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.