EXIM Thailand Advocates Buyers Credit Check and Use of Export Credit Insurance to Safeguard Exporters against Non-Payment Risks amidst Oil and Commodity Price Slumps

Stocks and Financial Services Press Releases Thursday November 26, 2015 10:12
Bangkok--26 Nov--EXIM BANK

EXIM Thailand invites Thai exporters to utilize the Bank's Buyer Risk Assessment (BRA) and Export Credit Insurance services, following a slump in oil and commodity prices that has caused African countries to face financial distress and foreign currency shortage, adversely affecting their ability to honor payment obligations with Thai exporters.

Mr. Kematat Saicheur, Acting President of Export-Import Bank of Thailand (EXIM Thailand), reveals that international trade risks nowadays are rising along with global economic volatility with worldwide repercussions. Recently, many African countries that rely mainly on oil and commodity export income are encountering grave domestic difficulties from oil and commodity price drop. This has led to falling export revenue resulting in foreign currency shortage and forcing domestic currencies to weaken. As central banks step in to impose exchange control on international payments, a number of African corporations have gone into arrears and refused to honor their import bills. Consequently, their business partners were jeopardized including Thai exporters as Thailand is a major rice supplier to Africa both directly and indirectly through foreign exporters such as those from the Middle East.

EXIM Thailand's Acting President discloses further that EXIM Thailand is keeping an eye on these situations very closely and advises exporters to proceed with caution. This can be done first by using the Bank's Buyer Risk Assessment (BRA) service to check credit worthiness of buyers before finalizing payment terms and conditions. Each export shipment should also be covered with export credit insurance toward off non-payment risks by overseas buyers caused by commercial reasons, such as buyer bankruptcy, payment default, refusal to take delivery of goods, or political reasons, such as restriction on hard currency remittance, new regulations prohibiting importation, occurrence of war, riot, revolution or coup d'etat that obstructs payment. In particular, for SMEs with limited capital base, "EXIM 4 SMEs," which is an export credit insurance service, is offered to SME exporters to protect them against non-payment risks. This facility is suitable for exporters with annual export value not exceeding 200 million baht. Key service features include lower premium rate and fast approval process. Besides, EXIM Thailand also provides "SMEs Export Delight" facility with a credit limit of up to sixfold of the collateral value for short-term loan coupled with export credit insurance and 50% discount on buyer's credit worthiness assessment fee.

In the first 10 months of 2015 (January-October 2015), a total of 19 EXIM Thailand's Export Credit Insurance clients have filed for compensation in the amount of 55.8 million baht. Of these, eight cases totaling 19.2 million baht derived from buyers' bankruptcy while the other eleven, worth 36.6 million baht, from overseas buyers' refusal to pay for goods delivered.

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