Tuesday, January 22, 1974
UNCONDITIONAL GUARANTEE SCHEME TO HELP EXPORTERS
The Hong Kong Export Credit Insurance Corporation is to be empowered
to guarantee medium and long term loans by lending banks to local exporters
to anable them to finance their export transactions.
This is provided in the Hong Kong Export Credit Insurance Corporation
(Amendment) Bill 1974 published in today's gazette.
This new facility will enable exporters, especially those who have
large contracts or a number of medium size contracts with large risks and long r
loan periods, to get credit from their banks more easily.
Commenting on the Bill today, a government spokesman noted thrt the
facility would be particularly helpful to those exporters who, though of high
repute and standing, were tied by susbstantial current commitments arising out
of past export financing, or who might be fully extended in financing current
production or in the purchase of new plant and equipment.
"From the point of view of the banks, these direct guarantees -- which
are unconditional would provide complete security. From the exporter's
point of view the guarantees would provide a means of obtaining finmoe without
correspondingly reducing the capacity to borrow," he said.
He pointed out, however, that for the proposed facility to operate
successfully, the banks would have to offer a favourable rate for the full
period of loan,
"Without a favourable rate, Hong Kong exporters of capital and semi-
capital goods would be put in an unfavourable position as far as financing
costs are concerned in relation to their competitors in other countries," he
gaid.
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