Ship building industry in Bangladesh by UNB staff writer Fahad Ferdous

Bangladesh Bank, central bank of the country, should introduce refinancing at a lower rate by the government for industrial loan to set up shipbuilding industry as well as its working capital, a government committee has recommended in its report.

The committee, led by Director General of Export Promotion Bureau Md Khalilur Rahman, was formed to submit report on problems and prospects of the shipbuilding industry. The report was recently submitted to the ministry concerned.

The report suggested that the single borrower exposure limit of commercial banks should be increased to 65 percent for non-funded facilities from the existing 35 percent. According to the present system, single borrower exposure limit of commercial banks has been fixed at 50 percent (funded 15 percent and non-funded 35 percent) of the total capital.

“This is not sufficient for shipbuilding sector in extending non-funded facilities. It should be increased to 65 percent for non funded facilities for investment in the shipbuilding sector,” the report said.

The report made its recommendations in four parts -- financial, human resource development, infrastructure and marketing.

In the financial part, it recommended that the limit of government deposit in private commercial banks has to be increased from present 25 percent to 50 percent and that should be earmarked for investment in shipbuilding sector. It also mentioned that commission for import L/Cs has to be fixed at 0.25 percent per three months.

The committee also suggested 10 percent interest for industrial loan while 7 percent interest for working capital loan with nil margin for bank guarantee and nil L/C margin for 100 percent export oriented shipbuilding industry.

To avoid issuing counter bank guarantee by a foreign bank as the bank guarantee issued by the local banks is not accepted by the buyer’s bank, the committee suggested that Bangladesh bank could maintain a record of such guarantees issued by local banks with cross reference to each other.

In the human resource development part, the committee suggested to form a committee by the government with the members of marine engineering department of universities, technical institutions, concerned association and ship exporting companies to review the course curriculum every two years and prepare a need basis syllabus.

The report also suggested making necessary arrangement for opening naval architecture and marine engineering department in the universities of Khulna, Chittagong and Barisal regions.

In the infrastructure part, the committee suggested to establish a special zone having technical and geographical facilities including deep channel, 200+ meter height of bridges on the rivers and uninterrupted electricity and gas supply for 100 percent export oriented shipbuilding industries.

“The bank of Meghna River at Gazaria, Munshiganj may be considered as the first special zone, the eastern side of Karnaphuli River may be considered as the second special zone and the bank of Pashur River considered as the third special zone on the basis of conducting survey,” the committee report said.

Arrangement may made to identify possible backward linkage industries like ship’s out fittings, safety accessories, marine lighting, maritime signs, symbols and posters, anchor and chain, marine cables, electrical and electronic items, pipes, pumps, ropes, angle, shipbuilding plate, piston rings, switch gear, marine spare parts, and marine technologies.

In the marketing side, the report suggested to take necessary steps by the Bangladesh missions aboard for boosting up export of ships.

It also recommended that Export Promotion Bureau (EPB) should ensure regular participation in the important international maritime exhibitions and fairs.