Bangladesh turns from
hulk-breaking to
shipbuilding By Syed Tashfin
Chowdhury
DHAKA - Bangladesh, known
worldwide as a place for breaking up old ships, is
making a push to grab more of the global
shipbuilding business, slashing corporate tax as
an incentive for its more than 100 shipyards to
expand.
The National Board of Revenue of
Bangladesh has approved a 12-year tax rebate
facility under which corporate tax is cut to 10%
from 18.75% effective July 1. In the event of any
shipbuilder becoming listed, it will have to pay
only 5% corporate tax. The government hopes the
move will help to create 1.5 million additional
jobs and lead to as much as US$2 billion in export
earnings by 2015.
Companies such as
Western Marine Shipyard and Ananda Shipyard and
Slipways are seeking to attract more buyers of
small vessels as the world's leading shipbuilders
in China and
South Korea increasingly
focus on large vessels such as ever-bigger
container carriers and specialized ships such as
transporters of liquefied natural gas.
Bangladesh's 124 shipyards, with more than
100,000 skilled and 150,000 semi-skilled workers,
can easily secure a substantial share of the
global small shipbuilding market, according to a
World Bank study published in March.
If
the country can capture even 1% of the $167
billion global shipbuilding market, "exports will
be worth $1.6 billion", the World Bank noted
earlier this year. Total export orders can easily
exceed a billion dollars within a year or two "if
we succeed in maintaining our present momentum
despite the worldwide economical turmoil",
Mohammad Shahidul Bashar, public relations deputy
manager at Western Marine, told Asia Times Online.
The industry at present has orders to build 42
ships worth around $600 million, he said.
Export earnings from ships, boats and
floating structures rose to $40.4 million in the
12 months to last June from $12.7 million in the
year to June 2009, according to the Export
Promotion Bureau. The latest tax incentive comes
after a dip in exports to $9.3 million in the
2009-10 fiscal year.
The World Bank's
"Bangladesh - Diagnostic Trade Integration Study"
released in March said the sector accounted for
0.57% of the global market by 2008, up from 0.08%
in 2006 and 0.35% in 2007.
The
shipbuilding industry could become the country's
third-largest foreign exchange earner in less than
10 years if the government provided support
relating to bank guarantees and declares
export-oriented shipyards as export-processing
zones, the Bangladesh Foreign Trade Institute
says. The country's exports are dominated by
textiles and ready-made garments, at around 70% of
value.
The Association of Export-Oriented
Shipbuilding Industries has for the past three
years been urging the government to ease taxes to
make the industry more competitive. Association
president Abdullahel Bari, in a written proposal
to the government, earlier forecast that global
ship manufacturing capacity would rise to 10,000
vessels by 2015 from 7,500 at present and that
"the traditional shipbuilders will come to new
builders like Bangladesh in the coming years to
meet the rising demand".
Present buyers of
Bangladesh-made vessels come from as far afield as
Europe and Africa. On March 21, German buyer Grona
Shipping took possession of the last two of eight
5,200 deadweight tonnage (DWT) ice-class cargo
vessels ordered from Western Marine. Each vessel
was sold at $9.74 million.
Western Marine
has also delivered six vessels to buyers from
Denmark, Pakistan and Finland, said Bashar. "The
shipyard has also built more than 60 ships
including ferries, tankers, cargo vessels and
dredgers for coastal and inland use in
Bangladesh," he said.
Ananda Shipyard and
Slipways (ASSL) in April handed over the $12
million Enzian, a 6,100 DWT multi-purpose
ship, to German's Komrowski Maritim. ASSL has also
sold ocean-going vessels to buyers from Germany,
Denmark and Mozambique. Other local shipbuilders
winning international orders include Highspeed
Shipbuilding, Dhaka Dockyard and Engineering
Works, Khan Brothers Shipbuilding and Karnaphuli
Shipyard.
Bangladesh is historically noted
for its ship-breaking industry, which competes
with India, China and Pakistan to be the world's
largest, but it appears unlikely that the steel
garnered from old hulks will make its way into new
vessels destined for the world's oceans.
"Ships built for foreign buyers and even
local owners comply with a set of standard
guidelines set by the International Maritime
Organization [IMO]," said Bashar of Western
Marine. "Classification societies work under the
IMO to monitor each new building project.
Therefore all machinery and equipment used and
installed in new building must be class approved.
According to this, parts from expired ships are
not permissible."
Syed Tashfin
Chowdhury is the Editor of Xtra, the weekend
magazine of New Age, in Bangladesh. (Copyright
2012 Asia Times Online (Holdings) Ltd. All rights
reserved. Please contact us about sales,
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