Bangladesh: Lack of Specialised Financing Key Barrier To Ship Exports: Study
A lack of specialised financial systems, such as specialised banks or loan schemes, is the key barrier to ship exports from Bangladesh where other required resources are available, according to a study by the Bangladesh Investment Development Authority (Bida).
“The global shipbuilding market was valued at over $142 billion in 2020, when Bangladesh exported $18 million. As the international market is projected to reach some $195 billion by 2030, the country has the scope to grow big, but easy-term loans are crucial,” according to the study report revealed at a workshop at the Bida office in the capital yesterday.
Titled “The Prospects and Problems of Ship-Building Industries in Bangladesh: A Comparative Study of South Asian Regimes”, it said the Bangladesh shipbuilding industry needs long-term and low-interest capital loans to operate and expand.
Unfortunately, banks do not offer such loans, making it difficult for shipbuilders to access the necessary funds. Moreover, there is no specialised bank like agriculture-focused ones for the shipbuilding industry, the report reads.
“If a shipbuilding industry invests 200-500 crore taka, the return from that industry takes 9-10 years, which is normal and feasible. But banks expect that return within 2-3 years, which is not feasible.”
The Bida study concluded with a call for establishing a specialised financial banking system with a grace period of minimum of 4-5 years at 1-2% interest for the shipbuilding industry so that it can unlock the immense potential of ship exports.
It also suggested a tax holiday of four to five years to help the industry achieve the export target of $4 billion by 2025.
“Without the development of shipyards and the shipbuilding sector, it is not possible to get proper benefits of the blue economy. So we should prioritise the industry,” Bida Executive Chairman Lokman Hossain Mia said at the workshop, which was attended by representatives from the shipbuilding industry, business leaders and ministries concerned.
Speaking on the occasion, Metropolitan Chamber of Commerce and Industry President Md Saiful Islam said currently Bangladesh earns about Tk15,000 crore annually from the shipbuilding industry.
“So far ships worth $200 million have been exported, which will stand at $650 million in 2026 if we address the constraints. By 2040, if we can exploit our potential, this industry can generate $90 billion.”
Ananda Group Executive Director Tariqul Islam, after the programme, told TBS that it takes two to three years to build a ship for export. Therefore, credit facilities like other sectors are applicable to the industry; it deserves specialised financing.
He further said at least Tk500-600 crore is needed for establishing a ship-building factory that can make and export sma ll ships.
Source: The Business Standard