|
Insuring Credit for Exporters
The American International Group, Inc. (AIG), through the AIG Vietnam non-life insurance company, recently introduced export credit insurance service to domestic exporters in Ho Chi Minh City. Vietnam Economic News' reporter, Phung Long, spoke with Christopher Shortell, the credit insurance vice president of AIG in Asia and China, regarding the service in Vietnam.
Why did you introduce the service in Vietnam?
The opening of the economy and the globalization of business means that we do not do business alone. We need partners. Vietnamese exporters are very good at producing export products but they need organizations that have experience and knowledge of risk and risk management to insure them. Insurers can help them achieve the highest export efficiency. The global economy is changing and more risks are surfacing. The global economy is in general going downhill due to the sharp increase in the price of oil, gasoline and food, political changes and natural calamities, and this means that there are hidden risks that will affect business revenue.
The insurance we offer will help Vietnamese exporters reduce credit risk since the buyers do not pay. Export credit insurance is a good way to avoid risk and will therefore enable Vietnamese companies be more able to negotiate with buyers and increase international competitiveness.
How can insurance create added value for a company?
Export credit insurance insures that the products are paid for. This makes it possible for a company to obtain a bank loan that could amount to 90 percent of the value of the products, much more than what can be gotten when goods are uninsured. An export credit insurance company helps companies 1) manage risk, particularly for new customers and new markets, 2) learn about the buyers' ability to pay and 3) fix the debt level, deferred payment terms, time payments, payment deadlines and more, which is expected to reduce bad debts. When buying export credit insurance, a company may also have the opportunity to obtain credit from many other sources.
How much does such insurance cost?
The cost of insurance reflects the destination country, its financial status, payment terms, kind of business, and past history.
What do you think about the export credit insurance market in Vietnam?
In recent years the economy in Vietnam has grown rapidly. There is a wide range of export items including agricultural products, seafood, industrial products and handicrafts. The number of Vietnamese export companies is increasing with an increasing presence in world markets. Vietnam has potential for export credit. However, there are few export credit providers in the country and companies have little to choose from. Unfortunately, Vietnamese companies know little about export credit insurance and the Government has not put in place incentive policies to support this kind of service, unlike in other countries in the region. However, I believe that AIG will be good for Vietnamese exporters. AIG's professional staff members will satisfy their need for credit insurance for their exports.
By providing export credit insurance service in Vietnam, AIG expects to reinforce its competitiveness in the Asian market./.
VEN
|
