Fazlur Rahman

A delegation of more then 20 Danish companies will visit Bangladesh next month to explore possibilities for setting up joint-ventures in shipbuilding.

"The aim of the visit, which takes place from November 8 to 13, is to set-up joint ventures in shipbuilding between Danish and Bangladeshi companies, said Morten Siem Lynge, Business-to-Business coordinator of Danish Embassy in Dhaka Thursday.

The visit is taking place at a time when the country's ocean-going shipbuilding industry has been hit by global recession as orders worth hundreds of millions of dollars have either been cancelled or put on hold.

"At the moment, more than 20 Danish companies have shown their interests to visit Bangladesh and look for local partners," Morten told the FE in an interview.

"It is true that buyers are now taking less, cancelling orders or putting them on hold due to global recession. But things will change when the recession is over and Bangladesh has to be ready for that."

He said ships have to be built in recession times, and Bangladesh can actually benefit from this.

"Bangladesh has done exceptionally well amid recession. It is still building new ships and the number of orders will certainly go up once the global economy recovers."

Experts said the country has become a new destination for companies seeking to build small ocean-going vessels as traditional shipbuilding nations such as South Korea and China now focus on building large ships.

Even Vietnam, which is relatively new in shipbuilding, is no longer interested to build small ships weighing 4,000-25,000 tonnes, Morten said.

Denmark, which has long tradition in shipbuilding, is now less active in this area due to high production cost. However, a very large number of high quality component and service suppliers for shipbuilders are still very active in Denmark, Mr Morten said.

He said low labour cost, which is one of the cheapest in the world, has also made Bangladesh a new destination for companies seeking construction of small ocean-going vessels.

Danish companies are interested to build ships here because it is at least 15 per cent cheaper compared with other countries, he said adding Bangladesh is the cheapest place in the world for building new ships.

He said 55 per cent of the world's ships below 20,000 dead weight tonne (DWT) are at least 20 years old and they have to be replaced sooner or later.

Morten said Bangladesh imports 90 per cent of the components needed to build ships. But the local companies can cut cost further and secure a more timely delivery of components if they manufacture components locally through joint venture with overseas companies.

"Many Danish companies, which manufacture components, are willing to go for joint venture in Bangladesh," Morten said.

The shipbuilding sector, which is hailed as the next industry leader after garments with potentials to earn billions of dollars, will create jobs for thousands and help grow many other allied industries, he added.

Local shipbuilders have termed the upcoming visit of the Danish manufacturers as a positive news for the country's nascent industry.

"This visit will broaden our business prospect," said Sakhawat Hossain, managing director of Western Marine Shipyard, the country's one of the largest shipbuilders.

He told the FE: "I think we have overcome the crisis, as it is evident from the interest shown by the global shipbuilders."

"The demand for small sea-vessels has also increased due to the economic crisis, and we are ready to take this opportunity," he added.