Shipbuilding and Ship Breaking Business in Bangladesh 2026: Ship Recycling Act, Hong Kong Convention, Incentives and Document Fraud

Shipbuilding and ship breaking business Bangladesh: the 2026 legal map

A shipbuilding and ship breaking business Bangladesh investors build today sits on the same stretch of coast but answers to two very different legal regimes. Ship recycling on the Sitakunda foreshore north of Chattogram is governed by the Bangladesh Ship Recycling Act 2018, the Hong Kong Convention and a dense layer of Bangladesh Bank, customs, labour and environmental rules. Shipbuilding is lighter on statute and heavier on policy: plan approval and survey for the vessels, and a package of refinance, cash incentive and foreign exchange concessions aimed at export yards. Both industries are exposed to the same commercial risk: forged shipping documents, phantom vessels and sanctioned tonnage.

This guide is written for investors, yard owners, cash buyers, banks and shipowners who need the 2026 position in one place. It covers the licensing architecture of the 2018 Act, the Bangladesh Ship Recycling Board, yard authorisation under the Hong Kong Convention, the import route for end-of-life ships, worker safety and environmental duties, the shipbuilding incentive framework, and the criminal and civil remedies for shipping document fraud. Where TRW has already published a detailed analysis of a neighbouring topic, such as ship arrest or bill of lading disputes, we link to it rather than repeat it.

Summary: Ship recycling in Bangladesh is a permit-by-permit business: a yard needs Government permission inside a declared recycling zone, a Hong Kong Convention authorisation, a no-objection certificate from the Ship Recycling Board before each ship is bought, and a separate clearance before it is beached and cut. Shipbuilding depends less on licensing and more on finance, with a Bangladesh Bank refinance scheme and a 6 per cent export cash incentive. Document fraud and sanctioned tonnage are the risks that cut across both.

Key point: Under section 6(2) of the Bangladesh Ship Recycling Act 2018, the Ship Recycling Board's no-objection certificate must be obtained before a ship is imported or bought locally for recycling, not after it arrives. Importing without it is an offence carrying up to two years' imprisonment, a fine of Tk 10 lakh to Tk 30 lakh, or both, and the ship itself can be seized and confiscated.

At a glance

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Table of Contents

How the shipbuilding and ship breaking business Bangladesh hosts is regulated in 2026

The two industries share a coastline, a labour pool and a steel supply chain, but their legal footprints differ. Ship breaking, now officially called ship recycling, is one of the most heavily regulated activities in the country: a yard cannot open, buy a ship, beach it or start cutting without a specific approval. Shipbuilding, by contrast, is regulated mainly at the level of the vessel, through design approval, construction survey and registration, while the State's role is to finance and promote export yards. Investors who treat the two as one "marine industry" usually underestimate the first and overestimate the second.

This guide sits alongside TRW's wider series. The admiralty court, ship arrest, port and carriage framework is explained in our overview of maritime law in Bangladesh. The hazardous waste rules that apply in the yards are set out in our guide to waste management law in Bangladesh. Here we focus on what it takes to set up, finance and protect a shipbuilding and ship breaking business Bangladesh law will recognise and banks will fund.

Ship recycling at Sitakunda in numbers

Bangladesh was long the world's leading ship recycling destination, but volumes have fallen sharply. NGO Shipbreaking Platform data reported in February 2026 show 88 ships, about 2.68 million tonnes, broken in Bangladesh in 2025, down from 130 in 2024 and a peak of 254 in 2021. India took the top position with 111 vessels.[4] Industry insiders blamed the enforcement of the Hong Kong Convention, under which non-compliant yards cannot import ships, together with the dollar crisis and high interest rates.[4] The shipbuilding and ship breaking business Bangladesh once dominated is therefore consolidating around fewer, better-capitalised and certified yards.

Shipbuilding: river yards and export yards

Bangladesh's shipbuilding base has two tiers. Dozens of yards on the Buriganga and other rivers build inland passenger vessels, oil tankers, barges and dredgers for the domestic market. A smaller group of export-oriented yards competes internationally. Ananda Shipyard has exported multi-purpose cargo vessels to buyers in Türkiye, the United Kingdom and Germany, and Western Marine Shipyard in Chattogram reports cumulative exports of 36 ships worth about US$138 million to buyers in 11 countries.[14] The policy ambition remains much larger than current output, a gap discussed below.

The Bangladesh Ship Recycling Act 2018: licensing architecture

The Bangladesh Ship Recycling Act 2018 (Act No. 8 of 2018), dated 12 February 2018, is the core statute for any ship breaking venture.[1] It is a Bangla-language Act; the Government may publish an authentic English text, but if the two conflict the Bangla text prevails.[1] Section 3 makes the Act supplementary to other laws, so the Environment Conservation Act 1995, the Bangladesh Labour Act 2006, the explosives laws and the customs regime continue to apply in full alongside it.[1]

Recycling zones and yard permission

Section 4 allows the Government to declare, by gazette notification, the areas in which ship recycling may take place, and to acquire land and lease it out for yards.[1] Section 5 then sets three rules. A yard may be established only within a declared zone and only with Government permission; building a yard outside a zone is prohibited; and yards that existed before the Act had to obtain permission within the period the Government fixed, failing which they may not operate and their property is liable to forfeiture.[1] Conditions, procedure and fees for permission are set by the Government.

For a buyer of an existing yard, the practical consequence is that the permission, not the land title, is the valuable asset. Due diligence should confirm the zone, a current permission in the seller's name, and no conviction exposing the permit to cancellation.

The Bangladesh Ship Recycling Board

Sections 8 to 14 establish the Bangladesh Ship Recycling Board as a statutory body with perpetual succession, able to own property and to sue and be sued.[1] The Board is chaired by a Ministry of Industries representative at additional secretary level and brings together the ministries responsible for environment, labour, energy and shipping, the National Board of Revenue, the Chattogram Divisional Commissioner, police, the Navy, the industry association and yard owners, with a Director General as chief executive.[1]

The Ship Recycling Board's functions under section 11 include supervising recycling, approving ship recycling plans and facility plans, protecting worker health and safety, securing environmental compliance and coordinating with customs.[1] Section 38 requires it to run an inter-ministerial one-stop service, and sections 15 and 16 give its authorised officers power to enter yards and ships, demand records and take samples.[1]

Vendor licences, annual reports and the 2011 Rules

The Act reaches beyond yard owners. Section 6(10) requires every vendor connected with ship recycling to take a licence from the Ship Recycling Board on payment of the prescribed fee, and section 40 requires each yard to file an annual report with the Board by 31 March of the following year.[1] Until new rules are made, section 44 keeps the Ship Breaking and Ship Recycling Rules 2011 in force to the extent they are consistent with the Act.[1] Those Rules sit beside the separate hazardous waste and ship-breaking waste rules made under the environment law.

Hong Kong Convention compliance and yard authorisation

The international layer now determines who can trade. The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships entered into force on 26 June 2025, 24 months after Bangladesh and Liberia became Contracting States in June 2023 and satisfied the entry-into-force conditions.[2] Bangladesh's accession was therefore not a formality: it triggered the global regime. Section 7 of the 2018 Act had already obliged the Government to build the capacity to meet the Convention within not more than five years.[1]

What the Convention requires

The Convention works on both sides of the sale. Each ship must carry an Inventory of Hazardous Materials, specific to that ship and verified under IMO guidelines, and must undergo surveys through its life and a final survey before recycling.[2] On the yard side, recycling facilities must be authorised by their national authority and must operate under a Ship Recycling Facility Plan covering worker safety, environmental protection, emergency response, monitoring and record-keeping. Before each ship is broken, the facility must prepare a Ship Recycling Plan specific to that vessel.[2]

The Document of Authorisation in Bangladesh

When the Convention took effect, Bangladesh had not finished adapting its domestic law. In July 2025 the Ministry of Industries notified the Ship Recycling Board to issue Documents of Authorisation for Ship Recycling to compliant yards until the laws, rules and policies were updated, and the Board invited applications.[3] Authorisation is tied to final approval of the yard's Ship Recycling Facility Plan. Yards without a Statement of Compliance must submit a transitional plan with a gap analysis prepared by an accredited organisation.[3]

Where the yards stand in 2026

Progress since then has been real but uneven. By February 2026, 23 Bangladeshi yards were reported as compliant, 17 with full Hong Kong Convention status and six provisionally, with 20 more in process. Upgrading a yard was reported to cost between Tk 300 million and Tk 1 billion.[4] Financing that upgrade is the bottleneck: banks fund ship imports but are reluctant to lend for yard upgrades, partly because the environment ministry classes ship breaking as a "red" category industry, and the industry association is lobbying for reclassification to "orange".[4]

For a seller, cash buyer or financier, the lesson is to diligence the specific yard, not the country. Ask for the yard's Document of Authorisation, its approved Ship Recycling Facility Plan, any conditions attached to it and the Statement of Compliance on which it rests. The sale contract should require a verified Inventory of Hazardous Materials and allocate the risk of clearance delays.

Importing a ship for recycling: NOC, Bangladesh Bank and customs

The import of an end-of-life ship is where regulatory, banking and commercial risk converge. A typical deal runs from the owner to a cash buyer, then to a Bangladeshi yard on a letter of credit, then to arrival off Chattogram, inspection, beaching and cutting. Each step needs its own approval.

The no-objection certificate comes first

Section 6(2) of the 2018 Act requires the Ship Recycling Board's no-objection certificate before a ship is imported or locally sourced for recycling.[1] After arrival, an officer authorised by the Board inspects the ship, and beaching and recycling may proceed only after that inspection and with the Board's clearance.[1] The Board may also fix cutting timelines by ship type and size, and a yard that overruns them faces a fine at a rate set by rules.[1] Section 39 allows emergency beaching in severe weather with the permission of the local administration, which must be reported to the Board immediately.[1]

Bangladesh Bank rules for the letter of credit

Foreign exchange rules shape the deal's cash flow. Bangladesh Bank's consolidated import circular of 13 August 2026 permits vessels procured for scrapping to be imported on up to 360 days' usance, a significant concession given that ordinary industrial raw materials are capped at 270 days or the cash conversion cycle.[6] For any import of USD 3 million or more, the bank must report to Bangladesh Bank's online import monitoring system 24 hours before opening the letter of credit.[6] Most scrap tonnage clears that threshold.

The same circular requires letters of credit to call for full sets of onboard bills of lading, prohibits clean, revolving and standby credits outside the zones, and requires banks to match the customs-certified bill of entry against the IMP form and invoice to confirm the goods actually arrived.[6] Banks may also verify shipments through recognised vessel-tracking systems.[6] In a recycling sale the "goods" are the ship itself, so its identity must be consistent across every document.

Customs clearance and taxes

The ship is cleared as an import under the Customs Act 2023, with duty and advance taxes assessed on the scrap vessel. Rates change with each Finance Act and must be checked at contract. Our guide to customs law in Bangladesh explains the declaration, valuation and appeal framework that applies.

Two points are specific to recycling. First, the customs record and the Board's no-objection certificate must describe the same vessel by name, IMO number and light displacement tonnage; any mismatch invites a detention. Second, the bill of entry must be filed and matched in time, because an importer that fails to submit it can be barred from opening new letters of credit without Bangladesh Bank permission.[6]

Importing a ship for recycling step by step

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Worker safety and environmental rules in the yards

Safety is the issue on which the industry's licence to operate depends, at home and with international buyers. The 2018 Act layers its own duties on top of the Bangladesh Labour Act 2006 and the environment law, and the Ship Recycling Board is charged with acting under the labour and explosives laws to protect workers and reduce risk.[1]

Insurance and compensation

Section 20(1) requires every yard owner to take out life insurance for all workers and staff employed in the yard. Section 20(2) allows the owner to pay compensation to a worker, or to the family, after an accident causing death or serious injury, in addition to compensation under the Bangladesh Labour Act, with the amount and method set by rules.[1]

Training, classification and the worker database

Sections 18 and 19 move the industry away from casual labour. The Government sets minimum qualifications and a classification of workers by type of work, the Ship Recycling Board arranges training, a training institute was to be established within five years, and the Board keeps a database of trained workers from which yard owners must recruit.[1]

Waste, the TSDF and environmental duties

Section 17 requires the Government to issue guidelines on the collection, storage and management of recycling waste, to build a treatment, storage and disposal facility within three years, and makes use of that facility mandatory.[1] The yard must also hold environmental clearance under the Environment Conservation Act 1995, and the classification of ship breaking as a red category industry means the most demanding assessment route applies.[4] The clearance process is explained in our note on environmental clearance from the Department of Environment.

Enforcement after the 2026 fatalities

Certification has not ended accidents. On 14 August 2026, nine workers, one of them 17 years old, died after exposure to toxic gas inside the LNG carrier MT RASI at the Ferdous Steel yard in Chattogram, a yard certified as compliant with the Hong Kong Convention.[5] About a month earlier, the Department of Inspection for Factories and Establishments had taken legal action against the yard over repeated safety failures, and after the deaths the Bangladesh Environmental Lawyers Association demanded an independent investigation and the yard's closure.[5]

The Daily Star has reported 84 accidents in Bangladeshi yards since the Convention entered into force in June 2025, leaving 15 workers dead and 81 injured.[5] A serious accident now triggers labour, criminal, environmental and Board proceedings at once; gas-free certification before hot work and confined-space permits are the minimum.

Offences, penalties and personal liability under the 2018 Act

The Act's offences are built around its permits. Establishing a yard without permission, importing or sourcing a ship without a no-objection certificate, beaching or recycling without clearance, and establishing a yard outside a zone each carry up to two years' imprisonment, a fine of not less than Tk 10 lakh and not more than Tk 30 lakh, or both.[1] Submitting forged certificates or documents to the Board to obtain a permit, certificate or clearance attracts a fine of Tk 5 lakh to Tk 20 lakh under section 28, and breach of the Board's orders carries up to six months' imprisonment, a fine of up to Tk 10 lakh, or both.[1]

Repeat offences attract double the first-offence penalty. After a conviction, the Board may suspend or cancel the yard's permission and the court may confiscate the yard, the ship and its materials; the Board may also seize them as soon as an offence is committed or attempted.[1] Offences are tried summarily by a first class judicial or metropolitan magistrate, are bailable, non-cognisable and compoundable, and the court takes cognisance only on a written complaint by the Board or its authorised officer.[1]

Section 35 extends liability to the company's owners, directors, managers and other officers, each of whom is deemed guilty unless they prove the offence was committed without their knowledge or that they used due diligence to prevent it.[1] Foreign investors with nominee directors should insist on documented compliance systems.

Shipbuilding industry incentives for a shipbuilding and ship breaking business Bangladesh investors own

Shipbuilding has no equivalent of the 2018 Act. A shipbuilding venture is set up as an ordinary company, takes the usual trade, factory, fire and environmental approvals for its site, and is then regulated through the vessels it builds.

The Shipbuilding Industry Development Policy

In January 2021 the cabinet approved the shipbuilding industry development policy, the Ship Construction Industry Development Policy 2020, which is often referred to as the 2021 policy. It set an export target of US$4 billion by 2025 and committed the Government to measures to develop the sector in line with it.[7] Bangladesh Bank's refinance support was later linked to that policy. The target has not been met: by 2026, the US$4 billion figure was widely regarded as unrealistic, with more plausible estimates of about US$650 million in 2026.[14]

Plan approval, survey and registration of vessels

For inland vessels, which make up most domestic orders, the Inland Shipping Ordinance 1976 governs construction. Section 5A requires the owner to submit the design and plan for approval before construction begins, section 5B requires notice of where and when the vessel will be built followed by construction surveys and a certificate of compliance, and section 5C allows these functions to be delegated to a classification society.[10] No inland ship may then make a voyage without a valid certificate of survey and certificate of registry.[10] Export vessels are built to the class rules and flag requirements specified in the shipbuilding contract.

Finance and export incentives

Three measures matter most to yard owners in 2026. First, Bangladesh Bank's Tk 2,000 crore refinance scheme for shipbuilding, formed in 2022, was extended by a circular of 8 February 2026 to December 2026; scheduled banks access it by signing a participation agreement, release funds to the yard in instalments and then claim refinance from the central bank.[8] Second, ship exports continue to earn 6 per cent cash assistance for FY2026-27, subject to repatriation of export proceeds within the specified period and an external audit before settlement.[9]

Third, the foreign exchange regime accommodates long build cycles. Shipbuilder-exporters may hold advance export proceeds in foreign currency accounts, and capital machinery may be imported on usance terms of up to three years under supplier's or buyer's credit.[6] The FY2026-27 budget also lists shipbuilding among the growth sectors receiving duty and tax concessions, analysed in our guide to tax incentives for foreign investors in Bangladesh. Each concession has conditions, and a lapse in repatriation or documentation can claw back the benefit.

Export yards and LDC graduation

The competitive position of export yards is changing. High-value components still have to be imported, long-term project finance is scarce, and Bangladesh loses preferential trade access when it graduates from least developed country status in November 2026.[14] For a foreign buyer, that makes the shipbuilding contract's refund guarantee, the yard's access to foreign currency for imported equipment and the governing law and arbitration clause more important, not less.

Structuring a shipbuilding and ship breaking business Bangladesh investment

Foreign investors usually enter through a local subsidiary or a joint venture with an established yard. The company formation and investment registration steps are covered in our guides to foreign company registration in Bangladesh and investment approvals from BIDA and BEPZA. In a joint venture with a ship recycling yard, the critical clauses are the allocation of the yard's permission, the Document of Authorisation and any criminal exposure under section 35, because none of those assets moves freely with the shares.

The table below compares the main approvals that every shipbuilding and ship breaking business Bangladesh regulators supervise must manage. On a phone, scroll it sideways.

Shipping document fraud: forged bills of lading, fake cargo and phantom vessels

Shipping document fraud takes several recurring forms, and every shipbuilding and ship breaking business Bangladesh hosts meets it, whether as buyer, seller or importer. A ship recycling sale depends on documents that prove the vessel's identity, ownership and freedom from sanctions. A shipbuilder importing steel plate and engines depends on bills of lading that prove the goods were actually shipped. The trade-finance side of these frauds is analysed in our guide to LC fraud in Bangladesh; this section concentrates on the shipping documents themselves.

Forged and switched bills of lading

The commonest fraud is a bill of lading that is forged outright, issued by a carrier that never received the goods, or ante-dated to fit a letter of credit's latest shipment date. A switch bill issued to disguise the true origin or shipper is a variant. Bangladesh Bank's requirement for full sets of onboard bills of lading, and its instruction that banks carry out due diligence before issuing shipping guarantees or delivery orders against copy documents, is aimed squarely at these risks.[6] The civil consequences of a false or missing original bill, including delivery against letters of indemnity, are covered in our guide to bill of lading disputes in Bangladesh.

Fake cargo and empty containers

A second pattern is a genuine bill of lading covering fake cargo: containers declared as machinery or steel that turn out to hold scrap, sand or nothing. The bill may be clean on its face because the carrier issued it on a "said to contain" basis. Buyers and banks should insist on independent pre-shipment inspection and weight verification at loading.

Phantom vessels and false flags

A phantom vessel fraud uses the identity of a ship that does not exist, or that is somewhere else, to support fraudulent bills of lading. Related tactics include continuing to fly a flag after registration has lapsed, obtaining IMO identification with fraudulent documents, and broadcasting falsified AIS data to copy another ship's identity.[12] The problem is growing: at its April 2026 session the IMO Legal Committee noted that 529 ships had falsely flown a country's flag in the previous year and that nearly 40 member States had had their flags used without consent, and it approved the first international guidelines on ship registration due diligence.[12]

For a recycling purchase, phantom identity is not theoretical. The vessel arriving at the anchorage must be checked against its IMO number, registry documents, deletion certificate and class records before the Board inspects it and before the letter of credit is paid. A false flag can also leave the yard holding a ship whose title is disputed or which a foreign mortgagee is still entitled to arrest; the arrest route is explained in our guide to wrongful ship arrest in Bangladesh.

Sanctions and the dark fleet

Ageing tankers from the so-called dark fleet, used to move sanctioned oil, will eventually need recycling, and the NGO Shipbreaking Platform has said they must be broken at safe, transparent and fully regulated facilities.[4] The risk for Bangladeshi buyers is designation during the deal. The chemical tanker MAYMEI arrived at Chattogram outer anchorage on 22 May 2026 after being sold for demolition and was designated by the US authorities six days later, which blocked beaching; the importer withheld payment and moved to return the ship to its owner.[11]

The lesson is contractual. A recycling sale should require the seller to warrant that the ship, its owners and managers are not designated, should screen the ship's trading history as well as its current ownership, and should allow the buyer to suspend performance and recover any deposit if a designation occurs before delivery.

Forged recycling documents

The 2018 Act contains its own document-fraud offence. Section 28 penalises anyone who, with dishonest intent, submits forged certificates or papers to the Board or its officers to obtain a permit, a no-objection certificate, an inspection or a beaching or recycling clearance.[1] This sits alongside, not instead of, the Penal Code. A forged gas-free certificate or Inventory of Hazardous Materials can also found charges of forgery and cheating, and exposes the yard to permit cancellation.

Criminal and civil remedies for shipping document fraud

A victim of shipping document fraud in Bangladesh usually needs both a criminal and a civil strategy, run in parallel. The criminal case brings investigative powers and pressure; the civil case brings security and recovery.

The criminal route

The Penal Code 1860 supplies the core offences: cheating under section 415 and cheating and dishonestly inducing delivery of property under section 420; forgery, making a false document, forgery of a valuable security and forgery for the purpose of cheating under sections 463, 464, 467 and 468; using a forged document as genuine under section 471; criminal breach of trust under section 406; and criminal conspiracy under section 120B.[13] A forged bill of lading presented under a letter of credit typically engages several of these at once. Where proceeds are moved, money laundering charges follow, as explained in our analysis of white collar crime in Bangladesh.

A complaint can be lodged with the police or filed before a magistrate. In port-related fraud, the Chattogram Port Authority, customs and the bank's own fraud unit often hold the key evidence, so the complaint should be prepared with their records in mind. A criminal case can take years and does not by itself return the money.

The civil route

Civil remedies are aimed at security. Where the fraud involves a ship or cargo carried by sea, an admiralty suit in the High Court Division can support arrest of the vessel, as described in our guide to admiralty suits in Bangladesh. Where a forged document has been presented under a letter of credit, an injunction to restrain payment is available only on clear evidence of fraud, and the bar is high. Commercial claims on mercantile documents may also fall to the new commercial courts, discussed in our guide to the Commercial Courts Act.

A cargo owner who loses goods through a fraudulent release has a claim against the carrier for misdelivery and, often, against its own insurer; the claim and notice requirements are set out in our guide to marine insurance claims in Bangladesh. A yard that buys a ship on false documents may have claims against the cash buyer under the sale contract, and the arbitration clause in that contract will usually decide the forum.

Either way, fraud cases are won on documents preserved early: the original bills of lading, the letter of credit file, AIS tracks and port call records, and surveyor and terminal records. Notify the bank and insurer in writing at once.

Shipbuilding and ship breaking business Bangladesh: mistakes to avoid

The same errors recur in our work on the shipbuilding and ship breaking business Bangladesh investors, yards and their counterparties run. Each is avoidable.

• Buying before the NOC. Signing a recycling purchase before the Board's no-objection certificate is an offence, and leaves the buyer with a ship it cannot lawfully import.
• Diligencing the land, not the permits. The yard permission and Document of Authorisation are the real assets of a yard and do not pass automatically with shares or land.
• Ignoring section 35. Directors and managers are presumed liable for company offences unless they prove lack of knowledge or due diligence.
• Weak sanctions clauses. A recycling sale without designation warranties and a suspension right leaves the buyer exposed if the ship is listed in transit.
• Accepting copy documents. Releasing cargo or paying against copies or unverified bills of lading is the gateway to most shipping document fraud.

What to watch in 2026 and 2027

Four developments will shape the shipbuilding and ship breaking business Bangladesh operators run over the next year. First, the domestic rules to implement the Hong Kong Convention: the Document of Authorisation route was introduced as an interim measure pending updated laws, rules and policies, and any new rules will reset compliance requirements for every yard.[3] Second, the response to the August 2026 deaths, which may bring tougher inspection and enforcement in certified yards.[5]

Third, whether the shipbuilding refinance scheme is extended beyond December 2026 and how the sector adapts to the loss of least developed country trade preferences.[8] [14] Fourth, the international response to false flags and the dark fleet, which will make vessel identity checks a standard part of every recycling sale and trade-finance transaction.[12] Bangladesh aims to have all active yards certified by 2030, and that goal will drive both regulation and consolidation.[14]

TRW advises yard owners, cash buyers, shipbuilders, lenders and foreign investors on permits, Convention compliance, recycling and shipbuilding contracts, incentives and fraud recovery. Our industrial and manufacturing facilities practice and customs and trade compliance practice work together on these matters.

Frequently asked questions

Which law governs ship breaking in Bangladesh?

The Bangladesh Ship Recycling Act 2018, administered by the Bangladesh Ship Recycling Board, read with the Hong Kong Convention and, until new rules are made, the Ship Breaking and Ship Recycling Rules 2011 so far as consistent with the Act.[1] [2]

When did the Hong Kong Convention take effect for Bangladesh?

Bangladesh became a Contracting State in June 2023, and the Convention entered into force for all Contracting States on 26 June 2025.[2]

Can a ship recycling yard be set up anywhere on the coast?

No. Section 5 of the 2018 Act allows a yard only inside a recycling zone declared by the Government and only with Government permission; building a yard outside a zone is an offence.[1]

What is the no-objection certificate for a scrap ship?

It is the Ship Recycling Board's approval that must be obtained before a ship is imported or bought locally for recycling. A separate clearance is then needed after inspection before beaching and cutting.[1]

How long can payment for a scrap ship be deferred?

Bangladesh Bank's August 2026 import circular allows vessels procured for scrapping to be imported on up to 360 days' usance.[6]

Must yard owners insure their workers?

Yes. Section 20 requires life insurance for every worker and staff member in the yard, and compensation after death or serious injury is in addition to Bangladesh Labour Act compensation.[1]

What incentives are available to shipbuilders?

The main ones are Bangladesh Bank's Tk 2,000 crore refinance scheme, extended to December 2026, and 6 per cent cash assistance on ship exports for FY2026-27, together with foreign exchange flexibility for advance export proceeds and capital machinery imports.[6] [8] [9]

Does a shipyard need plan approval before building an inland vessel?

Yes. Under section 5A of the Inland Shipping Ordinance 1976 the design and plan must be approved before construction, followed by construction surveys and a certificate of compliance.[10]

What happens if a scrap ship is sanctioned after it arrives?

It may be unable to beach. In the 2026 MAYMEI case the tanker was designated six days after arriving off Chattogram, the importer withheld payment and moved to return it to the owner.[11] Sale contracts should allocate this risk expressly.

What can a victim of a forged bill of lading do?

File a criminal complaint for cheating and forgery under the Penal Code and, in parallel, pursue civil security through an admiralty suit, injunction or contractual claim, preserving the original documents and vessel records from the outset.[13]