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Exporters urged to insure
The number of enterprises buying export credit insurance has remained modest two years after the Government urged companies to use it, Vice Minister of Industry and Trade Nguyen Thanh Bien said during a conference held in HCM City yesterday.
Bien said that export credit insurance, which helped to reduce risks, was still a new concept in Viet Nam, although it was used in many other countries.
The conference, organised by the Ministry of Industry and Trade and Ministry of Finance, was held to provide further information about the insurance to Vietnamese exporters as well as to listen to feedback from exporters and relevant agencies.
Export credit insurance protects exporters' foreign receivables against commercial and political risks that could result in foreign buyers' non-payment of export invoices.
Understanding the necessity of this kind of insurance, the Prime Minister in late 2010 signed a decision to pilot the implementation of export credit insurance, Bien said.
Under the decision, exporters of two groups of products featuring 23 items — including seafood, rice, coffee, fruits and vegetables, rubber, pepper, cashew nut, tea, garment and textile, footwear, electronics and computer components, ceramics, glass, iron and steel products, machinery and transport vehicles — are encouraged to apply for the insurance.
The Government said it would aid domestic businesses with a 20 per cent export credit-insurance premium, and support insurers in installing software and building up import databases, as well as design export credit insurance products and train staff.
The Government targeted total premiums paid to reach 3 per cent of the country's total exports after three years of implementation.
But as of today, the total premiums paid for the insurance were only 0.02 per cent of the country's total exports, said Pham Dinh Trong, deputy director of the Ministry of Finance's Insurance Management and Supervision Department.
Trong said that, despite the Government's support and the advantages of this kind of insurance, few businesses had paid attention to it.
He added that many companies said they could manage well without it, and some were worried about the high cost of insurance and its effect on their profit margins.
Vo Thi Phuong Anh of Coface Services Viet Nam Co Ltd said that many insurance providers hesitated to promote this kind of insurance because it was more complex than traditional insurance products.
Many participants at the conference said this was the first time they had heard about export credit insurance.
Tran Thi Minh Nguyet of the Long Nguyet Coffee Export Co said she had previously not known about it, but thought it would be useful for coffee exporters. However, companies would find it more attractive if the Government offered more support for businesses, she added.
Pham Hong Minh of Petec Coffee Co said that involved ministries and agencies would improve communications about this kind of insurance to the business community so the latter could understand its advantages.
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