EXIM Thailand forges new alliance with SCIB to help protect SCIB’s customers against non-payment risk involved in their export transactions. EXIM Thailand also announced its new “EXIM FLEXI” insurance facility which offers more flexible premium rates and better benefits to insurance policy holders.
Dr. Apichai Boontherawara, President of Export-Import Bank of Thailand (EXIM Thailand), and Mr. Chaiwat Utaiwan, Chief Executive Officer (CEO) and President of Siam City Bank Public Company Limited (SCIB), held a press conference to announce “EXIM Thailand and SCIB’s Collaboration under the Joint Export Credit Insurance Facility” at EXIM Thailand Head Office on February 19, 2008. Under this facility, EXIM Thailand will provide export credit insurance coverage to SCIB clients to enhance their ability to offer more favorable credit terms to new or existing overseas buyers and to mitigate the risk of non-payment for commercial or political reasons.
“This year, EXIM Thailand focuses on expanding its export credit insurance customer base through cooperation with commercial banks, starting with SCIB. It is hoped that with an effective risk mitigation instrument such as export credit insurance,Thai exporters will be more equipped to improve their product quality and seek new market opportunities with confidence,” said Dr. Apichai.
SCIB CEO and President said that this cooperation would bring benefits to not only SCIB clients but also Thai exporters in general. Apart from protection against international trade risks, export credit insurance can be regarded as a kind of collateral. With insurance in place, lenders including SCIB can extend credits more easily since, according to the BOT’s regulations, banks offering EXIM Thailand’s insurance products can deduct 75% of the insurance value from their loan provisioning obligations.
“SCIB will further its cooperation with EXIM Thailand to better serve Thai entrepreneurs’ demand and promote Thailand’s international trade through other activities such as export-import services development and personnel training,” said Mr. Chaiwat.
SCIB plans to expand its international trade service by opening nine SCIB Trade Finance Centers within three years. In 2008, the Bank will open three SCIB Trade Finance Centers in industrial estates or areas where export-import activities are concentrated. Further, the Bank will upgrade its information technology system to provide customers with greater convenience, gain better access to regional customers and reduce operating costs.
In addition to the EXIM Thailand-SCIB joint facility, EXIM Thailand President also announced the launch of a new export credit insurance product, “EXIM FLEXI.” According to Dr. Apichai, during 1996-2006 trade transactions under open account (O/A) increased from 44% to 66% while those under letter of credit (L/C) in which banks serve as intermediary between buyers and sellers declined from 42% to 27%. This trend denotes intensifying risks relating to international trade and may cause exporters who cannot bear the cost of offering more flexible credit terms to lose their competitive edge. Realizing the need to provide an efficient risk mitigation tool for Thai exporters, EXIM Thailand, therefore, inaugurated “EXIM FLEXI,” a new export credit insurance which offers reduced premium rates, shortened work process and increased benefits for eligible policy holders to receive claims payment up to 90% of loss realized.
Since the introduction of EXIM Thailand’s export credit insurance in 1995, claims totaling 260 million baht were paid to exporters. Of the total, 80% were caused by buyers’ non-payment, 18% buyer bankruptcy and 2% buyer refusal to accept products delivered. The largest proportion of claims came from buyers in the jewelry and accessories industry (57%), followed by industries such as furniture (13%), canned food (9%) and plastic products (9%).