NAME: Zubayeer M Alam

ID#:063601530
COURSE: MGT 372
SECTION: 04
FACULTY: ShH
Date: 26th January, 2009
North South University, Spring 2009

WILL BANGLADESH SAIL??

‘Bangladesh is set to emerge as new Shipbuilding hub’ (FE). Analysists predict this to be very accurate
and recognizes the re-birth of a very old Industry which was lost in time. If the Industry is carefully
nourished and grown, it may become the top revenue earner in the Export sector of Bangladesh in least
possible time. But during the delicate formative years of the Industry, the World economy is plagued with
worst deadly recession of the recent times. Most of the giant industries are falling down like flies. Now
the question is asked, can Bangladeshi Shipbuilding Industry sail through this rough storm at this early
stage and reach its goal?

Shipbuilding Industry dates back to more then thousand years here in Bengal region, specifically Bay of
Bengal. Back then skillful wood craftsmen, famous for their magnificent craftsmanship used to make
these magnificent wooden vessels in the St. Martin Island and adjacent Island in Chittagong. These
vessels were very famous for their endurance and design. But in the late 1800’s the Industry suddenly
vanished most probably due to the Indo-Pak Inter Continental turmoil with the British Empire. The
Industry emerged again in mid 1900’s under the Pakistani regime by the launching of Khulna Shipyard in
1954, only to fade away again. But Bangladesh got its first exposure of international ship building in
1979 by the private sector. Japanese ship building giant, Mitsui Engineering and Ship Building Industry
developed the first and the largest joint venture shipyard with High Speed Ship Building and Engineering
Co. Ltd. at Fatullah. This joint venture enabled the first private sector ship repair building yard with
modern facilities, slipways, workshops with Japanese management and local manpower and a proper
shipyard emerged. But soon with IMO implementing new global ship-building requirement, an
international slump in shipping was observed with many international ship-owners getting forced out of
business as the new rules proved too costly for them. But by 2001 international shipping entered a new
era and the freight market jumped four-fold which demanded more vessels as soon as possible.
Bangladesh having all the four mandatory conditions in order to produce ocean-going vessels:
international standard shipbuilding practice, quality management system, coastal and riverine country,
and infrastructure with proper sheds and skilled manpower. Bangladesh scores full marks on all these
counts.This forced foreign companies to place test orders in Bangladesh and in no time the pioneers
Ananda Shipyard, Western Marine Shipyard and High-speed Shipbuilding & Engineering Co. are
producing vessels for the International market at their full capacity. The combined worth of over US$ 400
million worth of orders for over 40 vessels for buyers from Germany, Denmark, Netherlands and
Mozambique. The success of these three companies has encouraged other local companies such as
Meghna Group of Industries, Rangs Group, Khan Brothers and Narayanganj Engineering & Shipbuilding
to jump on the bandwagon of global shipbuilding market. Behind the current boom of the industry is the
global rise in the demand for new ships, especially smaller ones with a capacity below 15,000 dead
weight tonnes (DWT). This has helped Bangladesh attract the attention of international shipping
companies as traditional shipbuilding countries such as Japan, China, South Korea and Vietnam are not
interested in building ships with fewer than 20,000 DWT. If nourished properly the industry Managing
director of WMSL Shakhawat Hossain said ‘no shipbuilding country could catch at least 25 percent —
$400 billion market of the global order $1600 billion for small ships. And according to my calculation, if
we can bring home an order of one percent of that 25 percent, it is $4 billion and then hopefully our GDP
will increase by at least 2 percent within the near future’. Adding to Shakhawat’s views, chairman of
ASSL Abdullahel Bari said ‘If this development can continue with another 12 to 13 shipbuilding yards
producing ships for international customers, ship building in Bangladesh will be the second largest
exporter after garments by 2015. He also said "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. But facing the following economics
situations, a successful ship building industry will definitely have a positive spin off in terms of export
potential, job generation and technology transfer – thereby helping to create yet another “thrust” sector
along; for example garment industry and IT business.

Given the recent global financial crisis, experts are apprehending a plunge in the heavy industries like
ship building all over the world. Nonetheless, I believe, Bangladeshi shipping industry with its
competitive edges including cheap and abundant labour is in a position to sustain this situation.