Domestic Credit Insurance to be introduced by ECGA
The Board of Directors of ECGA approved the implementation of domestic credit insurance services to Omani exporters. This will be helpful to the exporters as it will reduce the risks of non-payment by buyers not only from abroad but also for local buyers. The services provide additional protection to the exporters as it will also benefit them against the risk of protracted default and insolvency as well as ease the exporters cash flow constrain and liquidity problems.
Reinsurance Treaties of ECGA renewed
ECGA’s reinsurance treaties for the year 2003 have successfully been renewed by the reinsurers. The Agency maintains two separate treaties: Quota Share Reinsurance Treaty with the private international reinsurer – Namur Re as well as Excess of Loss Treaty with Coface through its association within the Credit Alliance Network. The treaties provide reinsurance protection to ECGA’s growing exposure against both commercial as well as non-commercial risks. The success of the renewal of the Agency’s reinsurance treaties were attributed partly because of its highly professional sound underwriting system as well as positive underwriting years of experiences with the reinsurers.
Omani Quality Mark (OQM) award to Oman Cables Industry (SAOG) and Amiantit Oman (SAOC)
Oman Cables Industry (SAOG) and Amiantit Oman (SAOC) have been awarded by the Ministry of Commerce & Industry with the coveted Omani Quality Mark (OQM) award. ECGA congratulated both the companies for receiving the awards.
The two companies are among the leading exporters and have been availing the services of the ECGA very effectively through the years, which allow them to expand their export business to various international markets.
Seminar on Export & Investment Guarantees
Under the auspices of Sheikh Yaqoob bin Hamed Al-Harthy, The Omani Centre for Investment Promotion and Export Development “OCIPED” in association with The Inter-Arab Guarantee Corporation – Kuwait organized a seminar on Export & Investment Guarantees on 28th January 2003 at Oman Chamber of Commerce & Industry. Mr. Ayham Abu Rshaid, In-Charge of Export Credit Guarantee from the Inter Arab Investment Guarantee Corporation and Mr. Imaad bin Soud Al-Harthy, Senior Claims and Recoveries Officer from ECGA provided respective presentations. The seminar highlighted the benefits of the services to Omani exporters from both IAIGC and ECGA respectively.
Omani non-oil exports for the 9 months period of 2002 disclosed
The total Omani non-oil exports for the 9 months period ended of September 2002 as disclosed by the Information & Publication Center of the Ministry of National Economy were RO.719.5 million compared to RO.629.1 million for corresponding 9 months period of 2001. Omani produced non-oil exports amounted to RO.187.5 million while re-exports were RO.532.0 million.
General Steering Committee & Country Risk Conference held in Paris
The General Steering Committee of the Credit Alliance Network held its meeting in Paris followed by Country Risk Conference on January 27 and 28 respectively. The General Manager of ECGA Mr. Nasir bin Issa al-Ismaily who is also a member of the General Steering Committee of the GSC and Regional Coordinator for Africa-Middle East Group attended the meeting and the conference.
Export Credit Insurance services continue to grow
As of end of 2002, the Export Credit Guarantee Agency SAOC had issued a total credit insurance cover of RO.142.8 million to exporters compared to RO.138.5 million in 2001 – an increase of 31.%. The number of credit insured exporters in year 2002 rose to 144 compared to 134 in 2001. Moreover, the number of overseas buyers to whom ECGA provided credit insurance cover rose to 3057 in year 2002 from 2703 in the year 2001 which represents an increases of 13%.
The table below provides the statistical highlight for operational indicators of ECGA’s performance since its inception in 1991 to the year 2002.
HIGHLIGHTS OF THE PERFORMANCE OF ECGA
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Credit Limits Issued(Total exposure in Million RO)
3.6
10.2
22
30.3
38.2
49.7
63.0
86.7
98.9
116.9
138.5
142.8
Number of Exporters
4
30
38
50
60
68
81
89
97
110
134
144
Number of Countries of Exports
10
23
34
39
50
58
64
70
76
80
88
89
Number of Overseas Buyers
43
154
410
696
952
1198
1412
1757
2077
2310
2703
3057
Export Credit Insurance services continue to grow
The Omani exporters are credit insured for their exports with ECGA to various countries worldwide. As of end of the year 2002, the number of countries for credit insured exports reached to 89 as listed below:
1
Algeria
24
Ghana
47
Maldives
70
Slovenia
2
Angola
25
Greece
48
Malta
71
South Africa
3
Armenia
26
Guinea
49
Mauritius
72
Spain
4
Australia
27
Hong Kong
50
Morocco
73
Sri-Lanka
5
Azerbaijan
28
Hungary
51
Mozambique
74
Sudan
6
Argentina
29
Haiti
52
Nepal
75
Sweden
7
Bahrain
30
India
53
Netherlands
76
Switzerland
8
Bangladesh
31
Indonesia
54
New Zealand
77
Syrian Arab Republic
9
Belgium
32
Iran
55
Nigeria
78
Taiwan
10
Botswana
33
Iraq
56
Pakistan
79
Tanzania
11
Brunei
34
Irish republic
57
Papua New Guinea
80
Thailand
12
Burundi
35
Italy
58
Philippines
81
Togo
13
Canada
36
Ivory Coast
59
Poland
82
Tunisia
14
Chile
37
Japan
60
Portugal
83
Turkey
15
China
38
Jordan
61
Qatar
84
Uganda
16
Cyprus
39
Kazakhstan
62
Romania
85
United Arab Emirates
17
Denmark
40
Kenya
63
Russia
86
United Kingdom
18
Djibouti
41
Korea (South)
64
Rwanda
87
Malawi
19
Egypt
42
Kuwait
65
Saudi Arabia
88
Yemen
20
Eritrea
43
Lebanon
66
Senegal
89
United states
21
Ethiopia
44
Libya
67
Seychelles
22
France
46
Madagascar
68
Singapore
23
Germany
46
Malaysia
69
Slovakia
COUNTRY PROFILE OF BUYERS OF OMANI INSURED EXPORTS KINGDOM OF SAUDI ARABIA The Kingdom of Saudi Arabia occupies four fifths of the Arabian peninsula. It covers an area of about 2,240,000 square kilometers. It has a population of over 22.8 million. Its major cities include the Capital Riyadh, the commercial sea port of Jeddah, Mecca, Taif and Dammam.
Total Omani non-oil exports including re-exports to Saudi Arabia during the year 2001 were RO.70.6 million while imports were RO.71.1 million Saudi.
Due to its geographical proximity with the Sultanate, Saudi Arabia represents the second largest market for Omani non-oil exports after UAE. Omani non-oil exports to Saudi Arabia has grown from RO.62.9 million in the year 2000 to RO. 72.6 million in 2001 representing growth rate of 15.4%.
Export Credit Guarantee Agency has insured Omani exporters for various manufactured products to Saudi Arabia. The total credit limits issued by ECGA to Saudi Arabia amounts to RO.21 million to 323 buyers. Total business declared as of date by the policyholders were RO.108 million. Saudi Arabia constituted 71.6% of total cumulative amount of claims paid by ECGA to exporters by the Agency with a recovery of 10%.
As per the latest publication of International Trade Finance Magazine (November 2002, Issue No. 416) published by Informa Professional in its survey highlights on Saudi Arabia it states as follows:
"Two out of four Saudi importers enjoy open account terms with their foreign suppliers. One in four covers purchases with I letters of credit one in seven utilizes dated drafts. Exporters now wait an average of three months before remittance in hard currency are received."
Questions and Answers Q- Why credit insurance is considered part of modern business practice and therefore vital? A- Ever since businesses started granting credit terms, some debtors have failed to pay after with disastrous results for the creditor. Thus credit insurance help to limit the exposure of a business to credit risks. It provides a measure of security for those who have been entrusted with managing a firm’s credit risks.
Q-Are the benefits of credit insurance worth the cost? A- For the price of a small premium you buy protection which gives you a peace of mind. If one of your customers that you have insured goes into liquidation or if payment is prevented by some other event beyond your control, ECGA will be there to indemnify you.
Q- What is the benefit afforded by a credit insurance policy? A- The protection afforded by a credit insurance policy will enable your business to expand into new areas and to deal confidently with customers of whose credit standing you had not been sure. Thus ability to expand is a crucial factor for Omani businesses. ECGA provides the safest and most professional backup service for companies who have or are likely to have an exposure to credit risks.
Q-Credit insurance is one of the principal activities of ECGA. What advises and benefits the clients derive if they obtain credit insurance from the Agency? A- We advise clients on various strategies to enable them to avoid credit risks when trading in the international markets.
- We provide a wide range of credit insurance policies to facilitate transactions that, without such protection, would not take place.
- We work closely with our clients to ensure that all risks that can be avoided are avoided.
- We provide our clients with the valuable benefits of professional credit risk investigation and analysis, constant surveillance of customers, the expert administration of overdue accounts and an effective recovery service.
Q- How wide in geographical terms does ECGA prepared to provide credit insurance cover? A- ECGA provides credit insurance to more than 80 countries throughout the world. If you are planning to export, ECGA can help you to protect against the risk of non-payment by foreign buyers.
Hint to Exporter
“ NOWADAYS, WITH THE FIERCE COMPETITION AMONG COUNTRIES TO INCREASE THEIR EXPORTS, THE QUALITY OF A PRODUCT AND ITS COMPETITIVE PRICING ARE NO LONGER ENOUGH TO CONQUER FOREIGN MARKETS AND WIN EXPORT DEALS. CREDIT INSURANCE AS WELL AS OTHER CREDIT FACILITIES ARE INCREASINGLY INDISPENSABLE COMPONENT OF ANY DEAL STRUCTURE AND A PARTICULARLY ATTRACTIVE INCENTIVE FOR FOREIGN BUYERS”
CONGRATULATORY MESSAGE ECGA takes this opportunity to congratulate our two credit insured Omani exporters for being awarded with the Omani Quality Mark ( OQM) award:
OMAN CABLES INDUSTRY (SAOG)
AMIANTIT OMAN (SAOC)
The Omani exporters have long recognized and appreciated that one of the major keys to success is to insure with ECGA for safe export business. The Agency provides confidence, encouragement and incentive in support of its services to exporters during the past ten year.
ECGA is here to help you minimize your risks
BUYER’S RISK
COUNTRY RISK
buyer’s insolvency/bankruptcy
buyer’s failure to pay
buyer refusing delivery of goods
foreign exchange transfer delay
import bans or cancellation of import licence
payment moratorium
war, civil disorder, natural disasters
Other benefits of service provided to credit insured exporters include post shipment financing through bills discounting by commercial banks as well as issuance of guarantees to commercial banks for pre-shipment financing needs of the exporters.
Issue No. 2/2003
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