"The horrific slaughter of diners at a Dhaka cafe has triggered fears that surging Islamist violence may imperil the garment industry in Bangladesh, which built its economy on cheaply supplying fashion to the world’s big-name brands. Said Faruque Hassan, Senior Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), that this attack will turn away foreigners. BGMEA represents 4,500 factories in the country"

The horrific slaughter of diners at a Dhaka cafe has triggered fears that surging Islamist violence may imperil the garment industry in Bangladesh, which built its economy on cheaply supplying fashion to the world’s big-name brands. Said Faruque Hassan, Senior Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), that this attack will turn away foreigners. BGMEA represents 4,500 factories in the country. The impact of this attack will be very damaging for the industry and we are now extremely worried, added Hassan, whose Giant Group supplies clothes to retailers including Britain’s Marks & Spencer and Next.

From the frying pan into the fire

Bangladesh, the world’s second-biggest exporter of apparel after China, even before the cafe siege was reeling from a wave of Islamist-linked killings of religious minorities, liberal activists and foreigners, including an Italian aid worker last September. Now concern is mounting that the South Asian nation, wracked by political instability since independence in 1971, is sliding into deeper chaos, with under-pressure police arresting 11,000 people last month in a desperate crackdown.

Said Sarah Labowitz, Co-director at the NYU Stern Center for Business and Human Rights in New York, the hostage crisis in Dhaka is a terrible tragedy reflecting how security has deteriorated in the country. The violence presents a serious threat to the economy, Labowitz said. This kind of attack will surely keep (fashion) buyers away in the months leading up to the holiday shopping season.

Bangladesh has clocked growth of around six per cent nearly every year since the turn of the millennium, although a quarter of its 160 million people still live below the poverty line. This is largely due to the garment exports, the lifeblood of its economy, and accounting for more than 80 per cent of total outbound goods last year. Between them the nation’s clothing factories employ more than four million people; most of them impoverished rural women. Ulrica Bogh Lind, a spokeswoman for H&M, which sources many of its clothes from Bangladesh, told AFP the Swedish chain was deeply sad about the tragic incident. They are of course monitoring the situation in Dhaka closely.

Sign of financial malaise

Ahsan Mansur, a former representative for the IMF in Islamabad fears that the trade-dependent Bangladesh may suffer the same fate as its restive rival Pakistan. When extremist violence began to spread in Pakistan, he said, the first sign of financial malaise was expat families packing their bags, then trade and investment crumbled. The perception that Bangladesh is a potential terrorist hotspot can seriously hit our export potential and growth prospects. Yet plucky Bangladesh has ridden out numerous storms, seeing off threats from labour unrest, mass transport blockades and large-scale political paralysis - as well as workplace disasters.

According to industry figures, clothing exports swelled nearly 10 per cent in the year to June, to $27.3 billion. The Rana Plaza factory collapse that killed at least 1,138 workers in 2013 shocked the world, heaping opprobrium on Western retailers seen as exploiting impoverished workers. But the tragedy prompted retailers to act on appalling safety conditions in their factories, where fires and other accidents are frequent. The incident forced the brands to set up two global alliances to make workshops safer and cleaner - although it remains a work in progress.