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By Ruma Paul and Promit Mukherjee
DHAKA/MUMBAI, July 2 (Reuters) - Some leaders ofBangladesh's $26 billion garment industry expect Western fashionretailers to review their ties with the world's second-largestgarment exporter after Islamist militants killed 20 foreignersin an attack on a Dhaka restaurant.
Bangladesh, one of the world's poorest countries, relies ongarments for around 80 percent of its exports and for about 4million jobs, and ranks behind only China as a supplier ofclothes to developed markets like Europe and the United States.
Islamist militants killed 20 people, including at least nineItalians, seven Japanese and an American, inside an upmarketrestaurant in Bangladesh's capital, before security forcesstormed the building and ended a 12-hour standoff on Saturday.
Islamic State said it was responsible for one of the mostbrazen attacks in the South Asian nation's history, but thatclaim has yet to be confirmed.
It marks a major escalation in a campaign by militants overthe past 18 months that had targeted mostly individualsadvocating a secular or liberal lifestyle in majority-MuslimBangladesh with 160 million people.
"An incident like this will definitely impact us, in as muchas our importers from places such as (the) U.S. and China willbe wary to visit because of the security concerns," saidShahidul Haque Mukul, managing director of Ananta Garments.
The industry had been recovering strongly from a majortragedy three years ago, when a factory building collapsed,killing more than 1,100 people, prompting safety checks that ledto many factory closures and the loss of exports and jobs.
It had also seemed little touched by a spate of recentmurders on liberals, gays, foreigners and religious minoritiesin sporadic attacks claimed by Islamic State and al Qaeda.
Between October and January, its exports surged 14 percentfrom a year earlier.
But Friday's attack signalled a more chilling threat toforeigners. The militants targeted a building housing twoupmarket eateries popular with foreigners, and several of thosekilled were Italian garment entrepreneurs.
"Bangladesh has never seen such a horrific incident," saidMohammad Siddiqur Rahman, president of the Bangladesh GarmentManufacturers and Exporters Association.
"It is a strong slap to our image. It will put pressure onour business, but we cannot say to what extent at the moment."
A Bangladesh-based executive for a French-based garmentbuyer said he feared a deep slump in business in the comingdays.
But other industry figures said heightened security fearscould be managed and that manufacturers could hold more meetingswith Western customers outside Bangladesh, in Asian cities suchas Singapore or Hong Kong, a trend that had begun some time ago.
"Concerns on visiting our factories, holding meetings, etc,by foreign nationals will be there for a few months but Ibelieve within six months, the intensity will thaw and thingswill be back to normal," said Abdullah Hil Rakib, head ofexporter Brothers Fashion Ltd.
At least two European retailers which source clothes fromBangladesh, Sweden's H & M Hennes & Mauritz AB andBritain's Marks and Spencer Group PLC, say theiroperations in the country are not immediately affected.
Both said their workers are unaffected and that they have noplans to change their sourcing, but are monitoring thesituation.
H & M's spokeswoman said the company has "safety routines"for workers, though she did not elaborate.
The industry owes its resilience to some of the world'slowest wages, the right skills and the fact that China hasbecome less competitive as a producer in recent years.
The minimum monthly wage for garment workers in Bangladeshis $68, compared with about $280 in mainland China. (Additional reporting by Zeba Siddiqui in Mumbai, SerajulQuadir in Bangladesh and Ethan Lou in Toronto; Writing by MarkBendeich; Editing by Mike Collett-White and James Dalgleish)
