Bangladesh garment industry in turmoil post Dhaka attack

Major multinationals have been reviewing their investment in Bangladesh after the terror attack in Dhaka last week. The companies are concerned that the attack may be a signal that further attacks will come, which could problems ranging from increasing risks to factories to disrupting the movement of raw materials and outputs. However, it is thought that the fact that the attack took place in what was supposed to be one of Dhaka’s safest areas, which already had high security, and appeared to be targeted explicitly at foreigners and wealthier Bangladeshis is of particular concern to the multinationals.

Bangladesh is the second largest exporter of finished clothing to the rest of the world (after China), with an estimated turnover in excess of £13 billion. The industry is largely responsible for Bangladesh’s economic growth, and four million people working directly or indirectly in the sector. The industry had been shaken by the collapse of the Rana Plaza factory in 2013, which highlighted how employers were overlooking safety issues and the state was letting them get away with it – but was getting back on its feet and seeing exports increase as the terrorists struck last week.

Leaders of the Bangladesh Garment Manufacturers and Exporters Association have issued press statements confirming that the domestic industry is worried but waiting for developments. So far, two important overseas companies – the Swedish company H&M and the UK company Marks and Spencer Group plc – have indicated that the attack will not change their policies towards locating production in Bangladesh, though they are keeping the situation under review.

Multinationals are keen to buy products made in Bangladesh because the very low wages in the country keep prices low too – and there is no sign that the Government is requiring employers to invest in health and safety work. However, any sign that the terror will continue may prompt investors to make new risk assessments and start looking elsewhere for alternative production facilities.

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