The title of the news says "
Indian ship breakers lose business to Bangladesh". If you ask Saifur Rahman type policy-maker (i.e. pre-1/11 policy-makers), you will find a happy face boosting success. They just look at the headline and be happy or sorry about the present. Those policy-makers actually deserved place in the manufacturing alleys of the EPZs, where no brain work is needed. However, a post-1/11 policy maker should be very worried about the future of our ship breaking industry, after reading the last two lines of the news item which reads "However, Indian ship breakers hope the tide will turn in 2010, when the International Maritime Organization comes with guidelines on ship breaking norms. Many Bangladeshi ship breaking yards will have to close down over pollution and labor issues". They should be worried, ideally that is.
If you take this news item in its face value, what needs to be done?
First of all, government and shipbreakers' association should employ a team of experts (consisting of engineers, environmentalists, labor-law specialists, maritime specialist, manufacturing consultant and above all, members from the finance industry) to assess the situation. The year 2010 is not very far away.
It should be noted that most of our local steel mills use these scrap steels. If proper processes are used, these steel is high-quality. The value chain is long - meaning it creates more employment than importing ore-based steel mills.
What Tata is proposing to build - that will be importing ore-based steels. If Tata's still makes economic sense, then go ahead and let it invest. One may ask whether we are going to lose our potential in ship breaking industry and then start importing ore from India through Tata? That would mean exporting thousands of job to India, scrapping our business relationships with many developed countries (who sells ships to scrappers) and instead becoming dependent on India's steel input. Moreover, the recycling through shipbreaking should be eligible for environmental credit.
We don't know whether anyone from this industry has examined the possibility of selling environmental credits in European Regulatory Markets - funds channeled from those efforts can then be used to increase the margin from this industry as well as better working conditions for the workers.
Historically, India has shown its incapability of being a responsible player when it comes to dealing with Bangladesh. The latest example was the promise of rice export and later retracting from it, or at least, trying to do that. Now, we do not blame India, per se, for that. They have too many empty plates among themselves - why should we expect them to behave responsibly? Tata, Mittal or Ambani's might be world richest - however, India as a nation is much weaker than the world thinks.
Bangladesh should play its role as a responsible player and not to expect much from its giant, weak neighbour. There are few strategic things that our policy makers has to be clear about when it comes to dealing with India.
In short, India is a hungry man (just like Africa) - but it is smarter than Africa. It pretends to be a shining man - though it feels the hunger in every move that it makes. So, when it comes to behave responsibly (which translates to behaving generously, in many cases), India can hardly afford that. So, instead of blaming India in every step of the way, its time for us to be more strategically aware of the best possible option and avoid being dependent on India where we can.
Our policy makers have to make sure that the critical points of the supply chain of our overall economy should not depend on the India's will - at least not in the short to medium term. The spirit of SAARC or regional will not have much meaning as long as the poverty in the region is not dealt head-on. Bringing together seven hungry man might give some strategic advantage - however, chances are that will create more problem than solution. Our history is a good example of that. So the policy should be not to depend on it.
Or even if our paths cross, if it makes economic and political sense to deal with them, it is better to have redundancy options open for those parts of the supply chain where India has control. Because, as long as India has 50-times more hungry people than Bangladesh has, we have no moral authority to blame them, do we? Rather we should work hard to benefit from the proximity of the big market as well as (at some point in future) help the giant neighbor - just like Japan/Korea often helps China when the need. We can develop much faster than they can - if we really want. Singapore developed faster than Malaysia, Japan/Korea developed much faster than China, UAE is developing much faster than Saudis, why can't we replicate that? And most importantly, our development will not come at the cost of India's development. Rather we will be able to help the many citizens of India and Myanmar - as soon as we get into the trajectory. All it needs a group of dedicated politicians who has the competence and will to do that.
Some of you will accuse by saying this - if that is the case, then, why does India do matobbori? How do you explain the big-brotherly behaviour? Our answer to that would be - they are big. But that does not necessarily mean that its natural. Does China behave the same way to Korea or Japan? Why not? If you can figure that out, you will figure out the same here too.
Coming back to our topic today, shipbreaking and shipbuilding are two sister industries which needs proper policy support. A timely focus on this will help reap benefits down the road. Both of these industries are related to the steel industry and our construction sector, a very important component, contributor and indicator of national development. "However, Indian ship breakers hope the tide will turn in 2010, when the International Maritime Organization comes with guidelines on ship breaking norms. Many Bangladeshi ship breaking yards will have to close down over pollution and labor issues" - these words should be taken seriously and make a plan that is win-win for all the stakeholders.
If you thought some of the ideas are worth of your reading time, please forward it to others. If you have an ear to the columnists in regular traditional media, please forward it to them. If you have an ear to the journalists and news editors of the electronic media, discuss it with them. Hope they would look at the suggestions and give due diligence.
Thanks for your time,
Innovation Line
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Note: This is a freelance column, published mainly in different internet based forums. This column is open for contribution by the members of new generation, sometimes referred to as Gen 71. If you identify yourself as someone from that age-group and want to contribute to this column, please feel free to contact. Thanks to the group moderator for publishing the article as Creative Commons contents.
The more of you forward it to them, the less will be the need to go back to street agitation. Use ICT to practice democracy.
http://steelguru.com/news/index/2008/05/03/NDQxMDE%3D/Indian_ship_breakers_lose_business_to_Bangladesh.html BS reported that, with Bangladeshi ship breakers offering around 23% more for steel scrap than India, Indian ship breakers are in trouble and some of them may have to close shop. Bangladeshi companies are offering INR 29,600 per tonne for scrap steel compared with INR 24,000 per tonne that the Indian players are paying.
Bangladesh has emerged as a major ship breaking destination in South Asia with an average of 150 vessels to 200 vessels being scrapped there every year. Pakistan, on its part, is competing with India by scrapping an average of 70 vessels to 90 vessels in a year as compared with India's 120 vessels.
Both India and Pakistan generate around 4,000 tonnes of scrap steel per vessel, much less than Bangladesh, which generates 12,000-15,000 tonnes of scrap steel per vessel. Bangladesh can offer higher prices as most steel manufactured there has scrap as the basic raw material.
Mr Nikhil Gupta joint secretary of Ship Recycling Industries Association of India said that "One reason why Bangladesh is offering more is because it does not have any other major source for making steel. For that, it has kept the duties low. Because of this, Bangladesh has managed to attract high-tonnage vessels. Neglected vessels with lesser tonnage make their way to yards in India or Pakistan. Now with Pakistan offering a higher price, it is in a better position to attract more vessels."
Mr Gupta said that their business is going through a lean phase. Between 1995 and 2001, the industry employed over 45,000 people per annum, which has now come down to 6,000.
Industry experts said that in the last 5 years, because of the boom in the shipping industry, a number of old vessels have been overstretched. Due to global economic slowdown, freight rates are correcting and with global steel prices ruling higher, shipping companies will be able to command more for their scrap vessels. However, Indian ship breakers hope the tide will turn in 2010, when the International Maritime Organization comes with guidelines on ship breaking norms. Many Bangladeshi ship breaking yards will have to close down over pollution and labor issues.
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