The ship-breaking industry in Chattogram, which used to be a major supplier of raw material for the steel industry in Bangladesh, has come to a near standstill due to various crises.
These crises include a shortage of dollars, the imposition of an advance tax on imported scrap ships, and the government's decision to categorise the industry as "Red".
The categorisation of ship-breaking as "Red" by the Department of Environment (DoE) in April last year has caused significant problems for the industry, resulting in a shortage of scrap iron for the country's re-rolling mills.
Furthermore, the industry has faced challenges in 2023, with the lowest import of scrap ships in the last decade.
The industry saw a substantial decrease in the import of old scrap ships in 2023 compared to previous years.
In 2016, the industry reached its peak with the import of 227 ships weighing 3,405,068 tonnes, but in 2023, only 144 scrap ships weighing 880,558 tonnes were imported.
Despite the impact of the COVID-19 pandemic, the import figures were 27,28,597 tonnes in 2021 and 11,45,324 tonnes in 2022. And during the years from 2017 to 2020, the industry witnessed declining import figures.
In addition to these challenges, the ship-breaking industry is also grappling with the advance tax on imported scrap ships and the policies of the government.
The shortage of dollars has made it difficult for importers to obtain Letters of Credit (LC), leading to reduced competitiveness in the international market. The process of approval has also been prolonged, and banks have imposed higher margin rates.
The industry leaders have expressed their struggles in complying with the Environmental Conservation Rules-2023, which classify ship-breaking in the red category.
This classification requires an additional round of clearance from the DoE for each ship before it can be broken down, causing further delays in getting permission.
The industrial entrepreneurs are concerned about facing additional complications and harassment.
On a positive note, Kabir Ship Recycling Facilities, a ship-breaking yard of the Kabir Group, has obtained the certificate of 'Green Yard' from three different international certification bodies. This signifies their commitment to maintaining safe and environmentally sound recycling practices under the Hong Kong Convention (HKC).
Overall, the ship-breaking industry in Chattogram is facing numerous challenges, including a shortage of dollars, the imposition of advance taxes, categorization as "Red", and the struggle to obtain necessary clearances and approvals. This has resulted in a decline in imports and a significant slowdown for the industry.
The ship breaking industry was established in 1970 at Sitakunda area in Chattogram.
Around 40,000 workers engaged in the ship breaking industries of Chattogram.
Average more than 3.0 million tonnes scrap ships are used to import by Bangladesh now which is more than 25 per cent of the total scrap ships of the world.
The total turnover of the ship breaking industry is around Tk 50 billion per year.
A total of four types of old vessels are scrapped in the shipyards of Sitakunda. The vessels are Turbine Tanker (TT), Motor Vessel (MV), Steam Vessel (SV) and Fishing trawler (FT). Scrapping of Turbine Tankers is very dangerous.
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