Australia's EFIC sees rise in Indonesian claim defaults
Australia's EFIC sees rise in Indonesian claim defaults
SYDNEY (Reuters): The Australian government's Export Finance
and Insurance Corp (EFIC) has paid more than A$1 million in
insurance claims on defaults in Indonesia since the start of
1998, the trade insurance and facilitation group said.
EFIC was currently working with exporters to try to solve more
than A$7 million in payment delays, Ronda Broadbridge, head of
claims and recoveries, said in a special report by EFIC on the
impact of the Asian crisis.
"We have seen an increase in requests for extensions of due
dates which is usually the first sign that there is a potential
problem," she said.
No appreciable increase in payment delays had been experienced
for Thailand, Malaysia or South Korea, she said.
"Indonesia is a little different."
In recent months EFIC has been given A$900 million in special
funding to underwrite Australian exports to Indonesia and A$500
million in short-term insurance cover for exports to South Korea.
At the beginning of the Asian crisis exporters experienced
delays mainly with exports of foodstuffs, including meat and
livestock, Broadbridge said.
These had now spread to small manufactured goods as buyers had
been unable to raise the foreign currency required to pay for
imports, she said.
The Australian government's ABARE commodities forecasting
agency also said a lack of liquidity in several Asian markets had
placed pressure on buyers, with many finding it difficult to
establish letters of credit.
This had resulted in an overall decrease in trade, prompting
recent initiatives by the Australian government to assist exports
to South Korea and Indonesia, Stuart Fishwick, head of EFIC
credit insurance, said.
"Exporters have the choice of exiting the market and losing
their hard fought market share or staying and managing the
risks," he said.
Sometimes it was prudent for companies doing business with
crisis-hit Asian countries to withdraw or scale back but some
companies may be able to take advantage of opportunities when
recovery took place.
"Markets in Asia have contracted, and that is unlikely to get
better quickly," he said.
The potential for project opportunities in Asia was in
countries like Thailand and the Philippines, Angus Armour, head
of structured Trade and project finance, said.