June 15, 2014 / 7:26 AM / 3 years ago

UPDATE 1-Bangladesh May exports up 7 pct on garment sales

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DHAKA, June 15 (Reuters) - Bangladesh’s exports rose 7.22 percent in May from a year earlier to $2.7 billion, boosted by stronger clothing sales, the Export Promotion Bureau said on Sunday.

In the first 11 months of this financial year, exports rose 12.56 percent to $27.37 billion from a year earlier. Garment exports surged nearly 15 percent to $22.2 billion in July-May.

The garment industry, which supplies many Western brands such as Wal-Mart, Tesco and H&M, has been in the spotlight after a string of fatal factory accidents, including the collapse of a building housing factories in April 2013 that killed more than 1,130 people.

Garments are a vital sector for the South Asian nation, whose low wages and duty-free access to Western markets have helped make it the world’s largest apparel exporter after China.

Political violence leading up to an election in January also crippled the economy, along with readymade garment industry, which employs four million people.

In its new budget for the coming fiscal year, starting on July 1, Bangladesh announced minor sops to improve safety in the garment industry, but did not allocate new funds to relocate dangerous buildings.

Finance Minister Abul Maal Abdul Muhith’s 2014/15 budget removed import duties on raw materials to make pre-fabricated buildings and abolished taxes on safety equipment such as fire-resistant doors and emergency lights.

The garment industry had been looking for government support to buy land and relocate factories in unsafe buildings to a planned industrial park in a bid to restore the confidence of Western buyers in an industry that generates 80 percent of export earnings.

Global buyers have also slowly started pulling out orders from around 30 percent of the garment factories housed in unsafe, shared buildings and which employ 1.5 million workers, the Bangladesh Garment Manufacturers and Exporters Association said.

Government officials recently got embroiled in a controversy over their decision not to shut down six garment factories deemed unsafe by experts hired by Western clothing brands.

Late last year, the government raised the minimum wage for garment workers by 77 percent to 5,300 taka ($68) and amended its labour law to boost worker rights, including the freedom to form trade unions. (Reporting by Ruma Paul; Editing by Robert Birsel and Clarence Fernandez)

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