force in shipbuilding
is 11.4 which are lowest in the world. It is essential to upgrade the productivity
through conducting training program, incorporating process enhancement,
modernizing yard facilities and employing more integrated production
technology, otherwise it is difficult to sustain in this competitive industry in the
long run. Bangladesh is a developing country. Each and every citizen of this
country expects the overall development of the country. But in most of the cases it
is not materialized in reality. In the past, we failed several times to take the
advantages and lucrative opportunities of modern trade and commerce due to the
delay in our response. For this reason, our overall economic development has
undoubtedly been interrupted. So the concerned authorities have to be watchful
and careful to take the opportunity to push the shipbuilding sector ahead as a
thrust sector through fixing the identified problems leaving no delay.

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