Gresik, East Java - Indonesia\u2019s Export Financing Agency (LPEI) is\ntargeting growth in its trade credit insurance business alongside the\nshifting trend in international trade payment mechanisms, which is\nmoving away from letters of credit (LC).<\/p>\n
Business Implementation Director II of LPEI, Sulaeman, stated that\nthe current global trend shows businesses increasingly using telegraphic\ntransfer (T\/T) or direct payment schemes, which are considered faster\nand more flexible than LC.<\/p>\n
\u201cNow, international transactions are increasingly reducing the use of\nletters of credit or LC. So now, most are using T\/T, which is direct,\u201d\nsaid Sulaeman during a media visit in Gresik on Friday.<\/p>\n
This situation increases the need for risk protection, particularly\nagainst buyer default risks. For this reason, LPEI sees significant\nopportunities in developing trade credit insurance (TCI) products as a\nrisk mitigation solution for exporters.<\/p>\n
\u201cT\/T is different from LC. With LC, all risks are covered. With T\/T,\nthere is no institution providing protection, so one of them is through\ntrade credit insurance. So, in my opinion, one of the insurance products\nwe can develop going forward is trade credit insurance,\u201d he\nexplained.<\/p>\n
He added that trade credit insurance will become one of the main\nproducts serving as the backbone of LPEI\u2019s insurance business\ndevelopment in the future.<\/p>\n
Additionally, Sulaeman said LPEI is also beginning to pioneer the\ndevelopment of marine cargo insurance, although its volume is currently\nstill relatively small.<\/p>\n
The development of this cargo insurance is carried out through\ncooperation with the Directorate General of Customs and Excise (DJBC),\nparticularly in utilising data to support risk management.<\/p>\n
From a performance perspective, LPEI targets its insurance business\nto grow above 8 percent this year.<\/p>\n
In practice, trade credit insurance is used to protect exporters from\nthe risk of non-payment by foreign buyers. With this scheme, businesses\ncan still export to trading partners with higher risk profiles because\npotential losses can be claimed through insurance.<\/p>\n
The development of this insurance and guarantee is also part of the\nSpecial Export Assignment (PKE) Guarantee and Insurance (PJA) programme\nrun by LPEI.<\/p>\n
Through PKE PJA, the government allocates Rp1.9 trillion from a total\nof Rp13.7 trillion in state capital participation (PMN) to support\nexport financing.<\/p>\n
This scheme not only provides financing but also protection through\nguarantees and insurance to mitigate commercial and political risks in\ninternational trade.<\/p>\n
\u201cGenerally, the insurance used is trade credit insurance. For\nexample, if we want to export to a certain country and are doubtful\nabout the buyer, this is what entrepreneurs face. Well, we can cover it\nwith insurance; if there\u2019s a default or non-payment later, they can\nclaim the insurance,\u201d he clarified.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/lpei-targets-growth-in-trade-credit-insurance-through-pke-programme-1776437456", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }