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| Tuesday, 23 November 2004 |
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Catering to exporters' needs: SLECIC provides tailor-made policies by N. Bennet Cooray, The Sri Lanka Export Credit Insurance Corporation (SLECIC) which steps into its 26th year is a market oriented organisation with an appetite for risk taking. The market orientation arose out of a conscious effort to move away from the risk averse attitude and seeking to become a true partner to the exporters of Sri Lanka. The decision, for the first time in its history, to obtain reinsurance to cover its liabilities enhances the risk taking capacity of SLECIC and paves way to actively build up an appetite for risk taking. As a result, SLECIC is now able to work with any company of any size, working in any sector, in any industry, anywhere in the country. Our core products are the export payments, insurance policies and the export credit guarantees. With our policies we strive to provide a safety net so that no Sri Lankan company will suffer as a result of non payment by their foreign trading partners. We are constantly upgrading our policies to reflect market conditions and seek to pass on the benefit of increased internal efficiencies to our customers. SLECIC evaluated its oldest product, the Export Payments Insurance Policy. Export Payments Insurance Policy was re-launched under the brand name of Seller's Risk with a bundle of benefits to the exporters. The premia, revised downwards and the cover increased. The terms and conditions of the policy were revisited, simplified and liberalised to ensure easy operation of the policy. SLECIC is now able to offer tailor-made policies for specific needs of the exporters. SLECIC today supplements its core products with a line up of other products that provide total credit solutions to exporters. BizInfo launched in 2002 permits lending institutions to evaluate existing and new buyers of exporters when authorising export credit. Partnerships with several agencies with regional specialisation in providing status reports of buyers help ensure accuracy of information provided. Equipped with this information, exporters become better able to manage the risk. In addition, these status reports would indicate any adverse developments of the buyer's status. In 2003, SLECIC launched another new product called SLECIC Export Finance. It provides direct finance at the post shipment stage especially to medium and small scale exporters. It assists exporters to offer liberal payment terms to their buyers and thereby enhance and diversify their export portfolios. The opportunity to proceed uninterrupted with export production will therefore be available to small and medium sized exporters irrespective of the terms of settlement agreed with overseas buyers. The benefits accruing to exporters under SLECIC Export Finance will therefore be, (a) to provide an insight into the financial status of overseas buyers with regards to their track record for honouring commitments for payment; (b) To improve the cash flow of exporters immediately after shipment, thereby ensuring continuation of export production without interruption and (c) The availability of credit at a concessionary rate of interest making it possible for exporters to be more competitive in overseas markets. In order to be eligible for credit facilities from airlines, freight forwarders are usually required to provide bank guarantees covering due payment. SLECIC's new scheme is designed to encourage commercial banks to issue bank guarantees to airlines on behalf of freight forwarders in a more liberal manner. This Export Performance Guarantee is a Counter-Guarantee issued to a bank in consideration of the bank issuing a bank guarantee to an airline on account of a freight forwarder. By this guarantee, SLECIC undertakes to pay on first demand 85% of the amount paid to the airline by the bank, consequent to the failure of performance of the freight forwarder. The corporation now offers Pre-Shipment Credit Guarantees and Export Production Credit Guarantees, assisting and encouraging Heat Treaters/Lapidarists and Exporters of Sapphires to pursue the export of sapphires instead of the significantly lesser value-added option of export of Geuda stones. These guarantees make it possible for commercial banks to offer working capital finance to value adders thereby providing indirect, yet powerful incentives that redirect the flow of geuda stones through the local value chain. The resultant value addition and financial benefits to be derived from the export of finished sapphires as against rough, unprocessed Geudas, will allow this sector to reap the benefits of higher profits and enhanced export earnings. Accounts Receivable Management & Debt Recovery is another area SLECIC ventured into during 2003. SLECIC partnered with receivable management companies that are experienced in providing recovery solutions for collection of disputed and undisputed receivables on a contingency or "No Collection - No Fee" basis. Efficient and effective accounts receivable management and debt recovery is essential for exporters for balance sheet protection and to maximise cash flows and return on capital investment. SLECIC as the sole government export credit agency strive to harness the Small and Medium Enterprises into the export picture. Development of SMEs has been identified as one of the strategies available for the government to alleviate poverty since it does not need many resources. The development in SME sector can generate more employment opportunities and would improve productivity especially in the agricultural sector. SLECIC's plans include garnering the support of co-operative societies to be the collection centres for export oriented products from the SME especially in rural areas. |
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