Wal-Mart lends US$50m for Bangladesh work safety
NEW YORK: Wal-Mart Stores said it is lending US$50 million to Bangladesh factory owners, joining global retailers in a push for safer plants in the country after the April collapse of a garment complex killed more than 1,000 people.
The loan is part of a combined amount of more than YS$100 million that a group of North American retailers, including Wal-Mart and Target Corp, pledged in a pact announced in July.
Called the Alliance for Bangladesh Worker Safety, the retailer group has said it will set safety standards by October and refuse to buy from factories deemed unsafe. The initiatives followed the collapse of the eight-storey Rana Plaza factory complex in April, which killed more than 1,000 people in the worst industrial accident in Asian country’s history.
Surging wages and inflation in China have prompted retailers to shift some production to other nations such as Bangladesh. In response, a US$19 billion manufacturing industry has sprung up in the South Asian country, marred by factories operated in buildings with poor electrical wiring, an insufficient number of exits and little fire-fighting equipment.
The 17 retailers in the North American safety pact include Gap, JC Penney and Sears Holdings. Li & Fung, the global outsourcer that supplies to Wal-Mart, will serve in an advisory capacity.
A separate accord signed by Hennes & Mauritz and Inditex, Europe’s two largest clothing retailers, pledged at least US$60 million over five years to monitor safety in Bangladesh plants. The Europe plan obligates companies to ensure their factories have the capital to make necessary repairs.