ENG-1994 — Page 147

TRADE AND INDUSTRY

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Hong Kong Export Credit Insurance Corporation

The Hong Kong Export Credit Insurance Corporation (ECIC) helps the territory's exporters to minimise risks and expand their markets.

The ECIC is a statutory corporation set up in 1966. It provides insurance protection to exporters against the risk of monetary loss arising from non-payment by their overseas buyers for goods exported and services rendered on credit, which are not normally covered by commercial insurers.

The government guarantees the payment of all moneys due by the corporation, with the limit for maximum contingent liability arising from its insurance and guarantee operations currently set at $7,500 million.

Under the Hong Kong Export Credit Insurance Corporation Ordinance, the ECIC has a paid-up capital of $20 million provided by the government and is autonomous in day-to-day operations. It is run on a self-sufficient, commercial basis. A 12-member advisory board, comprising prominent members from the business sector and representatives from the government, advises the corporation on the conduct of its business.

During 1993-94, the ECIC insured exports worth $15,631 million and received gross premium income of $91 million. The maximum liability of policies was $6,889 million. The gross claim payments amounted to $51 million. The excess of income over expenditure was $42.27 million.

The ECIC is a member of the International Union of Credit and Investment Insurers (the Berne Union) and has an international network of contacts. It has ready access to confidential and updated economic and market information on other countries, and credit reports on overseas buyers.

The ECIC's services to the exporting community fall into three main categories.

The first category is the protection provided by the corporation to indemnify policy- holders for up to 90 per cent of their losses. Besides domestic exports and re-exports, shipments from third countries direct to overseas buyers are also covered. Protection is provided to exporters against non-payment due to buyers' insolvency, default or repudiation; war or civil disturbance and transfer delays. Cover can be extended to outward processing operations against confiscation and non-repatriation of raw materials, work in progress and finished products. For the export of capital goods and services sold on medium or long-term credits, the ECIC can provide tailor-made insurance policies.

Secondly, the ECIC provides credit advisory services to its policy-holders. On request by a policy-holder, the corporation will investigate the prospective buyer's creditworthiness, having regard to the market trading environment and the terms of payment of the proposed transaction, and advise the policy-holder on the amount of credit that can be prudently extended to the overseas buyer.

Thirdly, when a policy-holder encounters payment problems, the ECIC provides a risk management service and advises the policy-holder on possible courses of action, either to prevent or minimise any loss.

During the year, the corporation continued to step up its links with trade associations, banks and individual exporters, as well as publicity and outreaching activities to exporters and manufacturers.

Service standards outlined in its performance pledge were met within the target turnaround time.