By Ruma Paul and Frank Jack Daniel
DHAKA (Reuters) - Bangladesh's finance minister pledged on Thursday to improve safety in the garment industry after a factory collapse killed more than 1,100 people, but he unveiled no new money in his annual budget to relocate dangerous buildings.
Finance Minister Abul Maal Abdul Muhith's 2013/14 budget aims to bolster faltering economic growth to 7.2 percent after political unrest and strikes for better pay and conditions in the key garment industry dragged this year.
The government will raise spending 16 percent to 2.22 trillion taka ($28 billion) for the coming year, he said.
The collapse of the Rana Plaza factory complex killed 1,129 people in April. A fire in another factory last year killed 112.
"In order to prevent recurrence of such incidents in future, we pledge to take all possible measures for improvement of working conditions and safety standards in factories in conjunction with all stakeholders," Muhith told parliament.
But he announced no new spending for factory safety. A senior finance ministry official this week had suggested that the budget was likely to include provisions to address a critical shortage of building inspectors and buy land to relocate dangerous factories to a planned industrial park.
Instead, he pledged a 20 percent reduction in import duties on woven fabrics, a significant boost to the garment sector.
Clashes between anti-government and Islamist activists and police have also claimed dozens of lives this year.
The combination of opposition-led political protests and worker strikes have hurt the garment industry, the main driver of the economy. GDP growth was about 6 percent in the current financial year which ends on June 30, the lowest since 2009/10.
Bangladesh is to elect a new government by next January and Prime Minister Sheikh Hasina needs to keep the economy growing to offset the rising anger at safety in the sector that employs four million workers.
The government and industrialists, along with the global brands that use their factories, have come under pressure to reform an industry that generates 80 percent of export earnings.
The April 24 collapse of Rana Plaza, a factory built on swampy ground outside Dhaka with several illegal floors, ranks amongst the world's worst industrial accidents and has galvanized brands to look more closely at their suppliers.
Very low labor costs and, critics say, shortcuts on safety, makes the country of 160 million the cheapest place to make large quantities of clothing.
Companies are split over how to improve conditions. Big European names signed an accord that would make them legally responsible for safety. U.S. firms like Wal-Mart Stores Inc have broken ties with non-compliant factories.
Inspections of about 150 buildings housing garment factories since the disaster found many with serious faults, such as cracks and floors built without permits, said Mujibur Rahman, who leads a team of 30 civil engineers at the Bangladesh University of Engineering & Technology.
"There are buildings that have approval for six floors, but then they built one or two more, this is an overload problem," Rahman said, adding that some factories were in buildings designed for shops or homes.
"We are recommending that they should immediately relocate their industries, especially the ones that are in residential buildings."
Plans to move factories crammed along Dhaka's teeming streets to an industrial park to the south have foundered as suitable land is scarce in low-lying and flood prone Bangladesh.
The garment industry has risen from almost nothing 30 years ago to become the second largest global supplier after China. Thousands of factories have sprung up in the past decade, overwhelming the capacity of a handful of inspectors.
Other initiatives to improve conditions include a rise in the monthly minimum wage for garment workers, now set at $38. A panel formed on Thursday is to set a new wage within months.
A revised labor law is also in the works to make it easier to form trade unions. Workers can now form a union only with permission of the factory owner.
(Additional reporting by Serajul Quadir; Editing by Ron Popeski)
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