Bangkok--23 Jun--EXIM Thailand
EXIM Thailand has introduced a new facility "Instant SMEs Export Insurance" offering a shortened application process and prompt approval within one day, as well as claims payment of up to 1 million baht in case of non- payment by foreign buyers. The service aims to enhance SME exporters' confidence to trade overseas and raise orders from new buyers, such as those from trade fairs.
Mr. Pisit Serewiwattana, President of Export-Import Bank of Thailand (EXIM Thailand), said during a press conference on the launch of EXIM new service, i.e. Instant SMEs Export Insurance, at EXIM BANK head office on June 23, 2016 that, despite the current global economic slowdown, trade opportunities remain in abundance. Cashing on these opportunities depends mainly on Thai exporters' competitiveness. One of the tools to help boost exporters' competitive advantage is taking out export credit insurance for each of their exports to safeguard against risk of payment defaults by foreign buyers, and enable exporters to offer more attractive credit terms to buyers than their competitors. Exporters will also be more confident in penetrating new markets or approaching new, unfamiliar buyers, especially SMEs who have small capital base. Therefore, the Bank has come up with a newly developed facility called "Instant SMEs Export Insurance," aiming to serve exporters who require quick and convenient service right from the application process to the approval process, and insurance coverage specifically for new and unfamiliar buyers.
EXIM Thailand President further said Instant SMEs Export Insurance is a new facility with simple application process and speedy approval within one day. Insurance coverage is activated right after approval of the service at a rate of 85% of loss incurred from foreign buyers' payment default, amounting to 1 million baht maximum. The insurance covers risk from buyer's bankruptcy, goods payment failure, and such political risk in buyer's country as control of fund transfer, ban on import of goods, warfare, riot, revolution and coup d'etat. The Bank will pay compensation immediately after the buyer turns bankrupt, and within 120 days in case of the buyer's failure to pay for goods or otherwise, and also follow up buyer's debt payment. This service caters well for SMEs who plan to or are ready to export their goods with moderate shipment value and receiving orders on a sporadic basis. The product is also designed for SMEs on a trade mission to negotiate deals at trade fairs overseas and would like to have insurance coverage to manage risk of buyers' payment failure so that they will be more confident in offering payment terms and making trade decisions.
Mr. Pisit said EXIM Thailand is the first and sole Thai provider of export credit insurance facility. For the past 21 years since its introduction of this facility to Thai exporters in 1995, the Bank has found that Thai exporters, particularly SMEs, usually do not prefer taking out export credit insurance considering it complicated and costly. Actually, the cost of export credit insurance is minimal but benefits are large. It enables SME exporters to set trade terms and value in each lot confidently and professionally. They can then contribute more time and resources to improving their business competitiveness without having to worry about foreign buyers' failure to make goods payment or any business disruption.
EXIM Thailand has targeted to expand this service facility to SME exporters through various channels in addition to its head office and nine branch offices in Bangkok and provinces, comprising those via public and private entities, such as Ministry of Commerce, and financial institutions with extensive branch networks across the country. The Bank will also launch promotion campaigns like insurance premium cut for the first two buyers from the full amount of 3,000 baht per buyer to 1,500 baht per buyer at its promotion booths throughout 2016.
The insurance claims payments made by the Bank since 1995 up to May 2016 have mostly come from buyers' failure to pay for goods (78%), followed by buyers' bankruptcy (20%), and buyers' refusal to accept goods delivered (2%). Classified by industry, 49% has been in gems and jewelry, 10% fuel oils, 8% canned foods, 6% furniture, 4% auto heat sink, and 23% in other industries. Claims payments go mainly to buyers in the U.S.A., the UK and Malaysia.
"This facility has been developed under the circumstances where a large number of overseas trade counterparts are in financial liquidity crunch, hence rising payment default risk, especially if buyers become bankrupt. According to the data of a world leading export credit insurance agency, there is one business entity going bankrupt every 3 minutes today. Therefore, we would like to encourage exporters, especially SMEs, to take out insurance for every lot of their exports," added Pisit.