Manufacturers in some Gulf Co-operation Council (GCC) countries who export to Oman and the UAE are being hampered by banks insisting on certificates of origin.
Two years ago, the GCC said certificates of origin (COs) were not required. Banks in the UAE and Oman insist they have not received any written directive from a central bank or ministry of economy and planning to dispense with COs.
“Normally, we receive a circular from the central bank regarding any changes, but on the issue of COs we have not received anything,” a spokesman for a local bank says.
A UAE central bank official adds that such a directive should come from the ministry of economy and planning.
The worst affected are Saudi exporters because the kingdom has stopped issuing COs following the GCC decision. Banks in the UAE and Oman continue to insist on COs before issuing letters of credit (LCs). The lack of clarity on the issue of COs has caused considerable delays and difficulties for exporters in the GCC, particularly from Saudi Arabia.
“Despite an official announcement that COs are not required for export of commercial goods from one GCC country to another, banks in the UAE and Oman are inserting a clause in their LCs demanding COs. This is because banks have not been intimated by the central bank,” says Prashant Mehta, a sales executive of Saudi Arabia Basic Industries Corp (Sabic), a major exporter within the GCC.
“Saudi banks are not demanding COs in their LCs. We provide the original invoice and goods have the stamp showing they were manufactured in Saudi Arabia, which is proof enough concerning the origin of goods.”
Goods have ended up being stuck for weeks when shipped out without a CO.
“We supply a lot of raw material and since Saudi Arabia stopped issuing COs we export material without the certificate. The matter is lingering due to the lack of official notification on a decision taken two years ago,” another Saudi exporter says.
A directive to exporters dated July 2, 2003, from the ministry of trade and industry in Saudi Arabia states that national goods that bear the stamp of the manufacturer do not have to be accompanied by a CO, only local bills and the customs form.
“Even at Sila, the border post of Saudi Arabia and the UAE, goods are allowed to enter on the basis of the invoice of the producer. It is the same at the Saudi-Oman border,” points out one exporter, who claims that despite repeated requests to customers to delete the clause, customers referred them to the bank.
“Banks simply insist on the CO and we are caught in this rigmarole,” he says.