Impacts of Compliance Issue on the Cost of Making and FOB Price of Bangladeshi Knit Products
Abdullah Al Mamun 
Abdullah Al Mamun, Asst. Prof., Department of Textile Engineering, Daffodil International University, Dhaka, Bangladesh.
Manuscript received on January 01, 2016. | Revised Manuscript received on January 08, 2016. | Manuscript published on January 15, 2016. | PP: 17-20 | Volume-2 Issue-2, January 2016. | Retrieval Number: B0102012216
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Abstract: The readymade garment (RMG) sector plays a vital role in the economy of Bangladesh. This sector is considered very important for its highest export growth, which greatly contributes to the economy of Bangladesh. One of single biggest threats for Bangladeshi Readymade garment (RMG) sector is the non-complying of standards of its manufacturing plants. There are number of buyers who avoid Bangladesh from their outsourcing destination because of the poor compliance records of the RMG sector. To improve the compliance record it is imperative to study on compliant and non-compliant RMG factories of Bangladesh. Therefore, the aim of this study was to divulge the differences in price for same type of knit product (tee shirt) of a compliant and non-compliant factory. Ten orders from ten different buyers of a compliant factory and same number of orders of different buyers on same product of a non compliant factory were scrutinized to find out differences in cost of making (CM) charge and free on board (FOB) price. Compliance could be a strong opportunity for Bangladeshi RMG sector as this study revealed that the compliant factory receives considerably higher price from the buyers than a non compliant factory for the same type of product. By complying with the international standards and following local rules, RMG sector of Bangladesh could add more value on its products and thus gain the capability to sustain in the global market.
Keywords: Compliance, COC, CM, FOB and RMG.