There are currently more than 100 ship builders and over 120 registered shipyards of varying size, located mostly on the river banks. In Bangladesh, almost 90% of fuels, 70% of cargos and 35% of passengers are moved by waterways, bringing about a huge domestic demand for vessels. Owing to steady economic and trade developments, and activated infrastructure projects, locally registered number of vessels has increased with average annual growth rate of 5.39%. Annual market value of local shipbuilding industry is currently valued around USD 1 billion, and the demand growth is forecasted to remain steady along with the economic growth. Annual building capacity for export orders is estimated as more or less 20 vessels currently. Vessels built locally for domestic usage include MPV, container, bulker, tanker, dredger, tug as well as passenger ferry, and ranges from 1,000 to 20,000 dwt in size.
Chief Adviser's Office
Shipbuilding
Snapshot:
An emerging player in the global market
Overview
The Bangladesh shipbuilding industry is the upcoming player in global market for small and medium sea-going vessels. While the industry mainly caters to the domestic market, exports have been growing satisfactorily over the last decade. Bangladeshi companies have exported ro-ro vessel, multipurpose container vessel, tug boat, landing craft, bulk carrier, patrol vessel, catamaran water taxi, ferry, oily waste collection vessel and passenger vessels to various countries in Europe, Africa and Asia.
Emerging player in mid to small sized vessel production
Supportive government policy with the new Shipbuilding policy 2020 encouraging local manufacturing and backward linkage
Shipyard
Annual growth rate
Annual market value
Rivers
Inland waterways
Growth drivers
Potentials and advantages of Bangladeshi shipbuilding industry lies in growing domestic market, competitiveness for international small vessel segment, and availability of skilled engineers and workers. The World Bank Group estimates that the shipbuilding industry will grow at 10-15% per annum on average for the next decade.
Growing domestic market
Ship builders can expect growing domestic demand of various types of vessels for usage in inland and coastal water, and ocean-going vessels for regional cargo shipping, owing to steady economic/ population growth, trade expansion, and ongoing/ scheduled infrastructure projects (that would increase demand for inland water shipment). Fuel tankers, bulkers, cargo feeders, dredgers, tugs as well as passenger ferries would be increasingly demanded. The World Bank estimates that almost 300 to 400 vessels be additionally demanded over the next decade.
Competitiveness for international small vessel segment
Bangladesh has the potential to compete for small vessel segment up to 12,000 dwt (MPVs, cargo feeders and passenger ferries for regional services) in international market, since labor cost matters more as vessel size is smaller. Bangladeshi shipbuilding industry enjoys labor 20 to 30% lower labor cost relative to other countries.
Availability of skilled engineers and workers
Bangladesh has competitively-priced skilled engineers and semi-skilled workers. Tailor-made training opportunity for shipbuilding is also available under the cooperation between the government and industry association, which generates 6,000 workers every year and matches over 70% of them with job opportunities in the industry.
Availability of shipbuilding cluster
Bangladeshi shipyards are agglomerated along with the banks of major rivers in Narayanganj and Chittagong in particular, mostly combined with ship breaking and recycling yards. These areas have relative convenient access to the utilities (power and gas) and supporting industries such as suppliers of steel materials, components and fixtures.
Industry association
Shipyard development involving technical assistance for “classed” shipbuilding
Bangladesh is an alternative and prospective place for building small size vessels clustered below 25,000 dwt, or 12,000. FDI or joint-venture is most expected to enhance both capacity and capability of local industry to build class ships along with international standards, through:
Supply of parts, components and fittings
There are another potential area for investment is the development of backward linkage. FDI or joint-venture by overseas suppliers could contribute largely to reduce dependence on imported materials and components, and enhance locally added value for vessels both for domestic and export markets. Suppliers of steel pipes, engines, generators, compressors, transformers, metal works (flanges, valves, propellers, anchors, etc.) could be promoted locally.
Vocational training business on shipbuilding
Vocational training business on shipbuilding and marine engineering is expected to be enriched further, possibly through FDI or joint-venture (with the existing educational or training institutes), since the industry reports a scarcity of skillful engineers and welders especially for the higher quality and more sophisticated vessels.
