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The Sri Lanka Export Credit Insurance Corporation (SLECIC) has assured exporters and its customers that a 'war-risk' surcharge would not be imposed on their exports and to continue exports to the Middle East market under the existing terms and conditions of the SLECIC cover, Chairman Hemaka de Alwis said.

The SLECIC management, in deference to a special directive given by the Minister of Commerce Ravi Karunanayake and in consultation with Prime Minister Ranil Wickremesinghe in an effort to provide exporters and banks with the much needed reassurance, has decided not to burden the already 'badly-hit' exporters with any further costs.

It is our experience that "Turbulent times, at times are also great opportunities for new market penetration. Therefore, SLECIC anticipates that Sri Lankan exporters will make this an opportunity to establish themselves firmly in the Middle East market when existing suppliers to these markets are backing out due to the lack of support from their insurers," he said.

SLECIC also provides an Insurance Policy known as the Export Payments Insurance Policy (EPIP) to exporters to protect them against commercial and political risks that go hand-in-hand with international trade.

* Bankruptcy or insolvency of the buyer

* Protracted default in payment by the buyer after taking delivery

* Repudiation of contract by the buyer after the goods have been exported

Political risks covered under the Export Payments Insurance Policy (EPIP) offered by SLECIC are as follows:

* Imposition of restrictions by the Government of the buyer's country or any Government action, which may block or delay the transfer of payment. New import restrictions or cancellation of a valid import licence

* War, civil commotion or other disturbances in the buyer's country

* Interruption or diversion of voyage resulting in payment of additional freight or insurance charges, which cannot be recovered, from the buyer.

* Any other loss not normally insured by General Insurers and beyond the control of the policy holder and the buyer arising from events occurring outside Sri Lanka. Besides Insurance Policies, SLECIC also offers credit guarantees to commercial banks on behalf of local exporters to facilitate the provision of export finances at pre and post-shipment stage, De Alwis said.

Tea exporters are already feeling the impact of the impending war situation in the Middle East. The increases in fuel and LP gas prices in the world market have already affected our cost-of-living adversely.

It is customary that in similar circumstances, where there are high risks, for insurers (credit and general) to take precautionary action to mitigate their own risks. Such precautions may range from the increase of premiums to introduction of surcharges. Depending on the magnitude of the risks, some credit insurers are known to declare certain countries 'off-cover'.

It was not long ago that Sri Lankan exporters faced a similar crisis as a result of shipping lines, insurers and re-insurers introducing an exorbitant 'war risk' surcharge after the attack on the Airport on July 24, 2001.

In its capacity as the Export Credit Insurer of the Government, SLECIC is now faced with a similar situation in the Middle East.

In the face of imminent hostilities in the Middle East region, exporters and banks alike, are turning to SLECIC increasingly for reassurances with regard to our continued support for their export endeavours to that region, he said.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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