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BACK             Issue No. 4/2002
 Report on the performance of ECGA

 Omani non-oil Exports to GCC countries increased

 ECGA of the Sultanate and Eximbank of Romania signed Cooperation Agreement

 Meeting of ECAs of Arab & Islamic countries held in Tunis

 Sadolin Paints (Oman) Ltd. celebrates its Silver Jubilee

 Annual Credit Alliance Meeting to be held in Paris

 Questions and Answers

 Tips to Exporters


 ECGA's transformation to an independent closely held SAOC Company


 
Report on the performance of of ECGA reviewed by the Board of Directors
The Board of Directors of ECGA under H.E. the Chairman Sheikh Yaqoob bin Hamed Al Harthy reviewed the performance report of the Agency for the first six months of the year 2002. Based on the Report, the total credit limits as of end of June 2002 reached to RO.141 million compared to RO.116 million for the corresponding six months period of 2001. The number of Omani credit insured exports rose to 135 to buyers to 87 countries compared to 117 exporters to 83 countries for the same six months period in 2001. The number of buyers also increased substantially for the first half of the year 2002 to 2871 buyers compared to 2534 buyers for similar period in the previous year. The Agency has been highly successful extending its credit insurance services while remaining self-sustaining

 
Omani non-oil Exports to GCC countries increased.
As per the assessment study on the performance of Omani non-oil exports prepared by the Agency based on the statistical export figures obtained from the Royal Oman Police, non-oil Omani exports to the GCC countries registered a growth rate of 6.3% from RO. 386.0 million in year 2000 to RO.410.3 million in the year 2001. The largest exports were to the UAE which constitutes more than 76.5% or at RO.314.1 million followed by Saudi Arabia at RO.72.6 million, Kuwait RO.9.8 million, Qatar at RO.7.9 million and Bahrain 5.9 million. Omani exports to GCC countries in the year 2001 constitute almost 49% of its total non-oil exports including re-exports. The Agency’s credit insurance cover for the GCC countries constitute almost 60% of total credit limits issued at RO.82.9 million as of the end of first six months of 2002.

 
ECGA of the Sultanate and Eximbank of Romania signed Cooperation Agreement.
Export Credit Guarantee Agency of the Sultanate and Eximbank of Romania signed cooperation agreement between the two institutions. The agreement encompasses various areas of cooperation including exchanges of information on buyers, assistance in recoveries, exchange experience in payments of claims, training, etc. Eximbank of Romania as in the case of ECGA of Oman is commemorating its tenth anniversary since commencement of its operations.

 
Meeting of ECGAs of Arab & Islamic countries held in Tunis
The annual Meeting of ECAs from Arab countries was held in Tunisia on 18/9/02 under the auspices of Inter-Arab Investment Guarantee Corporation (IAIGC) followed by the meeting of ECAs from Islamic Countries on 19/9/02 under the auspices of the Islamic Corporation of Investment & Export Credit (ICEIC). Both the meetings include exchanges of experiences among ECAs as well as discussed topics of common concerns including exchanges of information of buyers, claims, recoveries, reinsurance, recent developments and changes in the credit insurance field, etc. ECGA was invited and participated in the meeting.

 
Sadolin Paints (Oman) Ltd. celebrates its Silver Jubilee
ECGA congratulates Sadolin Paints (Oman) Ltd. in marking its 25th year of successful operations and excellent accomplishment as it celebrates its Silver Jubilee. Sadolin Paints (Oman) Ltd. is one of the first exporters to avail the export credit insurance service of ECGA since 1992. It exports its paint products in many countries, which are credit insured by ECGA.

 
Annual credit Alliance Meeting to be held in Paris
The annual general meeting of the Credit Alliance will be held in Paris from 23rd to 24th October 2002. The Credit Alliance marks its 10th anniversary since it was established under the auspices of COFACE of France. Apart from COFACE and its owned subsidiaries, the Alliance consists of a number of ECAs from the emerging markets. ECGA of the Sultanate of Oman joined the Credit Alliance in 1996 when the Alliance had only 16 members and since then it has grown to 49 members worldwide with the total market representing more than three quarters of world trade.
Questions and Answers 
Q- Why do I need to insure export sales under Irrevocable Letter of Credit?
A- An Irrevocable Letter of Credit provides guarantee / security for receiving your payment of export bills provided the terms and conditions of the Letter of Credit are strictly complied with. However, certain events of political nature in buyers’ country could prevent performance of the sale contract or transfer of funds. In such circumstances, the Export Credit Policy of ECGA provides you protection against losses.

Q- Apart from indemnifying the exporters for losses, does ECGA contribute towards recovery costs? If so, what nature of costs incurred by the exporter?
A- Yes. ECGA normally reimburses the legal fees paid to the appointed lawyer and the court, in the buyers country in the proportion of its liability to the total outstanding debt provided the claim for loss is admitted by ECGA. It does not contribute other expenses such as travel expenses, auditor’s fees, translation charges and any overhead expenses etc. However, ECGA is not obliged to share recovery costs, as per the policy. Also being an Insured, you should inform ECGA, on the legal fees agreed upon in advance.

Q- If ECGA cancels the credit limit on a particular buyer duly informed the exporter, are the shipments made prior to the cancellation of the limit eligible for future claims in case if the buyer fails to pay?
A- Yes, certainly, all shipments made prior to the cancellation of the credit limit are covered and eligible for indemnification for loss. But not shipments made after cancellation.

Q- What can ECGA do if the exporter faces difficulties in discounting export bills with the commercial banks for which the Agency has entered MOU?
A- Upon receipt of intimation from the exporter to this effect, ECGA would contact the concerned bank to ascertain the reasons for not discounting the export bills which are credit insured under the Policy and endevour to assist the exporter. Sometimes, the banks may have some restriction in extending further credit facilities due to past due facilities with them, or with the other banks which are under litigation.

Q- Why ECGA restricts its indemnification of claim for loss to the maximum of 80% or 85% of the credit limit issued but not on the business declared considering that the premium charged is based on the later which is more than the credit limit?
A- ECGA liability is tothe maximum of 80% or 85% of the credit limit or business declared whichever islower. However, premium is charged on the business declared as loss that, may beincurred by the exporter, is related to business declared i.e export sales. Incertain instance the premium is being charged on business declared which couldbe in excess of credit limit amount, due to the fact that such export sales alsowill be under cover once the earlier export bills are settled by thebuyer.

Q- Why ECGA charges same rate of premium for 60/90 days and 120/180 days?
A- ECGA’s premium structure is based on 30, 90, 180 days credit period for open account export sales which are the common payment terms extended to buyer. In other words, the premium rate indicated for 30 days, 90 days and 180 days are in fact for the credit period 0-30 days, 31-90 days 91 – 180 days respectively. It is rather difficult to have all possible credit periods up to 180 days in the premium structure. This is the practice adopted by all Export Credit Agencies in other countries as well.

Q- What is the importance of approved credit limit to the policyholder?
A- An approved credit limit is the maximum amount which ECGA is prepared to pay for any insured loss in respect of individual buyers.

Q- What modes of payment are provided cover under an Export Credit Policy issued by ECGA?
A- An ECGA Export Credit Policy provides protection when export on Open Account, Post Dated Cheques (PDCs), Documents Against Payment, Documents Against Acceptances and Irrevocable Letters of Credit.

Q- Apart from credit insurance cover against both commercial and non-commercial risks what are other benefits available to credit insured exporters of ECGA?
A- Other benefits provided to credit insured exporters include post-shipment financing through bills discounting by commercial banks at a concessional interest rate as well as availability of pre-shipment financing for working capital needs.
 
Tips to Exporters

  In a business that is fiercely competitive and increasingly unpredictable, your ability as a growing enterprise to safeguard against bad debt and ensure the safety of your cash flow assumes even great significance. Hence it is important for you as an exporter to insure your exports receivables with ECGA.

 Credit insurance helps you to avoid the risks associated with non-payments resulting in a secure cash flow which gives you freedom to pursue your business strategies with confidence. Avail tangible benefits by credit insuring your export business with ECGA
3). Offering you the best credit risk protection at a price you can afford, let ECGA provides you with the reassurance needed in today’s business world to secure your company’s growth.

  By reducing management time spent on chasing aged debts, your own staff will be able to focus on key business goals.
   
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