The move comes after over 1,100 people died in a factory collapse in Bangladesh in April, prompting top Western retailers and global trade unions to promise to improve shocking factory conditions.
The Netherlands is giving USD 13 million that together with funds from the textile sector will be put to improve "harrowing" work conditions, the foreign ministry said on its website.
"All involved parties -- the textile sector, manufacturers, consumers and governments -- must now take responsibility to break the vicious circle," said Trade and Development Minister Lilianne Ploumen.
The April 24 collapse of the nine-storey Rana Plaza factory complex in Dhaka killed 1,127 people, one of the world's worst industrial disasters.
More From This Section
Bangladesh is the world's second-biggest apparel maker and the 15.5-billion-euro industry, which relies on women workers, accounts for up to 80 per cent of exports.
Western retailers rely on cheap labour in the region, where safety standards are often inadequate and critics say many employers ride roughshod over workers' rights.
The Netherlands will represent donor countries in dialogue with the Bangladeshi authorities and trade unions to coordinate and monitor international efforts to improve the plight of garment workers.
Last month's disaster prompted top retailers to join an initiative by Labour umbrella groups binding retailers to hold independent building and fire safety inspections and to pay for repairs.
Ploumen wants to travel to Bangladesh with a delegation of Dutch textile businesses, trade unions and civil society groups, the ministry added.
She will also discuss the action plan with European Union trade ministers in Brussels.