Export firms to get credit insurance aid

HCM CITY — The Ministry of Finance will aid domestic businesses with 20 per cent export credit insurance premiums based on staples such as agricultural products, fisheries, garments, footwear, electronics and woodwork.

Addressing a conference on export credit insurance in HCM City on Tuesday, Deputy Director of the ministry's Insurance Management and Supervision Department Pham Dinh Trong said that the country currently had seven insurers providing export credit insurance, however, the ministry would allow all local insurers to provide such products with the number of exporters having surged significantly.

Besides supporting insurers in installing software and building up import databases, the ministry will also help them design export credit insurance products and train staff.

Trong said the ministry targeted having export goods worth US$2 billion insured this year, up from last year's $100 million. The ministry also expected goods worth 3 per cent of the country's total export revenue using the services in the coming years.

However, he admitted it would not be easy meeting such targets as the insurance was not popular among domestic exporters.

Trong said the insurance boosted national exports and helped local firms reduce the risk of loss, however, despite advantages, local businesses remained unwilling to opt for it.

He said exporters worried that insurance costs would push up operation expenses and reduce profit margins, especially in the context of current rising freight costs.

Analysts warned that Vietnamese exporters faced a high risk of loss from the international payment term, which have seen foreign customers transfer money only after receiving shipments.

Therefore, buying export credit insurance was necessary even though it reduced profit margins, they stressed. — VNS