Security concerns linger in Bangladesh a month after the deadly terror attack on a Dhaka eatery, casting shadows over an economy dependent on garment exports and remittances.
Miran Ali, director of the Bangladesh Garment Manufacturers and Exporters Association, worries that export growth may slow. Ali runs a factory that makes clothing for global giants such as H&M Hennes & Mauritz and the Benetton Group. Though no orders have been canceled, he said it has become tougher to find new clients.
Nine of the 20 hostages slain in the July 1 attack were Italian, most of whom were involved in the garment industry. H&M and many other Western companies now restrict unnecessary travel to Bangladesh, making factory visits and other typical steps taken by prospective clients difficult. The U.S. and British governments also issued warnings against visiting the country's more dangerous areas, which likely discouraged travel even further.
This presents a worrying prospect for an economy growing at a pace of more than 6%.
The garment industry accounts for 80% of Bangladesh's exports and about 15% of gross domestic product. In contrast, official development assistance and direct foreign investment amount to slightly more than 1% of GDP. The garment association aims to boost the country's clothing exports to $50 billion by 2021, nearly double the total from 2015, but the group's campaign to gain new clients is facing headwinds.
The repercussions of the Dhaka attack also could squeeze remittances, which make up 9% of GDP. Wages sent home by the 10 million Bangladeshis working abroad fuel consumer spending, which drives about half of the country's economic growth. Prime Minister Sheikh Hasina's repeated assertions that the attack was the work of homegrown terrorists give other countries the impression that Bangladesh has become a hotbed for extremism.
The attack will have limited effect on the 85% of overseas Bangladeshi workers employed in the Middle East, the head of a staffing industry group said. But Bangladeshis could have a harder time finding jobs in Europe and other regions if the string of terror attacks in those areas raises fear of Muslims, this person said.
Source: Nikkei Asia Review (2 August, 2016 Issue)