Joint Assistance for SME Exporters

KEIC, IBK and KOTRA agree to help SMEs to further expand exports

Korea Export Insurance Corp. (KEIC) signed an agreement with Pt Asuransi Ekspor Indonesia (Asei) to cooperate on trade and investment between Korea and Indonesia at the Pacific Palace conference room in Jakarta on March 7, the company said. President Yoo Chang-moo and his Indonesian counterpart Zaafril Razief Amir signed the agreement in the presence of Minister Lee Youn-ho of the Ministry of Knowledge Economy for Korea and Minister Sri Mulyani Indraeati of the Ministry of Economy for Indonesia and other Indonesian dignitaries.
The two organizations agreed to increase the amount of export insurance for exporters in both countries in an effort to overcome the current economic slump and cooperate with each other to reduce risks for firms in such areas as reinsurance and joint insurance.
The two companies also agreed to exchange information on their countries including credit information on businesses and the management of risks and the exchange of officials on a regular basis.
They also agreed to build a cooperative system on major investment projects to promote increased trade and investment between Korea and Indonesia.
KEIC officials said Indonesia is the 11th largest importer of Korean products and the 10th largest exporter of goods to Korea, a representative trading partner for Korea in Asia. The current cooperative agreement will boost bilateral trade between the two countries and therefore help overcome the current economic crisis. In the meantime, KEIC said the volume of export insurance has been rising sharply this year, although exports have been declining year-on-year. Korean exports have fallen by 32.8 percent in January, but the amount of export insurance subscriptions by export firms rose 33 percent in the month to 10.4 trillion won.
KEIC increased support to SMEs' export credit insurance to 230 billion won in January, up 210 percent from the same period last year, amounting to 73 billion won.
The amount of export insurance subscriptions have been rising due to the fear of default by importers while the economic slump continues to sweep the world, despite the reductions in exports, as exporters want to protect themselves with insurance coverage.
KEIC cited as an example the bankruptcies of well-known companies in the world such as Circuit City, the second largest electronics home appliances retailer in the United States, and Qimonda in Germany and other smaller importers. The number of applications for insurance money due to the bankruptcies of overseas importers of Korean products amounted to 557.2 billion won, compared to 75.6 billion won, up 7.4 times, from the same period a year ago. KEIC officials said many companies in advanced countries and emerging countries went bankrupt and the danger of default is spreading fast around the world, requiring Korean exporters to protect themselves with insurance coverage just like Samsung Electronics and LG Electronics did to avoid huge losses when Circuit City, one of the biggest importers of their electronic home appliances, went belly-up.
President Yoo Chang-moo said KEIC will spare no efforts to help the Korean exporters faced with the worldwide economic slump, so that they will be able to expand their world market domination when the economy recovers. He said KEIC is determined to go all out to provide support to Korean exporters even if it means KEIC might sustain losses.
In the meantime, KEIC, the Industrial Bank of Korea and the Korea Export and Investment Promotion Agency (KOTRA) signed an agreement to help small exporters at the Federation of Banks building on March 16. The three companies agreed to provide 1 trillion won in export credit guarantees to SME exporters. KEIC will provide a 25 percent discount of guarantee fees to SME exporters recommended by the IBK. KEIC will simplify its credit analysis on issuing guarantees to loans less than 500 million won provided to SME exporters. The three companies will seek out the companies on the list of "KOTRA Guaranteed Brands and SME exporters with great potential for success" and provide them with concessionary credit financial support and foster them to grow. KOTRA will provide support to SME exporters, especially in their exploration of overseas markets through its 97 overseas business centers. nw

President Cho Hwan-eik of KOTRA, 3rd L, President Yun Yong-ro of the Industrial Bank of Korea, 3rd R, and President Yoo Chang-moo of the Korea Export Insurance Corp., 2nd R, hold together the agreement signed among their three organizations to provide financial help to SMEs Feb. 16.