EFIC signs agreements with Korean and Thai counterparts

The Export Finance and Insurance Corporation (EFIC) has signed a Reciprocal Reinsurance Agreement with the Korean Export Insurance Corporation (KEIC) and a Memorandum of Cooperation agreement with the Export-Import Bank of Thailand (EXIM Thailand).

The Export Finance and Insurance Corporation (EFIC) has signed a Reciprocal Reinsurance Agreement with its Korean counterpart, the Korea Export Insurance Corporation (KEIC).

Australia’s export credit agency has also signed a Memorandum of Cooperation agreement with its Thai counterpart, the Export-Import Bank of Thailand (EXIM Thailand).

The agreements are part of a coordinated response to the global financial crisis to ensure businesses in the Asia-Pacific region continue to have access to trade finance to sustain export activities.

They represent an important contribution to the Asia-Pacific Trade Insurance Network, and also support the G20 commitment in April to make US$250 billion available for trade finance over the next two years.

The agreements are intended to assist Australian, Korean and Thai companies to collaborate more easily on international contracts and benefit from the streamlined financing packages and administrative efficiencies created under the agreement.

‘Overseas buyers find reciprocal reinsurance agreements particularly appealing when choosing suppliers because of the one-stop nature of the service,’ said Chang Foo, Head of Product Management and Risk Transfer at EFIC.

‘They need only deal with the lead export credit agency, saving costs and time in finalising a contract. This type of agreement can facilitate the participation of Australian exporters in large overseas contracts.’

Under reinsurance agreements, the lead export credit agency (ECA) provides export credit cover for the entire transaction on its usual terms, while the other ECA, whose exporter is a sub-contractor, provides reinsurance, for its portion of the transaction, to the lead ECA. Buyers and borrowers need only negotiate one set of documents with the lead ECA.

EFIC will continue to work within the Berne Union Asian Regional Cooperation Group and other forums to explore opportunities to further expand the Asia-Pacific reinsurance network.

The expanded network will enhance EFIC’s ability to meet the needs of Australian exporters and will support the development of international trade. EFIC has already established reinsurance agreements with Nippon Export and Investment Insurance (NEXI) of Japan, Euler Hermes Kreditversicherungs AG of Germany, Exportkreditnämnden (EKN) of Sweden, Office National du Ducroire (ONDD) of Belgium, and Atradius Dutch State Business NV.

Under the Thai agreement, EFIC and EXIM Thailand will strive to identify and develop eligible projects involving trade and investment relationships of Australian and Thai companies where participation by both agencies might be bilaterally beneficial.

‘The agreement will formalise working procedures intended to promote and facilitate overseas investments of our respective national companies, trade finance, credit insurance and/or financing of projects within the scope of our respective mandates,’ said Chang Foo

Thailand is Australia’s tenth largest export market and ninth largest two-way trading partner.

EFIC and EXIM Thailand are also forging stronger regional links through their memberships of the Asian Exim Banks Forum (comprising the financing arms of respective agencies) and the Berne Union Regional Cooperation Group (comprising the credit and overseas investment insurance arms), which aim to enhance cooperation between the export credit agencies in the Asia-Pacific region.

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