Once, Japan was an undisputed titan in the global shipbuilding industry, responsible for the world's total 50% ship construction, a dreamy, enjoyable historical memory. But today, Japan's share has dropped to nearly 10%, far behind its core competitor China (65%) and S. Korea (19.6%) as well. Where the Chinese, present undisputed leader in the shipbuilding industry, shared was less than 10% in 2000, in 2024 it has reached almost 65%, an unprecedented boost in the history.
Japan is mainly fighting to retain its near-immediate past position due to a lack of advantages. Besides, it is trapped in economic and social issues, including a lower birthrate, higher older people, and deflationary pressure, hindering Japan's success in growth. Yet, Japan is aggressively concentrating on reviving its pre-dominant shipbuilding industry, aiming to double national shipbuilding output in terms of number and capacity by 2030 through the proposed investment of 1 trillion yen to outdo its competitors, but is suffering due to a shortage of youth labour and necessary elements.
They will also initiate automation, robotics, and AI-based systems to spark production capacity and embed in ammonia-powered shipping by a 120 yen billion investment to produce carbon-free vehicles. They are planning to collaborate with friendly nations to bid on their competitor.
In contrast, though Bangladesh has lower labour costs and higher productivity compared to Japan, but low technological level and weak financing capabilities persist in Bangladesh. Bangladesh's shipbuilding industries are made up of 100 shipbuilders operating more than 120 registered shipyards with 20 small and medium?sized vessels export capacities. Furthermore, Bangladesh already has 1,000 to 20,000 DWT (deadweight tonnage) dock capacities and plans to expand to 50,000 DWT following yard upgrades and infrastructure investments. Mainly, Dhaka has a fortified domestic demand for ships, but foreign export limitation persists, despite strong demand. Capturing 2% of the global shipbuilding share will contribute to $4 billion annually in Bangladesh's export earnings.
Both nations have lacked comparative advantages that can be addressed by bilateral collaboration. Japan can offer technological and economic advantages, but what can Bangladesh address? Let's find out in detail.
Bangladesh's low-cost labour helps Japan to earn a competitive advantage. Where Japanese hourly manufacturing wages exceed $35, Bangladesh's workers are paid only $1.00, dramatically reducing production cost. Particularly, Bangladesh's shipbuilding industries enjoy 20-30% lower labour cost than other countries, helping Japan to achieve a competitive advantage in bidding against its competitors.
Moreover, Japan is combating labour shortage due to low birthrate and a higher aging population, shrinking its labour force by over 10,000 in the past five years as of 2024. Currently, 50% of Japan's shipbuilding labour force is exceeding 55, risking losing experienced workers. Japan's median age is 48, whereas Bangladesh showcased a youth-centric human resources with a 26-year median age. Particularly, Dhaka has 45.94 million people aged 15-29, highlighting future potential. A youthful Bangladeshi labour ensures scalability for labour-intensive vessel production.
Though Japan is an island nation, it exists in far eastern Asia, making it difficult to connect in the Bay of Bengal area, as well as both the South and Southeast Asian region, which can be relaxed by Japan-Bangladesh cooperation. Furthermore, the Bay of Bengal Initiatives (BIG-B) plan, Matarbari Deep Sea Port, backed by Japanese ODA, will serve as a hub for ship-repair, retrofitting, and component assembly. Bangladesh's extensive riverine network and direct access to the Bay of Bengal reduce coastal transport costs for inbound materials and outbound vessels.
Bangladesh Investment Development Authority (BIDA) highlighted only 5% tax, which contributes to investors' higher income generation, on export income for publicly-listed companies. Additionally, the availability of private shipyards, a refinance scheme by Bangladesh Bank (BB), only 5% import duties on raw materials used for building ships in the local market, and 10% export subsidy on export of ships, presents the lucrative benefit of investing in Bangladesh. BIDA initiated a one-stop-service that allowed invested companies to fulfil all kinds of activities, approvals, licenses, and clearances, with the blink of an eye. Merging benefits, from an incentive-giving-prone nation, Japanese shipbuilding share in the world market will be sparked surprisingly.
Bangladesh has experience in constructing ships before its official birth in 1971, particularly during the Mughal and British colonial periods. European traveller Caesar Frederick cited that Chittagong was renowned for building ocean-going vessels and warships, including the supply of warships in the Battle of Trafalgar in 1805. In 2008, Ananda Shipyard exported an ocean-going ship to Denmark, and since 2006, Bangladesh has built and exported 45 ships (cargo vessels, ferries, patrol boats) to 14 countries, including Germany, Denmark, Mozambique, and Tanzania, highlighting Bangladesh's experience and capabilities to utilize Japanese investment.
In conclusion, Bangladesh has strong potential but capacity & technological shortcomings, policy and regulatory inexperience, and financing weakness that can be addressed by the Japanese comparative advantage. On the other hand, Bangladesh fulfils Japan's higher cost issues, offers destination advantage in a new region, shares historical experience, and labour advantage as well. Ultimately, bilateral collaboration delivers an absolute advantage for both nations.
The writer is a researcher and former student of Japanese Studies, University of Dhaka
