Export earnings from the country's shipbuilding sector has surged in recent months due to handing over of several high-value ships to foreign companies after a sluggish growth witnessed during the last couple of years, insiders have said.
They are becoming hopeful of the sector to contribute more to the country's export earnings in the days ahead, if there is enabling policy support specially low cost finance.
According to the Export Promotion Bureau (EPB), the country earned $30.45 million in the first five months (July-November) of the current fiscal year (FY) 2017-18, a robust growth of 460.77 per cent comparing to the corresponding period in previous FY.
In July-November period of FY 2016-17, the country exported ships and other floating structures worth $5.43 million. The total export figure for whole FY 2016-17 was $65.61 million, a growth of 230 per cent from $19.89 million in FY 2015-16.
Export earnings from the sector were $0.44 million and $5.73 million in FY 2013-14 and FY 2012-13 respectively. However, in 2011-12 FY, it was $45.95 million, the official data revealed.
According to estimation by Businesswire, a global economic data analysis agency, around $650.83 billion will be spent for the procurement of new ships in the year 2026 across the globe.
Sources said the country may tap the multi-billion dollar opportunity riding on its expertise and long tradition in ship building. The global market is led by China, Korea and Japan.
When contacted, President of Association of Export Oriented Shipbuilding Industries of Bangladesh (AEOSIB) Dr Abdullahel Bari said the country has huge prospect to earn from the global shipbuilding market.
"The global shipbuilding industry is growing at a significant rate in recent times," he said adding : "The sector will see a robust growth from next years as shipyards are receiving increased orders."
Mr Bari, chairman of Ananda Group, a pioneer in vessel export also said domestic market has become important for the shipbuilders.
"It will be our first job to build our ships by ourselves, not by foreign shipyards at higher cost," he said.
Admiring the capability of Bangladeshi ship builders, the veteran engineer said: "Our entrepreneurs are very courageous to invest money in the sector who are giving the country an identity of a ship exporting nation."
However, higher cost of investment is the main challenge for the sector, he said.
The shipbuilding industry is very important one considering its direct link with total export-import and merchandise handling to and from the country.
Bangladeshi Shipyards have to pay a double digit (12%) interest rate for funding from the banks.
"India and Vietnam governments are providing interest-free loan for a period of up to 20 years," he said.
Sources said around 300 shipyards are operating in the country with employment of more than 0.3 million people.
They added that unlike other industries including apparels, shipyards require extended period from investment to profit ensuring. This is why many banks are reluctant to invest in the sector. Moreover, construction of a ship usually requires more than two years.
In addition to this, shipyard owners have to pay import duty on raw materials aimed at ship construction in the country, which is contrary to the industrial policy. The authorities concerned failed address the issue, despite persuasion from shipbuilders.
Amid such challenges, the ship builders are doing well, said the AEOSIB president.
"In next five years we shall be highly successful in shipbuilding," he said adding that: "Bangladeshi manufacturers can build ship with capacity up to 15,000-20,000 Dead Weight Tonne (DWT)."
Ananda Shipyard and Slipways is now more focused on local market in recent years, he added.
According to the sources, for the last couple of years, only Western Marine Shipyard (WMS) Limited has been exporting vessels.
While contacted, the WMS Company Secretary, Shahadat Hosen said the WMS has already exported 15 vessels including ship, barge and ferries in calendar year 2017.
Of those, only three ships brought $30 million approximately. The company earned $2.6 million from export in the year 2016.
"Recently we have sold an Offshore Patrol Vessel (OPV) to the government of Kenya through a Danish buyer at a cost of $18 million," said Mr Shahadat.
He also said two other ships have also been sold at nearly $10 million each in recent months. These earnings have been reflected in nearly five times growth trajectory compared to first half of last years.
The WMS is making numerous ships for both international and local buyers.
Sources said the country exports vessels to countries including the UAE, Denmark, Germany, Norway and India. Buyers choose Bangladesh for low cost and availability of cheap labour.
The sector's great achievement is in reducing the import dependency, said Tariqul Islam, executive director of Ananda Group and a naval architect.
"We are meeting almost whole of the local demands in recent years", he said adding that local ship buildings annual market value is about $1 billion.
His company has been making vessels for government and non-government organisations like Bangladesh Inland Water Transport Authority (BIWTA), Bangladesh Inland Water Transport Corporation (BIWTC) Bangladesh Navy, Chittagong port, Mongla port and others through international tender.
With the country's growing economy in recent years, shipbuilding sector will also thrive to meet the increased demand for commodities and other goods, he said.
"The government should adopt a refinance scheme for supporting the sector," he said.
Besides, Banks should extend the term for loan against trust receipt (LTR) to more than one year for the shipyards as it takes time to make profit from building a ship, he added.
