Vietnam to Give 23 New Commodities Export Credit Guarantees in 2011
Nov. 9 – Under a new trial program aimed to insure 3 percent of all exports coming out of Vietnam, 23 new commodities will receive export credit guarantees starting in 2011.
An export credit guarantee is provided by an export credit agency, which is a quasi-government institution that acts as an intermediary between governments and export-oriented firms to issue export financing. The financing can come in the form of financial support, credit insurance, guarantees, or some combination thereof, depending on how seriously the specific government pursues an export-oriented economic strategy.
This new program, filed under decision 2011/QD-TTg and issued by the government last Friday, is aimed to encourage exports from Vietnamese firms by insuring against potential political and economic risks from abroad and providing easy credit at home. The program is targeted towards firms engaged in the following industries: rice, coffee, fruit and vegetables, textiles and garments, and footwear.
The decision was spurred by a recent survey conducted by Vietnam’s Ministry of Finance, which found that although 95 percent of exporters who were surveyed wished to receive export credit guarantees, there were only a few enterprises that were involved in debt and risk payment management that dealt specifically with exports.
Currently, Petro Viet Nam Insurance, Bao Minh Joint Stock Corporation and QBE Limited Company are the only three insurance companies providing credit guarantees for exports. Now, many more seek to enter the fray, including a few banks and several non-life insurance firms, such BIC and Bao Viet.
Deputy Director of BIC Tran Trung Tinh said that this year that his company would be running the export credit guarantees program.
“So far, the letter of credit method has accounted for 90 percent of the global export and import revenues, but now exporters, including Vietnamese enterprises, tend to buy insurance services for the risks incurred when they export,” the deputy director said.
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