Commodore Reazuddin Ahmed, was appointed as Managing Director of Khulna Shipyard Limited on 20 Feb 2011. He did his graduation in Naval Architecture and Marine Engineering from BUET. During his career in Bangladesh Navy, he has held many prestigious appointments both onboard as well as ashore including Naval Headquarters. Prior joining to KSY, Cdre Reaz served as Chairman of Chittagong Port Authority. In an interview with the Holiday, he spoke on prospects of shipbuilding sector in Bangladesh in general and transformation of Khulna Shipyard Limited (KSY) in particular as a profitable enterprise.
Holiday: How important is our maritime industry for the national economy of Bangladesh?
Riazuddin Ahmed: Our maritime industry is vital for the development of the country as well as for its security and energy needs. Nearly 95% of our trade runs through the sea. Furthermore, 95% of our energy resources are imported by ship. So, one can imagine the importance of this industry. Shipbuilding is one of the major maritime industries. Over the period Bangladesh has developed a large fleet of about 20,000 vessels comprised of inland and commercial vessels, and various types of working and fishing craft. There are indigenous shipyards more than 200 in numbers building and repairing these vessels and in turn have provided a strong prepared base for building ships of international standards.
Less than 6% of our international trade is carried by Bangladeshi ships and each year we are paying billions of dollars as sea freight. Our export and import is growing but we are at the mercy of foreign shipping companies. Only a proper development in shipbuilding sector may reduce our cost of doing business. This will also generate employment in manifolds.
Holiday: Bangladesh is traditionally a sea faring nation and has a rich heritage of shipbuilding of many hundred years. Under this backdrop how do you evaluate BDs potentials in shipbuilding sector?
Riazuddin Ahmed: Shipbuilding is a highly labour intensive industry and countries that may offer lower wages have profound advantage. The human inputs here are comparatively lower than other actors in this field e.g. India, China, Singapore, S Korea etc. So, Bangladesh may offer the best cost with combination of quality and productivity. The total productivity of China and India is almost same and our productivity is expected very similar to that of India. Our strength lies in terms of effective cost of workforce. India our nearest competitor is 2.5 times away and Korea 4 times costlier in terms of workforce alone. According to various reports and sources, many countries are eager to enter Bangladesh's shipbuilding market mostly due to lower labour cost, which is typically 20-30 per cent of the total ship manufacturing cost. Compared to other shipbuilding nations, the overall investment cost for shipbuilding in Bangladesh is estimated to be 15 % lower.
Holiday: Bangladesh has emerged as a potential place for shipbuilding. Last few years she has made tremendous progress in this field. How do you see this development?
Riazuddin Ahmed: Our shipbuilding sector is growing both in the domestic and international market. Some of our private shipyards have already built ships for highly competitive European market. Recent building of warship by Khulna Shipyard is also a giant stride forward, which only few countries may offer. All these will immensely help us to attract FDI, generate employment, development of infrastructure and strengthen backward linkage industries. These will ultimately help to grow GDP of the country. Last but not least this will make a positive image for the nation.
Shipbuilding demand arises from seaborne activities and this demand creates capacity in shipbuilding. Japan, Korea, China and India all took shipbuilding as a major sector in their economy and now key actors in this field.
Holiday: What are the problem areas in this field you come across as a shipbuilder?
Riazuddin Ahmed: A shipbuilder needs huge capital, as such financial problem is often acute in shipbuilding industry. A company's capital or customer down payment is inadequate to carry on business. Financial institutions are less interested to provide significant loan without sufficient guarantee. Very often it cost higher interests. Thus, the cost of financing is high in comparison with other countries like China, Vietnam and India. It may gradually weaken our competitiveness. Therefore, adequate subsidies and incentives are required.
In addition, lack of electricity, backwardness in technology, longer lead time in material mobilization and lack of comprehensive skill development in shipbuilding trades are the main hindrances in the shipbuilding sector.
Holiday: KSY Ltd is the oldest shipbuilding enterprise in the country, which was handed over to Bangladesh Navy in 1999 as a sick industry. How did you transform it into a profitable enterprise?
Riazuddin Ahmed: KSY had been running as a loosing concern since its inception in 1957 except few years. Its capacity was never attained despite having internal demand in the shipping sector. Rather, due to poor management, it was about to be collapsed. Finally, KSY was handed over to Bangladesh Navy in 1999. Although we had no experience of running a commercial enterprise but indirectly or directly we knew its problem as BN ships are very often repaired in this yard. At the outset we put emphasis on building discipline amongst all ranks and files. Although only few BN personnel works here, but we could generate a sense of belongings amongst our men and women. Such effort has given a positive signal to our potential customers, who once left this yard. As such we could bring them back and gradually increaseed our work volume.
Holiday: The Yard is operating under BN management for last 13 years. How do you evaluate its contribution in the shipbuilding sector in general and socio-economic development in particular?
Riazuddin Ahmed: KSY is one of the oldest shipyard in the country. By the time it was handed over to BN, it lost its born capacity. The machineries and equipments lost its optimum output. Nevertheless, our work force resurrected again with able BN leadership. A significant numbers of ships and crafts have been built in this short span of operation. Apart from govt jobs, private entrepreneur’s are also placing order for building oil tankers, cargo vessels, tourist vessels, research vessel etc. The most significant achievement is the ongoing warship building project. Already first warship has been delivered and more four warships are in the pipeline. Recently, a contract has been signed to build 02 inland container vessels, which will be the first such endeavour in the country. KSY’s such intense operation is also contributing in the overall economic development of the country. It started with a nominal profit from the very first year of taking over and now one of the big tax payers in the Khulna region. Until last FY, KSY has deposited approximately Tk.45 crores in the govt treasury. KSY is also playing a pivotal role in overall socio-economic development of this region. Approximately 1000 pesonnel both male and female are serving here. As a whole directly and indirectly KSY helping to uplift the socio-ecnomic condition of this area. This yard has become the principal training ground for our future workforce. Each year around 1000 personnel are trained here with nominal expense. The yard is also offering good job opportunity for the new comers.
As part of CSR, KSY has established accommodation, school, college and madrasash for future generations. This has tremendously boosted the moral of our men and women. Last but not least, our workforce never got delayed payment and other financial benefits since BN took over this yard.
Holiday: KSY has already proven that it can make warship. What is paramount now to keep this expertise?
Riazuddin Ahmed: Building warship is different than other commercial vessels and crafts. Here precision and workmanship is of prime importance. If we want to keep this expertise and strengthen the mastery of warship building than we need to build warship in this yard very frequently. BN and Coast Guard is using age old platforms in her fleet, which needs replacement. Those ships may be built in this yard and it is the high time to take such endeavour. Such effort by the Govt will build confidence amongst our work force.
Holiday: KSY is one of the oldest shipbuilding industry in the country. What efforts you have taken to enhance your capacity.
Riazuddin Ahmed: Shipbuilding is a technology driven industry. One can easily imagine how first technology is moving forward, specially with the introduction of ICT. It is also very difficult to keep pace with such momentum because these are costly venture. However, many major equipments have been changed, which has brought momentum in our work. This Yard is also working closely with foreign shipbuilders and classification societies that has helped us a lot to produce quality product. Besides, enhancing the capacity of our present workshops, we are about to complete a fabrication shed, where we will be able to build larger ship under cover without loosing single men hour. We have also acquired land near Mongla to build deep drought vessels in future.
Holiday: Building warship is a new beginning for KSY. How do you see the prospects of warship building in Bangladesh?
Riazuddin Ahmed: Bangladesh has entered the prestigious club of warship builders that few countries have achieved so far around the globe. KSY has brought this glory for Bangladesh. This has been made possible with existing manpower and its resources. Such achievement amply demonstrates that as a Nation we can achieve any goal despite numerous limitations we have. Warship is unlike other commercial ships/vessels. Here precision in works, fineness in turning, signature management, and interfacing of equipments/sensors/weapons are of utmost importance to fight and sustain. KSY has made these surmountable tasks possible. The yard is also capable of building bigger ships like large patrol craft, corvettes etc. This will significantly enhance our self-reliance in warship building in course of time. It would not be also unjust to dream to export warship by 2020 when shipbuilding cost is sky rocketing in the West as well as in the Far East. Bangladesh Navy started its journey with BNS PADMA in the post-liberation period. Let new BNS PADMA be our inspiration in future warship building.