ENG-1978 — Page 49

INDUSTRY AND TRADE

Hong Kong Export Credit Insurance Corporation

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Protecting Hong Kong's industrialists and merchants against the risks of not being paid for the goods and services they provide for overseas customers is the major function of the Hong Kong Export Credit Insurance Corporation (ECIC).

These risks arise from such customers' inability or unwillingness to pay because of bankruptcy, insolvency, default or repudiation, and include economic and political risks such as war, strikes, internal strife, blockage or delay of foreign exchange, cancellation of import licence and force majeure - in the country of destination, and in the countries through which these goods must pass to reach Hong Kong's

customers.

The corporation holds its policy holders indemnified for 90 per cent of their out- standing credits should such risks materialise. In addition the ECIC carries out a credit investigation and control function for its clients, and provides active support in resolving the payment difficulties they run into as well as advice on the economic position of their overseas markets.

The bankers of the ECIC's clients welcome this service as additional security for their advances to exporters. To encourage the export of capital goods, the corporation can make available to the exporter's banker its own unconditional guarantee, thus providing the bank with complete security.

As Hong Kong's official export credit insurer, the ECIC operates on commercial lines, on a break-even basis, taking one year with another. It markets its services like other enterprises do, and it is not compulsory for exporters to insure their outstanding credits abroad.

The corporation's protection is available to any company registered in Hong Kong, regardless of its origin or nationality. The corporation receives no subvention, it does not subsidise exports, and it is required to pay its own way. Its share capital of $20 million was provided by the government, which also guarantees the liabilities under- taken by the corporation in its insurance operations. This statutory guarantee stands at present at $2,000 million.

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The corporation is guided in its operations by a 12-member advisory board, representing the government and the major private sectors of Hong Kong. Since 1968 it has been a member of the International Union of Credit and Investment Insurers (the Berne Union), which represents 35 fellow export credit insurers operating for the benefit of exporters in 27 major trading countries.

In 1978 the corporation insured some 150,000 shipments for more than 1,000 policy holders, representing Hong Kong exports worth more than $2,000 million. Diversifica- tion successes were noted; more insured exports went to Hong Kong's smaller markets, and the export of a growing range of more sophisticated products, such as cameras and domestic appliances, was protected by the corporation.

The premium received for the year ended March 31, 1978, amounted to $9 million, and in that year the 75 claims settled or provided for amounted to some $6.5 million. The corporation publishes a detailed annual report on its results.

The corporation is the only government-owned export credit insurer in the world which enjoys reinsurance facilities with one of the largest private reinsurance companies.