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INDUSTRY AND TRADE
seating for 700 and 360, plus a variety of small function rooms. The centre is scheduled to open in October 1988.
Hong Kong Export Credit Insurance Corporation
The Hong Kong Export Credit Insurance Corporation (ECIC) is a statutory corporation established in 1966 to issue insurance contracts which protect exporters and manufacturing exporters against risks of monetary loss arising from non-payment by their overseas buyers for goods and services supplied on credit. The ECIC is autonomous in its day-to-day operations, with major formulation and changes in policy being subject to the approval of the Financial Secretary. Its capital of $20 million is provided by the government which also guarantees the corporation's underwriting liabilities up to $4,200 million. The corporation, which is required to operate commercially, is assisted in the conduct of its business by a 12-member advisory board.
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As a member of the International Union of Credit and Investment Insurers (the Berne Union), the corporation has regular access to confidential and updated economic and marketing information on all major trading countries.
The primary function of the corporation is to improve the competitiveness of Hong Kong's exports, by protecting policy-holders against losses arising from those risks not normally covered by commercial insurers, namely, commercial risks of an overseas buyer and the political risks of his country. The maximum percentage of indemnity is 90 per cent. The protection provided by the corporation's policies helps policy-holders to obtain from their bankers trade finance and discount facilities for export operations.
The corporation also provides policy-holders with supporting services in resolving payment difficulties, and in the supply of political and economic intelligence on overseas markets, as well as giving indications as to the credit-worthiness of individual overseas buyers.
Transactions which include documents against payment, document against acceptance and open account invoices concluded on short-term credits (maximum 180 days) are normally insured under a Comprehensive Shipments Policy which gives protection from the date of shipment. Cover can also be made effective from the date of the contract of sale instead of the date of shipment so as to provide the exporter with protection during the manufacturing stage. For exports of capital goods and services sold on medium or long-term credits with payments spreading over two to five years or longer, the corporation provides other types of insurance policies to cater to the individual needs of the exporters.
In recent years, Hong Kong's exporters and manufacturers who export on the basis of irrevocable letters of credit (ILC) are increasingly facing risks at the pre-shipment, or manufacturing, stage. They often find themselves having to begin manufacturing before the ILC has arrived and therefore have to face the risk of contract repudiation during the manufacturing stage. To protect them against this risk as well as the risk of the buyer becoming insolvent and other political risks, the corporation introduced a new Compre- hensive Contracts Policy in early 1986.
Although the corporation itself does not provide finance, exporters find a 'letter of authority' a useful form of collateral security in negotiating export finance facilities. For exports on medium and long-term credits, the corporation can, upon application, provide a full unconditional guarantee directly to the exporter's banker.
Many of the corporation's business operations have been computerised. This enables the corporation to deal with policyholders' enquiries speedily in respect of around 55 000 overseas buyers and to process some 10 000 credit limit applications a year.