How shipbreaking is contributing to Bangladesh's economy
With a staggering annual turnover of Tk30,000 crore, Bangladesh's shipbreaking industry is not just dismantling vessels, it is building futures as this thriving sector impacts the economy, creates jobs and supports local businesses
Shipbreaking in Bangladesh has led the global market for nine consecutive years. This thriving industry, primarily centred along a 20-kilometre stretch of the Sitakunda coast in Chattogram, boasts around 120 registered shipbreaking yards.
With investments exceeding Tk10,000 crore and an annual turnover of approximately $2.46 billion (around Tk30,000 crore), the sector is a cornerstone of Bangladesh's economy.
Economic contributions and employment
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The shipbreaking industry is a significant revenue generator for Bangladesh, contributing between Tk1,200 to Tk1,400 crore in import duties, VAT, taxes, and certification fees. Its influence extends far beyond immediate financial metrics; the sector has been instrumental in bolstering the steel industry, which now boasts a turnover of Tk50,000 crore. The availability of raw materials from shipbreaking has fostered infrastructure development across the country.
In terms of employment, the industry directly employs over 20,000 people and indirectly supports around 150,000 jobs in various linked sectors. It has fundamentally altered the economic landscape of the Sitakunda upazila, providing countless job opportunities and stimulating local businesses.
The shipbreaking industry has not only changed individual lives but has also led to the establishment of three major markets in the region, including Sitakunda, Kadamtali in Chattogram, and Postogola in Dhaka. These markets thrive on various equipment and materials salvaged from decommissioned ships, such as machinery, tools, and pipes. These items are repurposed in local industries, adding further economic value.
Remarkably, around 50 residents of Sitakunda have become ship-breakers themselves, transforming their lives through the business opportunities presented by this sector. The rise of shipbreaking has also created over a thousand millionaires in the area, showcasing its role in wealth generation and economic mobility.
The growth of the shipbreaking industry has also significantly influenced the banking sector in Chattogram. With daily transactions surpassing Tk300 crore, commercial banks have established 35 branches within the shipbreaking zone. The staggering financial activity has attracted banking institutions to the area, creating a robust banking presence in Sitakunda.
Transformation of Sitakunda's economic landscape
Before the shipbreaking industry took root in the 1980s, Sitakunda's economy was primarily agricultural. The introduction of shipbreaking transformed the livelihood of residents. Initially, people joined as workers in shipyards, but many soon ventured into entrepreneurship, dealing in goods salvaged from ships, such as leftover oil, furniture, hardware, and electronic goods.
Local businesses now thrive along the Dhaka-Chattogram highway, where over 1,000 shops sell products recovered from shipbreaking, with an estimated worth of Tk1,000 crore. Many entrepreneurs, like Nur Uddin Rubel, have seen their fortunes change dramatically through this industry.
Rubel transitioned from cable trader to ship-breaker in 2014 and notes that many businesspeople in the area transact over Tk1 crore a month, indicating a remarkable shift in lifestyle and living standards.
Shipbreaking's role in Bangladesh's steel industry
A staggering 80-90% of the raw materials for Bangladesh's steel production come from the shipbreaking industry. Currently, the country produces about 6 million tonnes of steel rods annually, with mild steel making up roughly 95% of a ship's composition.
As Tapan Sen Gupta, deputy managing director of BSRM, points out, the shipbreaking industry has significantly contributed to the country's steel sector. Around 400 re rolling mills rely on plates from shipbreaking to produce essential construction materials, while large-scale steel mills utilise about 20-25% of meltable scraps sourced from these operations.
Bangladesh's strategic geographic positioning as a riverine country has historically made waterways a primary means of transportation. The shipbuilding industry has blossomed, thanks in large part to the availability of raw materials from shipbreaking.
Currently, over 150 shipbuilding yards exist across the country, constructing approximately 3,000 small to medium-sized vessels each year, valued at around Tk10,000 crore. Shamsur Rahman from the Bangladesh Ship Building Association emphasises that local shipbuilders rely heavily on materials sourced from shipbreaking yards in Chattogram, directly contributing to the industry's growth.
Oxygen industry growth
The shipbreaking process involves cutting ships with burning torches, which rely on oxygen and Liquid Petroleum Gas (LPG). The increasing number of ships dismantled has led to a surge in demand for oxygen, resulting in the establishment of 14 oxygen plants in Sitakunda over the past two decades. These facilities, with an investment of over Tk300 crore, have created employment for around 2,000 people.
During the Covid-19 pandemic, these oxygen plants played a critical role by supplying free oxygen to those in need, showcasing the industry's importance beyond mere commercial interests.
Markets for recovered goods
The shipbreaking industry recovers over 600 items, including paints, chemicals, furniture, kitchen appliances, and various electronic goods. These items are in high demand in local markets due to their quality, durability, and affordability.
In Sitakunda, Chattogram's Kadamtali, and Dhaka's Postogola, three vibrant markets have emerged where traders sell goods recovered from shipbreaking, with transactions exceeding Tk1,000 crore annually. Shahab Uddin, a local businessman, notes that around 1,000 shops along the Dhaka-Chattogram highway facilitate significant trade, further emphasising the industry's economic impact.
With the shipbreaking industry driving substantial sales, banking transactions have soared. As the industry expanded in the early 2000s, banks were drawn to open branches in Sitakunda, catering to the financial needs of traders. Currently, approximately 30-35 banks operate within a 15-kilometre radius, handling daily transactions of Tk10-20 crore each, contributing to a cumulative total of over Tk300 crore across all banks in the region.
The shipbreaking industry in Bangladesh is a vital component of the national economy, shaping various sectors and contributing to significant job creation. From its influence on the steel and shipbuilding industries to the growth of local markets and banking, shipbreaking has transformed the economic landscape of Sitakunda and beyond.
This industry has not only fostered entrepreneurship and wealth creation but has also become a lifeline for thousands of families in the region. As Bangladesh continues to navigate the challenges of economic development, the shipbreaking industry stands out as a testament to the resilience and adaptability of its people. The ongoing evolution of this sector promises to further bolster the country's economy, providing hope and opportunity for future generations.
