That the European Union is an important export destination for Bangladesh is a well-known fact. As a matter of fact, by far, it is one of the biggest markets for the ‘Made in Bangladesh’ apparels, where it enjoys trade benefit under the Generalised System of Preference (GSP).
Naturally so any hiccup in the European market does not augur well for the Bangladesh readymade garment industry. So when the EU made in mandatory to comply with the Registered Exporter (REX) certification system of origin of goods to retain the GSP facility there, the garment makers were somewhat apprehensive.
The global transition period from the current system of origin certification to the REX system started on 1 January 2017, and will last until 30 June 2020, according to the EU. Once included in the database, an economic operator will become a ‘registered exporter’. The REX system will eventually fully replace the current system, based on certificates of origin – issued by the Governmental authorities, and on invoice declarations made out by economic operators.
Under the REX system, Bangladeshi products will get duty-free access facility.
As per the EU directive, Bangladesh’s Export Promotion Bureau introduced Registered Exporter System for the country’s exporters who make their shipment to the European Union. Initially, 10 export-oriented entities received REX numbers for making self-declaration of the country of origin, which are Zaber and Zubair Fabrics Ltd., Rifat Garment Ltd., Square Fashions Ltd., Noman Teri Towel Mills Ltd., Sea Mark BD Ltd., Akij Jute Mills Ltd., Pran Agro Ltd., Karupannya Rangpur Ltd., Uniglory Cycle Industries Ltd. and Universal Jeans Ltd.
Even as the process was undergoing, exporters encountered a major problem. Readymade garment manufacturing groups with multiple companies but one Tax Identification Number (TIN) faced hurdles in getting registration numbers required for the units for enabling automated certification system, which gave rise to the fear that export might hamper in the EU as only one REX number was given against each taxpayer identification number but many of the companies were running more entities against a TIN number.
Citing the EU regulation, the EPB informed exporters that there was no scope for providing more than one registration number against a TIN number as the IT system of EU allowed one registration against a unique number and till date the EPB has registered some 1,904 local exporters with majority from textile and RMG sectors.
Given the complexity of the situation, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) sent a letter to the EPB to provide REX number to all units under a company against a TIN number.
The trade body fears that if more than one REX number is not provided against a TIN number, the activities of many units would be shut down and labour unrest would take place in the country.
EPB officials said that they held a number of meetings on the issue and it was discussed that REX number might be provided against business identification number but finally the proposal was not settled.
The EPB in a letter on 22 January requested the BGMEA to obtain separate TINs for the units of the business groups saying that despite having group/proprietorship Saad Musa Fabrics (unit-2 and 3), Garib and Garib Company Ltd. (unit-2) and Divine Textile Ltd. (unit-2) took separate TINs for getting REX number.
The Bureau also said that if the business group received a single REX against several of its factories and the EU revoked the REX under any circumstance, all the factories would come under the purview of the revocation. It explained that Certificate of Incorporation and TIN only mention the name of a single company, and there might be incidents that a registered exporter might be revoked from the REX system for some reasons.
In such cases, the GSP facility for rest of the companies, owned by the same group or individual person, would be cancelled automatically, it said. It also informed exporters that considering the present complexities in getting REX number against all entities the EU extended its time frame up to 30 June this year so that exporters could get separate TIN for separate entity.
The EPB in the letter said the EU has extended the REX registration number issuance time for Bangladesh until 30 June 2020 as grace period, considering the huge number of local exporters who shipped goods to EU, after the EPB requested for the same.
Given the present turn of events, it would be in the interest of the industry if the stakeholders could soon find a feasible way out as business loss in the European Union is going to weigh heavy on the country’s apparel sector, more so considering the overall apparel export performance in the recent past.