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BACK             Issue No. 3/2002
 ECGA has been transformed as an Independent legal entity

 ECGA’s Credit Insurance Services reach many Omani exporters

 Omani Non-Oil Exports increased

 Prague Club Meeting in Romania

 Awards to ECGA’s two credit insured exporters

 Oman’s e-Business Week

 Conference of Corporate Governance in the Arab Gulf Cooperation Council Countries

 Questions and Answers

 Tips to Exporters

 Importance of Policy Holders in managing Export Credit Policy effectively

 
ECGA has been transformed as an Independent legal entity
The Export Credit Guarantee Agency (S.A.O.C) which used to operate under the umbrella of the Oman Development Bank SAOG has now been transformed into a closely held independent government owned company – SAOC. The Agency is commemorating its 10th Anniversary since inception of its regular operations of promotion of Omani non-oil exports through credit insurance and guarantee services.

 
ECGA’s Credit Insurance Services reach many Omani exporters
ECGA has continued to be successful in meeting its target for assisting exporters in availing credit insurance services. As for the first quarter of 2002, the total credit limits issued to various buyers reached RO.141 million compared to RO.123.5 million for the corresponding period of 2001. The number of Omani exporters reached to 139 for the period compared to 118 for similar period in the year 2001. ECGA covered exports to buyers to 88 countries world-wide compared to 79 countries in the same period for the year 2001.

 
Omani Non-Oil Exports increased
As per the statistical exports data obtained from the Ministry of National Economy, the total non-oil exports from the Sultanate during the year 2001 amounted to RO.843.4 million compared to RO.746.4 million in 2000 or a growth rate of nearly 13%. Omani produced non-oil exports during the year 2001 were RO.265.8 million compared to RO.247.8 million in the year 2000. This represents an increase of more than 7.3%.

As per the latest assessment study on the performance of the Omani non-oil exports prepared by the Export Credit Guarantee Agency, Omani non-oil exports to Arab countries amounts to RO 486.7 million which constitutes 57.7% of total exports. This is very encouraging considering the Inter-Arab trade is very limited as it constitutes less than 10%.

It is also worth mentioning that as per the analysis of ECGA’s study, 84.3% of total such exports are to the five GCC countries that is UAE, Saudi Arabia, Kuwait, Qatar and Bahrain.

 
Prague Club Meeting in Romania
The Prague Club which operates under the auspices of the Berne Union held its first bi-annual meeting of the year in Poiana Brasov, Romania from May 25 to 30, 2002 hosted by the EXIMBANK of Romania as it coincided with its 10th Anniversary. Mr. Nasir bin Issa Al-Ismaily, the General Manager of the Export Credit Guarantee Agency participated in the meeting. Among the important topics discussed include members’ various credit insurance schemes and business trends, review of Berne Union Understandings and Agreements, underwriting of risks for short, medium and long-term business, general underwriting issues, pre-shipment cover for small and medium enterprise policy and a number of other related issues. Ms. Kimberly Wiehl, the new Secretary General of the Berne Union attended her first meeting of the Prague Club.

 
Awards to ECGA’s two credit insured exporters
Al Khaleej Polypropylene Products Company SAOG and Oman Fiber Optic Co. SAOG have been awarded with the "Exporter of the Year Award " and "Flame of Excellence Award " respectively. ECGA has congratulated both the companies for receiving these prestigious Awards. The two exporters have been availing the services of the ECGA very effectively by expanding their export business to various international markets through the Agency’s credit insurance scheme.

 
Oman’s e-Business Week
A number of ECGA’s officers and staff attended Oman’s e-Business Week at Muscat Inter-Continental Hotel organized by the Intevents from April 27 to May 1st. The event covers a wide range a number of e-related seminars and workshops which include e-commerce, e-services, e-government, e-education, etc. Considering the rapid evolution and development of e- business in Oman today, the Agency is considering introducing web-based applications through its website at http:/www.ecgaoman.com in parallel to its existing channels in actively servicing the needs for credit insurance of the Omani exporters.

 Conference of Corporate Governance in the Arab Gulf Cooperation Council Countries
ECGA’s management participated in the Conference of Corporate Governance in the Arab Gulf Cooperation Council Countries on May 5-6, 2002 at the Grand Hyatt Hotel Muscat organized by Capital Market Authority. The Conference was highly successful as number of reputable speakers addressed the gathering and provided useful insights on corporate governance, disclosure and transparency, accountability and other areas of importance of sound governance

 
Questions and Answers


Q- Do I need to declare to ECGA when the total outstanding on the buyer exceeds the credit limit approved? If so, why?
A- Yes: You should. The reason or rationale is that the “excess” outstanding will automatically fall under cover once previous shipments are paid for. This is due to the reason of revolving nature of your credit limit. If the “excess” shipments were not declared and the buyer subsequently faces any financial crisis, ECGA could technically refuse to entertain any claim due to non-declaration of those exports made in excess of credit limit.

Q-How can I obtain export financing by credit insuring my export sales under Export Credit Policy of ECGA?
A-
You could arrange a Letter of Authority (L/A) which is an authorization in writing initiated by you with the consent of your banker, requesting ECGA to directly pay the designated bank all claims which may become payable under your policy. Under this arrangement, ECGA could send copies of your credit limits to the banker.

Q- Why does ECGA refuse or approve reduced cover on my buyer?
A-
ECGA, in certain cases, restricts or refuses cover on a buyer for various valid reasons as outlined below:-

The buyer may not be sufficiently creditworthy.

They total commitments with his other suppliers are already too high in relation to his financial strength.

Based on the record of adverse payment experience or un-genuine disputes with the buyer.

The social, economic and political conditions of the buyer’s country.


However, ECGA always endeavours to accommodate your request for a credit limit as objectively as it could.


Q- Is it necessary to have an export order in writing for each sales transaction? It may create an atmosphere of mistrust as I know this buyer for longtime?
A-
Yes. It is necessary to have an export order in writing with the necessary details such as in particular, specification, price of merchandise, to avoid any disputes later. This will safeguard the interest of both parties. Your buyer should be able to accept the arrangement when you explain your intention in a positive way.

Q-Having known that the buyer is facing financial difficulties, I have allowed discount to the buyer for full and final settlement for reduced amount than the invoiced amount. Can I lodge a claim with ECGA to the extent of discount amount granted to the buyer?
A-
No, As per the terms of the policy, you are onlyentitled to lodge a claim with ECGA if any receivable from the buyerexists. In this case, since you have accepted reduced amount as full settlement,no more receivable from the buyer. As such there is no default from the buyer’s side.

Q-Why does ECGA charge premium on total business declared that is shipment value, especially when it is more than the credit limit issued?
A-
As per the policy, the premium is payable on actual export sales made to various buyers on whom credit limits have been issued not on the credit limit amount. In case of no exports made no premium will be charged, The purpose of fixing a credit limit on each buyer, is to restrict the maximum liability of the Insurer based on financial capacity of the buyer’s company. However, the Agency charges premium on the export sales in excess of credit limit as declared by the exporter due to the fact that those export sales made in excess of credit limit will also be automatically covered once previous shipments are paid. If no premium is charged on those exports, it is off cover in accordance with the terms of the policy in the event of non-payment by the buyer.

 
Tips to Exporters

  A fast, accurate credit assessment of each new buyer of the exporter at the beginning of a business relationship can radically reduce the risk of bad debt. Not only that, monitoring your existing buyer’s progress is equally vital to maintain effective credit controls within your company.

  Every time you trade on credit, you run the risk of non-payment by your buyers. Moreover, unforeseen customer insolvency can cause damage to the cash flow and financial stability of your business. Hence it is very important that you credit sales are insured by ECGA so as to mitigate such risks.
   
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