Covid-19: Ship builders yet to get government incentives

No entrepreneur in the shipbuilding sector has received any incentives so far despite the government announcing incentives for various heavy industries to mitigate the loss due to Covid-19 outbreak.

According to this industry insiders, investment in this shipbuilding sector, which exports ships abroad after meeting the local demand, is Tk5,000 crore but the losses due to the pandemic are about Tk10,000 crore.

The sector has already spent Tk10,000 crore to 12,000 crore for workers' wages, gas, electricity bills and loans. About US$500 million in foreign orders in the sector have also been suspended due to Covid-19.

To keep their business afloat, entrepreneurs in the industry have demanded an incentive of Tk3,000 crore from the government as working capital.

With this money, this sector will turn around again and the government will be able to earn Tk200 crore annually from taxes.

Md Sakhawat Hossain, general secretary, Association of Export Oriented Shipbuilding Industries of Bangladesh, said the incentives which the government announced for this sector in 2018 also remained stuck at the ministry.

"The government recently announced a new incentive package due to the Covid-19 pandemic. None get any kind of loan assistance even after applying from this incentive package."

Entrepreneurs will be in crisis if this sector, which earns foreign exchange alongside meeting the local demand, does not get incentives, he added.

If the Covid-19 situation improves, this sector can get an order worth of Tk1 lakh crore because the small ships built in Bangladesh are appreciated across the world.

In 2018, the government announced an incentive at 9 percent interest to take the shipbuilding industry forward.  Of which, the government will pay 4 percent while the remaining 5 percent by the entrepreneurs. But that incentive did not see the light of day for bureaucratic complexities.

Under the package-1 following Covid-19, the government announced Tk30,000 crore incentive for affected industries and service sector as working capital to be disbursed through banks as loans with 9 percent interest.

Of the interest, the industries and businesses concerned will pay 4.50 percent, while the government would pay the rest to the banks as subsidy.

The Association of Export Oriented Shipbuilding Industries of Bangladesh (Aeosib) said about a hundred small and big organizations are involved in shipbuilding in the country. Of these, 20 are export-oriented and 80 are inland shipbuilders.

Around 70 percent of those shipyards are located in and around Dhaka while 20 percent in Chattogram and 10 percent in Khulna and Barishal.

About 52 domestic and foreign orders of FMC Dockyard have been suspended, Yasin Chowdhury, managing director of the shipbuilding company, said.

"As our organization has some work orders from the government, we have continued to work amid Covid-19 by ensuring social distance," he said.

But it will be difficult to run the company if the government does not provide any incentives and foreign orders are suspended.

"Despite that we are not a defaulter, we are not getting any help even though we apply for a loan from the bank under the package. I urge the government to ensure this loan facility quickly," he said.