Promoting the ship building industry

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Editorial

Saturday, 04 February 2012

Author / Source : Editorial

The Danish ambassador in an exclusive interview with a news agency observed that shipbuilding can turn out to be the second most important export-oriented sector after readymade garments (RMG) in Bangladesh. The observations of the Danish envoy, whose country purchased the first ever ocean-going ship from Bangladesh in 2008, are likely to be shared by others both within and outside the country. Since the country’s export activities have become concentrated mainly in the RMG sector, the need for export diversification is imperative both to increase export earnings in support of the country’s macro economy as well as reduce vulnerability of the export sector as a whole while depending solely on one export item. Also, at a time when the country’s foreign currency reserve is depleting steadily and the balance of payments is coming under increasing pressure, export of ships can fairly soon turn out to be a very major source of foreign currency earnings, large scale creation of local employment, industrialization and its accompanying benefits. Bangladeshi entities entered the global shipbuilding market with $350 million orders from Denmark, Germany and Mozambique. Following the first builders, another shipbuilding company signed a memorandum of understanding with another Dutch firm to supply eight sea-going ships.
If Bangladesh can grab even one per cent of the $400 billion global market of small ocean going vessels, the amount will be $4 billion. Already Bangladesh has bagged $500 million export orders for ships to build and deliver in 2010. Earnings will rise to $2 billion if this momentum is maintained. But the momentum is critically dependent on the government declaring appropriate policy methods and goals to this end. Observers believe the government should have declared ship building for export as a thrust area at least two years ago. Why it has not been done is a big question.
A special committee had long ago recommended three sites for establishing a shipbuilding zone. These are the east bank of the Karnaphuli River, Meghna Ghat area and the Chalna Basin. The special economic zone should have technical and geographical facilities including a deep channel with 200-plus metres height of bridges on the rivers and uninterrupted electricity and gas supply for a fully export-oriented shipbuilding industry. The report also identified financial constraints like high interest rates, credit ratings of local banks and barriers to hiring foreign experts. Apparently, relevant policymakers have not studied well the contents of this report not to speak of getting down to working for setting the stage for its implementation.