Shipbreakers caught in govt agencies’ wrangle over industry revenues
Bangladesh will soon lose top position if such dispute continues, experts warn
Highlights
- Yard owners take land lease from DC office
- CPA, BIWTA now claim authority over Sitakunda coast
- Industry fears double or triple taxation
- Association urges resolving disputes
- Members ready to lease from legal owner
- Experts warn multiple demands risk competitiveness
The country's shipbreakers are caught in confusion and fear of added financial strain as two government agencies recently asserted authority over parts of Chattogram's Sitakunda coast, where most ship dismantling yards are located.
For decades, shipbreakers have taken annual leases of diluvionland, newly formed coastal areas created by the Bay of Bengal, from the Chattogram deputy commissioner's office.
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Alongside, the industry pays various fees to the industries ministry, under which it is formally regulated. Operators must also secure clearances from the Department of Environment, the Department of Explosives, and the Department of Inspection for Factories and Establishments.
However, the Bangladesh Ship Breakers and Recyclers Association (BSBRA) recently received letters and verbal notices from two other agencies – the Bangladesh Inland Water Transport Authority (BIWTA) and the Chattogram Port Authority (CPA) – both pressing claims share over the same stretches of land.
Unless the government resolves this issue at the policy level, shipbreaking yards will face a tangle of competing authorities, rising costs, and legal uncertainty.
In a reply to CPA on 19 August, the association warned that such claims are creating uncertainty for yard owners who have already been paying lease and approval fees.
"Currently, all yard owners lease diluvion land yearly from the DC office. Now, two other departments are asking for payments on the same land. This creates unbearable pressure on the industry," the association wrote.
Zahirul Islam Rinku, vice president of association, told The Business Standard that industry leaders fear the claims may result in double or even triple taxation.
"Unless the government resolves this issue at the policy level, shipbreaking yards will face a tangle of competing authorities, rising costs, and legal uncertainty," he added.
Rinku further said they already pay port dues and other fees to the CPA when a ship is imported and anchored at the outer anchorage. "We don't understand why CPA is asking for further revenues."
Commodore Kaosar Rashid, member (engineering) of the CPA, confirmed he had written to BSBRA instructing it to obtain a CPA licence.
"The land belongs to the yard owners, but under state law they must secure CPA approval to operate legally since the industry falls within the port's jurisdiction," he said.
Nayan Shil, deputy director of BIWTA Chattogram, told TBS that the Sandwip channel belongs to BIWTA, and the CPA cannot claim it.
"We have already discussed this matter with the CPA. Shipbreaking yards will ultimately have to obtain a license from us as a legal requirement," he added.
Overlapping claims
Shipbreaking yards pay lease fees to the district administration, which claims authority over the Sitakunda coast's khas land and has been issuing leases there for over 40 years.
A government gazette dated 19 October 2011 declared several mouzas under Sitakunda upazila – Uttor Salimpur, Bhatiary, Jahanabad, Shitalpur, Dokkhin Sonaichari, ModdhomSonaichari, and Uttor Sonaichari – as a shipbreaking industrial zone. The notification explicitly included "leased khas land" as part of the designated zone.
At present, yard owners pay Tk30,000 per acre of diluvion land. Depending on yard size, lease payments typically between Tk1-2 lakh annually, depending on yard size.
The industries ministry, meanwhile, collects revenue from factories operating in the shipbreaking zone. The Bangladesh Ship Recycling Board (BSRB) under the ministry recently imposed an annual Tk40,000 DASR (Documents of Authorisation for Ship Recycling) fee and also charges for no-objection certificates.
The CPA, pointing to a 2019 notification that extended its port limits up to Mirsarai, issued its letter on 10 August asking shipbreakers to seek CPA approval.
Separately, the BIWTA, citing a 2020 gazette notification, has verbally claimed ownership of parts of the land and asked shipbreakers to obtain its approval to continue operations.
Calls for resolution
BSBRA has urged the CPA, BIWTA, and the district administration to first resolve the ownership question before making further demands. The association said its members are ready to lease land from whichever authority is legally recognised as the rightful owner.
Industry leaders warn that unless the turf war is resolved quickly, the pressure of multiple revenue demands could erode competitiveness and deter new investment.
Captain Anam Chowdhury, shipbreaking consultant and maritime expert, told TBS that through bilateral agreements with Japan, India secured a $76 million soft loan for ship recycling infrastructure and provided an additional $35 million in domestic incentives.
"In contrast, Bangladeshi authorities remain focused on revenue collection rather than financial, policy, or business facilitation support," he said. "The industry has been struggling for years. If this continues, Bangladesh will soon lose its top position in the global market to India."
Muhammad Ali Shahin, coordinator of YPSA, a development group that has worked on shipbreaking for over two decades, said the BSRB was created to provide one-stop services for the sector.
"BSRB should be the sole regulator and all government agencies should work through it. Otherwise, the industry will face double trouble in the future," he said.
BSRB Director General Shafiul Alam Talukder told TBS, "The industry has been going through massive transformation and facing several challenges. It's time to support the industry with clear policy direction. If government agencies impose extra revenue burdens at this crucial time, it would be a disaster."
He added, "We will hold dialogues with the authorities demanding revenues to find a rational resolution."
The industry
Bangladesh's shipbreaking industry is one of the largest in the world, concentrated along a 20km stretch of Sitakunda's coast. Each year, hundreds of decommissioned ships are dismantled here, making the country a global hub for ship recycling.
The industry supplies more than half of Bangladesh's scrap steel, sustaining a domestic steel market valued at around Tk50,000 crore, according to industry insiders.
It contributes an estimated Tk1,200–1,400 crore annually in taxes, VAT, and duties, and directly employs over 20,000 workers, with another 150,000 people dependent on related services and supply chains.
Globally, Bangladesh accounts for nearly 36% of the world's annual ship scrapping, generating turnover worth around $2.46 billion.
