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Published on February 20, 2008

Exporters can use export credit insurance to mitigate the risk of trading partners failing to pay for goods.

Apichai yesterday signed a joint export credit-insurance facility with Siam City Bank (SCIB) CEO Chaiwat Utaiwan.

Under the facility, Exim Bank will provide export credit-insurance coverage to SCIB clients, in order to enhance their ability to offer more favourable terms to new and existing foreign buyers and cushion the risk of non-payment for both commercial and political reasons.

"This year, we're focusing on expanding export insurance, and right now we're negotiating with another three commercial banks on this business," said Apichai, adding that he was also talking to international insurance firms, because Exim Bank planned to reinsure the business, to reduce its risk exposure.

Chaiwat said SCIB was planning to expand its trade-finance business, and he expects new lending for trade finance to grow 30 per cent this year. SCIB will open three trade finance centres in industrial estates or places with export-import activities.

Exim Bank also launched a new export credit-insurance product yesterday called Exim Flexi, offering reduced premium rates, a shortened work process and increased benefits. Policyholders may receive up to 90 per cent of losses suffered due to failure of foreign importers to pay for goods.

Exporters may spend as little as Bt1,000 for credit insurance on export value of Bt1 million. However, insurance premiums depend on the level of risk posed by the buyers, said Exim Bank executives.

Since it began offering export credit insurance in 1995, Exim Bank has paid out Bt260 million in exporters' claims. Surprisingly, importers failing to honour their contracts were from the US and Europe, Apichai said.

Wichit Chaitrong

The Nation