Import of ships below 5,500 tonne capacity to be banned

To patronise the shipbuilding industry, the import of all types of ships with a capacity below 5,500 tonnes, and length less than 100 metres, has been banned in the latest shipbuilding policy.

The Shipbuilding Policy 2021 was approved at a cabinet meeting on 25 January and will be published in a gazette soon.

Welcoming the government's decision, shipyard owners have said it will pave way for the development of domestic industries.

But, shipowners have said such a decision will lead to a crisis in the watercraft needed to transport goods by sea before achieving the capacity. They suggested that the decision be implemented after the necessary infrastructure and capacity is acquired.

Sohail Hasan, managing director of Western Marine Shipyard Limited, told The Business Standard, "So far we have built up to 8,000-tonne-capacity ships and we can build ships with capacity from 1,2000 to 15,000 tonnes. Additionally, small shipbuilders can build 4,000-5,000-tonne [capacity] ships.

"The ships required to implement the 2100 Delta Plan will operate on inland routes and in coastal areas. The capacity of these ships will be 5,000-5,500 tonnes. So, this segment needs to be protected."

Sohail said, "Shipowners used to import second-hand ships with the capacity of 3,000 to 5,000 tonnes from Japan – similar to reconditioned vehicles. The tankers were mostly brought from Japan and recently some ships have been brought from China. Chattogram Port also bought three second-hand ones. These can be easily made in Bangladesh.

"Capacity will not be a problem. At present, big groups have built shipyards. The government has three naval shipyards that have experience in building large ships. Khulna Shipyard, Narayanganj Shipyard and we have also built large ships."

As a result of this policy, he believes imports will be economical and backward linkage industries will improve – like the cable industry and furniture industry.

Laxman Chandra Dhar, senior vice-chairman of the Coastal Ship Owners Association, said, "Some shipyards can build ships with capacity of up to 5,500 tonnes. Four to five container ships were built for navigating the coast having the capacity of 3,000-4,000 tonnes. Of these, one sank near the Payra Port. Another, now disabled, remains stuck near the Indian port of Visakhapatnam. The rest are now operating on the Dhaka-Chattogram route."

He said, "Bangladeshi shipyards do not have the capacity to build mother vessels and it will take another 40 years to create the infrastructure and environment for it. So, the government should have thought before making such a decision in the policy."

However, it may work if the government provides the necessary subsidy and the VAT-tax is waived, he added.

The policy states ships with a capacity of 10,000 deadweights (DWT) are currently being built in the country. The 20 shipyards of international standard can build an average of 100 ships a year.

The shipbuilding industry has so far earned Tk180 million by exporting 40 ships since the first import in 2008. A maximum of 8,000 DWT ships have been exported.

The policy has suggested that the government evaluate existing challenges in shipbuilding and help the sector recover.

A special fund with government and private finance can be formed from where shipyards can avail of a loan with an extended time of repayment.

The policy also recommended continuing cash incentives in imports, special facilities in raw material imports and tax holiday facilities.

The policy further suggested the development of necessary infrastructure for forward and backward linkage industries and the establishment of special zones for the shipbuilding sector.

In addition to conventional shipbuilding, the policy aims at a self-capacity building in: LCD, LNG tankers, crude oil tankers, chemical ships, coal-carrying ships, as well as ships capable of exploring and extracting mineral resources in the deep sea.

At present, 12,500 small and large vessels are transporting goods and passengers by sea in the country. It is thought that in the next five years, an annual income of about four billion dollars and the employment of one lakh people will be possible.

The policy has already been sent to BG Press, for publication as a gazette, after receiving cabinet approval, said Salim Ullah, senior assistant secretary at the industry ministry.