VN companies try to avoid buying export insurance
Play
Many exporters remain unfamiliar with export credit insurance two years after the Government introduced it, according to the Viet Nam Insurance Association.
Cash-in-advance and letters of credit are no longer competitive in the international marketplace, said Phung Dac Loc, the association’s general secretary, and buying on credit was a common trend nowadays, especially in developing countries where importers usually had limited access to capital.
Export credit insurance would boost the country’s exports and help exporters reduce their risk, he said.
“Banks will provide loans to exporters without demanding collateral if they have export credit insurance, thus improving their borrowing capacity,” he said.
But despite these advantages, Vietnamese businesses were not keen on it, he told a conference in Ho Chi Minh City yesterday.
The total premium paid for the insurance last year was only 1.3 billion dong (Bt2 million), or just 0.1 per cent of the country’s total exports. The government targets a rate of 3 per cent next year.
Businesses on the other hand said they did not need coverage because they have managed smoothly without the insurance, with some also worrying about the high cost of the insurance and its effect on their margins.
