Euro-zone crisis spurs Exim's export-credit insurance sales
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Surge of 36% from January-April as firms rush for protection
Companies have rushed to buy export-credit insurance from the Export-Import Bank of Thailand (Exim Bank) as they try to protect themselves against the persisting crisis in the euro zone, figures show.
Export-credit insurance offered by the bank rose 36 per cent year on year to Bt42.55 billion in the period from January to April, according to the institution.
State-run Exim Bank is the only institution in Thailand providing export-credit insurance designed to enable companies to mitigate overseas non-payment risks.
PTT, the Kingdom’s largest energy enterprise, is one of the bank’s major clients, representing about 30 per cent of the credit-insurance portfolio, according to an Exim executive. The rest are mainly small and medium-sized enterprises.
Competitive prices offered by Exim and the high uncertainty surrounding the global economy
have made many companies, including PTT, apply for export-credit insurance, the executive said.
The bank’s risk exposure has increased in line with rising risk stemming from the prolonged sovereign-debt crisis in the euro zone.
Risks are expected to heighten further if the crisis in Greece spreads to Spain and Italy, as the two larger economies are core members of the 17-strong European currency bloc.
Exim at the end of April had insurance obligations worth Bt43.98 billion, representing a 40.25-per-cent year-on-year rise in the first four months of the year.
However, bank president Kanit Sukonthaman said yesterday that any adverse impact from the European Union crisis on the bank’s clients would not be great, as most Thai exporters had increasingly turned their attention to Asia’s growing market.
“There are a limited number of exporters selling their products to Europe,” he said.
Asked whether the bank would provide financial support to the Dawei project in Myanmar, Kanit said Ital-Thai, which is developing the project, is one of the bank’s major clients.
“Since the project is huge with a value of about US$8 billion [Bt250 billion], other investors are expected to join with Ital-Thai; Exim would closely monitor such developments,” he added.
Meanwhile, Deputy Finance Minister Tanusak Lekuthai yesterday said he was confident Thai banks would not be adversely affected by the ongoing crisis in the euro zone, as banks here conduct business prudentially after learning the lessons of the 1997 Asian financial crisis.
He wants Exim Bank to support community-based OTOP (One Tambon One Product) enterprises to export their products by training them in international trade and providing financial assistance.
He also said the bank would offer low-interest loans to support small exporters whose overseas sales are not above Bt200 million a year.
Exim expects its overall loans to exporters this year to rise to Bt69 billion, up from Bt65.45 billion in outstanding lending at the end of last year.
Exim chairman Prasong Poontaneat said the bank is expected to benefit from planned legislation to create a development fund for state-run banks, as it could receive fresh capital from such a fund in the future.
The bank’s capital currently stands at just Bt15 billion.
