Japan's Uniqlo suspends most Bangladesh travel; others reviewing operations

By Abhirup Roy, Promit Mukherjee and Chang-Ran Kim

MUMBAI/TOKYO (Reuters) - Foreign companies with nationals working in Bangladesh's garment and building industries have suspended travel to the country and told workers there to stay at home after a deadly attack by Islamist militants on a restaurant in Dhaka on Friday.

The hospitality sector is also seeing cancellations, hotels are tightening security and foreign embassies are looking at reducing staffing after the attack claimed the lives of nine Italians, seven Japanese, an American, an Indian and some Bangladeshi nationals.

Fast Retailing Co, the Japanese owner of the Uniqlo casual-wear brand, said it would suspend all but critical travel to Bangladesh and had told staff there to stay indoors.

Bangladesh's $26 billion garment industry has been bracing for the fallout of Friday's killings, fearing major retailers from Uniqlo to Marks and Spencer and Gap could rethink their sourcing plans after the latest attack targeting foreigners.

One of the world's poorest countries, Bangladesh relies on garments for around 80 percent of its exports and for about 4 million jobs, and ranks behind only China as a supplier of clothes to developed markets like Europe and the United States.

Uniqlo has 10 Japanese staff in Bangladesh, one of its major production hubs outside China, and was among the first to confirm it would tighten travel restrictions already in place after attacks last year. A spokeswoman said all but critical travel was suspended.

"Obviously this is generating a lot of concern with all the brands my company works with," said Shovon Islam, the head of Sparrow Group, which supplies top brands like Marks and Spencer and Gap.

He said that after a foreigner was killed in Bangladesh last year, some overseas companies pared back travel to the country and asked for meetings to be held in Bangkok, New Delhi and Hong Kong instead.

"This time the intensity of the threat is much higher and we will definitely see companies altering their plans," Islam said.

The Accord on Fire and Building Safety in Bangladesh, a group of mostly European retailers, said it would review security measures for its staff in Bangladesh.

While it is too early to say whether the group's signatories will shift production out of Bangladesh, it may affect travel restrictions for buyers coming to Bangladesh, a spokesman for the group said.

'HEARTBREAKING'

"There'll definitely be an impact on the garment industry," said Sudhir Dhingra, head of Orient Craft, based in the Indian city of Gurgaon. "I was just speaking to a top label which said its official who was supposed to visit Bangladesh to inspect an order has refused to go."

Bangladesh garment exporters who dealt with some of those killed in Friday's attack were still coming to terms with what had happened. "I was doing business with six of the nine Italians who died. It's shocking and heartbreaking," said Meshba Uddin Ali, managing director of Wega Fashion Sweater Pvt Ltd.

Amos Ho, a senior manager at Pou Chen, one of the world's largest makers of trainers for brands like Nike, Adidas and Puma, said: "We've urged our employees to be cautious. They have to pay attention to their personal safety."

Industry analysts have suggested clothing brands may consider shifting out of Bangladesh to less unsettled countries in Asia, such as Cambodia and Sri Lanka. No major companies have yet signalled official plans.

"There are no plans on changing any sourcing, but we are following developments closely," Sweden's H & M said in a statement on Sunday echoed by other big retailers.

Several others companies, including French retail group Auchan Holding, German clothing company Kik Textilien and European family-owned clothing retailer C&A, said they were monitoring the situation closely but had not made any plans to stop working in the country.

Two foreign nationals who live in Bangladesh and work in the garments business said the attack could scuttle plans for business travel.

"I have so many big brands I do business with and in the last 48 hours, they've all called me. They're afraid, they're scared," said Robert, an American who has lived in Bangladesh for seven years. He did not wish to disclose his last name or the name of his firm.

The foreigners said, however, said they personally did not intend to leave, noting that such attacks were not restricted to Bangladesh.

"In the last month, I went to Italy, Belgium, Germany, Amsterdam. If you look at where I went last month, where was there not a problem that's not equal to Bangladesh? Even USA,” said Robert.

REDUCING STAFFING

Both the United States and British embassies in Bangladesh may reduce staff numbers, one diplomatic source said, and ask only essential staff to stay on.

Japanese construction companies Obayashi Corp and Shimizu Corp, both with more than a dozen employees working on bridge projects in Bangladesh, said they advised staff to stay indoors.

At least two five-star hotels in Dhaka, which cater primarily to business clients, said they had seen a spike in cancellations since Friday's attack.

"Whenever people book, it's usually within two or three days of their visit to Dhaka, and now nobody is doing any bookings at all," said a source at one of the hotels, noting this week is typically quiet because of the upcoming Eid celebrations.

(Reporting by Chang-Ran Kim in Tokyo; Additional reporting by Saqib Iqbal Ahmed and Jarrett Renshaw in New York, Ethan Lou in Toronto, Faith Hung in Taipei and Zeba Siddiqui in Mumbai; Editing by Ian Geoghegan and Peter Cooney)