Bangladesh: Businessmen Worry About Economic Fallout from Terrorism

Recent terrorist acts have damaged Bangladesh’s global reputation, say some local business leaders who worry that perceptions about insecurity could harm its economy and drive away foreign investors.

Bangladeshi businessman are nervous even after a group of North American fashion retailers this week pledged to keep buying garments from factories in Bangladesh, and Japan’s foreign aid agency announced that it is committed to the South Asian nation’s development, despite losing seven of its workers in one of the attacks.

“With the efforts of all, I hope we can resist the terrorists. But any further terrorist attacks, even of a lower magnitude than the Gulshan attack, would cause further damage to our stable economy and business climate,” Mir Nasir Hossain, a former president of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI), told BenarNews.

He was referring to an Islamic State-claimed attack at a café in Dhaka diplomatic quarter on July 1 that killed 20 hostages, including 17 foreigners, in Bangladesh’s worst-ever act of terrorism.

Among nine Italians who were killed were at least three women who worked in the textile and garment trade – a huge part of Bangladesh’s export economy.

They were hacked to death with machetes inside the Holey Artisan Bakery café alongside seven Japanese who were working in Bangladesh as consultants for the Japan International Cooperation Agency (JICA) – Bangladesh’s single largest source of foreign aid money, according to reports.

The seven dead Japanese and an eighth citizen who was injured in the café attack were working on a survey related to an infrastructure project aimed at improving Dhaka’s mass transit system and easing traffic congestion in the capital, JICA President Shinichi Kitaoka said last week.

“Sadly, these people, who worked hard for the development of Bangladesh, became caught up in this incident. It is impossible to suppress our anger at the criminals who carried out this act of terrorism,” he said in a statement.

Last year, the value of JICA-funded programs in Bangladesh amounted to U.S. $472 million (37 billion taka), according to the agency annual report for 2015.

“We at JICA will continue giving top priority to the safety of JICA-related personnel and thoroughly assessing the situation on the ground in the places where we do our work,” Kitaoka added. “We also remain firmly committed to contributing to the development of Bangladesh.”

‘Dismal days are waiting’

The café attack was followed days later by a suicide attack that killed two policemen and a woman near the site of the country’s largest Eid prayer gathering, as millions of Bangladeshi Muslims were celebrating the end of Ramadan.

“The killing of 17 foreigners has caused panic among foreign business delegations; so they are refusing to visit Bangladesh, fearing further attacks. This has caused huge damage to Bangladesh’s global image,” Hossain said.

As a result foreign businessmen are asking members of the FBCCI to host or hold meetings with them abroad, in places such as Hong Kong and Singapore, which could drive up operating costs for local businesses, he added.

Meanwhile, global credit-rating agency Moody’s warned that the recent terrorist attacks could erode investor confidence in Bangladesh, which attracted $795 million in foreign direct investment in the first half of fiscal year 2016, according to the World Bank.

“It was the most damaging of a series of attacks targeting foreigners and minorities over the past year, and highlighted political risks that are factored into our government bond rating,” Moody’s said in a statement issued on July 4, according to the Dhaka Tribune.

The next day, Fast Retailing Co., the Japanese owner of the Uniqlo casual-wear brand, said it was suspending all but critical travel to Bangladesh and had instructed its staffers working in the country to stay indoors, according to Reuters.

Reduced business will lead to joblessness, poverty and other social problems in the country, warned Hossain Zillur Rahman, an economist and executive director of the Power and Participation Research Center (PPRC).

“Any investor, both local and foreign, must seek guarantees for their investments and physical security. We must ensure it; otherwise dismal days are waiting,” Rahman told BenarNews.

Buyers Not Withdrawing

The Alliance for Bangladesh Worker Safety, a consortium of North American brand names and garment retailers, including Wal-Mart and GAP, announced this week that it would not abandon Bangladesh’s garment industry in the aftermath of the attacks.

“Member companies will continue to stay the course,” James F. Moriarty, a former U.S. ambassador to Bangladesh and the head of Alliance, told a conference call for journalists, news agencies reported.

“I am not aware of brands withdrawing or cancelling contracts,” he said, according to Reuters.

Ready-made garments accounted for U.S. $28 billion out of a total export volume of U.S. $34 billion in the last fiscal year, which ran from July 1, 2015 to June 30, according to the data released on Wednesday by Bangladesh’s Exports Promotion Bureau.

While some local businessmen and economic observers were gloomy about their country’s post-attack outlook, Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association, was more upbeat.

“The government has ensured security of all diplomatic staff and foreigners living in different parts of the country,” he told BenarNews. “Unless anything bad happens in the future, we can easily overcome the scar of the Gulshan attack and recover from the great loss.”

Jesmin Papri in Dhaka contributed to this report.