24 January 2012

Development of maritime activities in Bangladesh:

Bangladesh is one of the most densely populated countries in the world. It has achieved tremendous progress in agricultural sector but still finds it difficult to feed the nation. Apart from controlling the population through strict family planning, it has to educate and train the human resources to turn them into useful man-power. It has to diversify its economy.

One of possible avenues for diversifying the economy of Bangladesh is maritime sector. It is a small country with a vast coastline in the south. It is through the sea that we will find this new avenue of our economic success. The range of activities that fall within the domain of maritime world can be noted have as follows:

Ship-owning and operation; ship-management; ship-chartering; seafaring; ship-building; ship-financing and mortgage; shipbreaking; transhipment of goods; off-shore activities; and dispute resolution/ arbitration and litigation.

Ship-owning and operation:
In the days of the then Pakistan, despite having several private shipping companies, the government set-up a state owned National Shipping Corporation (NSC). It achieved tremendous success. Mr. Lee Kwan Yew, the then Prime Minister of Singapore was so impressed that he asked for technical help to develop something similar in his country. The services of Captain Saeed were loaned to Singapore. He later became the founder Chairman and Managing Director of the Neptune Orient Lines (NOL). It eventually became one of the largest shipping companies in the world which later took over the famous American President Line (APL). Late Capt. Saeed is still treated and honoured as father of Maritime Singapore.

Setting up the Marine Academy (the writer is also trained there) and then the NSC enabled us then to grasp the essential know-how of the shipping sector. That is why we could make a quick start in this sector immediately after the liberation. However, it faded away soon because of various other factors which will be discussed later.

There is no other business as international in nature as shipping. Government control and restrictions are impediment to the growth of shipping. We should make it open - open the register so that ships, not owned by Bangladeshis, can also be registered in Bangladesh. However such open register should be for a size over 15,000 GT so that smaller ships are genuinely owned by Bangladeshis to reap the benefit of domestic shipping and lighterage (carrying cargo by smaller vessels from a bigger vessel) trade. An open register (for over 15,000 GT) will open many new avenues. Economic activities will increase with increased employment.

The question comes - do we need to have state-owned Bangladesh Shipping Corporation (BSC)? The answer is yes as well as no. If we allow it to operate as a business venture free of bureaucratic control, then certainly it can remain and flourish. Otherwise we should find some buyer and sell it off. The government legislation and infra-structure should be helpful for private shipping to grow.

Shipping is not only international but also deeply legal and technical. This is why many ship-owners prefer their ships to be managed by management companies. The SOLAS-ISM requires a company to have the technical expertise and other resources to manage their ships in compliance with the code for safe operation and protection of the environment. This is all about regulatory aspect of shipping but some owners may even want business of the ship (marketing) to be handled by reputable company.

It is not surprising to find a company meeting both requirements. There are lots of ship-management companies located in Glasgow, Hong Kong, Cyprus and Singapore. With more shipping activities in Bangladesh, ship-management companies are bound to grow. They could eventually even manage foreign flag ships.

There are different types of chartering. Bare-boat or demise charter involves taking over the ship (on long lease normally leading to sale) as virtual owner to manage and operate the ship (including employment of master and crew) for its own business. Bare-boat charterer may also register the ship in a Flag of his/ her choice (the original ownership registry remaining suspended for the relevant period) but cannot raise any capital through mortgage because these records remain tied-up with original register.

Time charter means hiring a vessel for a specific period (normally six months at a time) at an agreed rate (normally paid monthly) adjustable for completion of a voyage. In this charter the owner still maintains the master and the crew and ensures the operational efficiency of the vessel but the charterer finds business and employs the vessel accordingly.

Voyage charter is a contract for carriage of a cargo (normally bulk cargo) at a given rate. Charterer normally wins a contract to deliver certain quantity of cargo at a given rate and then hires ships for one-way operation. There is provision of despatch and demurrage depending on quicker service by the ship or inability of the consignee to accept delivery at the stipulated rate.

There are a lot of Bangladeshis who want to engage in ship chartering business but cannot do so because of exchange control restrictions. Bangladesh should remove all bureaucratic restrictions and allow its nationals to freely undertake ship chartering business. Such chartering business will not remain confined to national trade but will involve third nations as well.

There was a time when thousands of Bangladeshis worked on foreign ships, earning a large amount of foreign exchange for the country. Over the years technology advanced and ship-owners looked for better trained seafarers. We lost the market because we did not keep pace of training with new development.

The other reason why we lost the market is because too many Bangladeshi seafarers jumped ships abroad causing huge loss/ damage to their employers. Our legal and administrative systems are also to be blamed. Seafarers' employment is regulated by an office known as the Government Shipping Office.

The term "shipping" means transportation of goods from one place to another. In this case the office deals with employment of seafarers. What a mockery of a name! This office should be rather known as "Directorate of Seafarers" and their role should be to oversee that the seafarers are employed in line with procedures outlined by the government. It must not deal with such employment directly. The government should set up a high powered committee to find reasons for decline in employment of Bangladeshi seafarers so that remedial measures can be taken to improve the situation. The Philippines does now have the highest number of seafarers around the world and we have to study their success story.

It comes within the domain of the maritime activities but is a shore-based industry. The Ministry of Industries (and not the ministry of shipping) should look after its development and future growth where the shipping ministry should be involved as advising partner. The government should identify this as a thrust sector and provide best possible assistance.

The university course on Naval Architecture and Marine Engineering must include at least 6 months on the job training in shipyards (equally divided within design, mechanical and electrical sections) to make better engineers for the future. The marine engineering training must also include similar workshop training as specified in the STCW Convention.

Ship financing and mortgage:
The government should not impose any control or restrictions in ship financing. This applies both ways - I mean for Bangladeshi ships to get finance under mortgage (at home or abroad) and also to allow local banks and financial institutions to engage in similar business abroad. Bankers and lawyers should undertake appropriate training to engage in this business.

Bangladesh does not have any iron ore. The industrial requirement of steel is largely met by a number of re-rolling mills which use imported scrap material. In this context, ship-breaking industry is vital for Bangladesh. It provides the essential link to national industrial and economic activities. The industry employs thousands of people and keeps many other industries operational.

This industry has nothing to do with the maritime administration. The sector should be regulated and overseen by the ministry of industries with the help of the department of environment. ILO safety guidelines and IMO/ UNEP environmental requirements must be complied with. The government should make a set of regulations transposing the requirements of the Hong Kong Convention.

Transhipment of goods:
We are not so lucky to have a strategic location like Singapore or Colombo to become a hub-point for transhipment. The global operators use those way-points for their global service and local and regional operators feed them with transhipment facilities. However, we can still make the best use of our location knowing very well that Nepal and Bhutan do not have access to sea.

Any transit agreement with India must include a clause to allow free access of goods to, and from, Nepal and Bhutan to Chittagong and Mongla for import/ export of cargo by sea. We should assist those two countries to make road and rail connection with our two sea-ports. If our port facilities are further developed, then we may be able to attract cargo to, and from, Assam (India) and nearby regions of China.

Offshore activities:
We have every right to facilitate doing of domestic trade. Our law must stipulate that goods and passengers from one point in Bangladesh to another point must only be carried by a national ship. Similarly those rigs, tugs and other support vessels engaged in business in Bangladesh waters must be registered in Bangladesh and for the period of operation in Bangladesh must be manned by Bangladeshis.

Dispute resolution/ Arbitration:
Bangladesh maritime law must provide for this provision. Bangladeshi lawyers must be trained and qualified to deal with these matters. They must develop a national arbitration society. Even for litigation in court we need well trained maritime lawyers. We cannot expect foreign investment in maritime sector unless there is rule of law and a community of well trained lawyers.

Other considerations:
Bangladesh needs comprehensive maritime legislation as a first step. Legislation is the foundation. We need well trained efficient administration to execute the provision of the legislation. We must have quality control by means of documented procedures, record-keeping and periodical review.

The Merchant Shipping Ordinance of 1983 is an obsolete legislation. We have to replace it by a law where essential elements of international conventions and protocols (such as UNCLOS-82, SOLAS-74, MARPOL-73/78, STCW-78, ITU Radio Regulations, ILO-MLC2006, registration, mortgage, Wreck, Salvage, Receiver of Wreck, CLC, Lien, Claim and arrest of ships, Fund and Limitation of Liability etc.) are reflected. The Department of Shipping should be renamed as the Department of Maritime Affairs and should be strengthened to a point that it can operate on its own without unnecessary references to the ministry. A department cannot work under another department.

The Chittagong and Mongla offices should be known as Maritime Affairs offices for survey and inspection. The government should appoint a high powered committee to look into the affairs of the maritime sector and take a long-term plan for its improvement. The future of Bangladesh is closely connected to this sector.

I conclude this article by congratulating the government for taking our case to ITLOS (International Tribunal for the Law of the Sea) in Hamburg for settlement of our dispute with India and Myanmar on limits of our Exclusive Economic Zone (EEZ)/Continental Shelf.

Source: The Financial Express. Fazlur Chowdhury (fazlu.chowdhury@btinternet.com). 9 January 2012

No comments: