The shipping ministry has pledged to provide financial incentives for ship owners who are now facing serious financial difficulty.
The number of ocean-ferrying ships has declined mainly due to the high interest on bank loans as owners of these ships are unable to procure newer ones for their business, said a letter sent recently to Finance Secretary Mahbub Ahmed.
According to the letter signed by Assistant Deputy Secretary Mohammad Muniruzzaman, the Shipping Ministry wants to sit with the Finance Ministry to devise a favourable policy for local ocean-ferrying ship operators.
The Shipping Ministry in the first week of this month held a meeting with vessel owners against a backdrop of decline in the number of ships. Shipping Minister Shajahan Khan presided over the meeting.
The number of ocean ferrying vessels came down to 63 from 75 in last one year. Of them, 12 remain inoperative while 20 others were declared unfit for plying on international routes.
The letter said the ship industry is shrinking as sea freight prices have plummeted drastically paired with the global financial crisis.
Other reasons are the rise in fuel prices, increase in salaries and allowances of sailors and the hike in other costs, according to the letter.
The owners of the ships said high duties on purchase of vessels and 3.0% cut in freight earnings were a major barrier to the growth of the industry.
They said freight incomes had dropped globally and the industry required government support to survive.
“Local ship owners take loan from commercial banks with 15% interest while in foreign countries, the owners of ocean-going ships take credit from their commercial banks with only 3%-4% interest,” the letter said.
The government should withdraw 3% tax on freight charges, it said, adding that the government would sign agreements on double taxation with all the countries. “As a result, owners of these ships will get 100% income tax waiver from visiting countries.”
President of Ocean-going Ship Owners Association Shah Alam told the Dhaka Tribune that without financial assistance and policy support, the ship industry would not survive.
The shipping minister said the problems faced by the ship industry could be resolved through a joint effort. “Otherwise financial crisis will deepen,” he added.
The government agencies were asked to use local ships to import goods, but they were not carrying out the orders. Only 40% of local ocean-going ships were used by the government agencies, the letter said.
Indonesian ships now carry 98.8% of goods while it was only 55.5% in 2005. The number of Indonesian ships now stands at 11,628 from 6,041 in 2005.
According to the letter, ship owners were not getting the permission to open accounts with commercial banks. So, they were facing difficulties in paying salaries to captains, sailors and engineers as well as PNI club fees, insurance premium and port dues.
The government should introduce one-stop services to register the ocean-going ships as the registration process delays getting frequency, call sign and ship station licences from Bangladesh Telecommunications Regulatory Commission, the letter said.
Like India and Singapore, the government would introduce different types of financial incentives, the letter said. “National Board of Revenue will introduce five-year tax holiday for new ocean-going ships and withdraw 5% advance tax for registration of ocean-going ships.”
Shipping Directorate will withdraw the provision for import of ships within six months under provisional registry, it said.