Danish agency to run export credit scheme

By DANIEL RIORDAN

The Danish Government's export credit agency will run New Zealand's new export credit scheme, starting from July 1.

Eksport Kredit Fonden (EKF) has won an international tender to operate the Export Credit Office (ECO), the structure set up to run the New Zealand Government's long-awaited initiative in this area.

Associate Minister of Foreign Affairs and Trade Pete Hodgson said yesterday that he did not know how many parties had bid to run the scheme.

EKF's export credit expertise dates from the 1900s and it manages a contingent exposure many time larger than the Government's $350 million limit on this scheme.

Mr Hodgson believed there was little chance of a conflict of interest arising between Danish and New Zealand exporters because of the products and countries EKF dealt in.

The scheme will have two parts.

Short-term trade credit reinsurance, which will cover export payments that take up to about a year to come through, will be limited to small to medium-sized firms with a capitalisation of less than $200 million and with a history of exporting to the particular market.

The Government will limit its total liability in this area to $35 million.

In the case of medium to long-term insurance facilities (for projects where total payment could take up to six years) the Government's total liability will be $315 million.

The Government will share underwriting with about a dozen private sector underwriters, and will require exporters arranging medium to long-term insurance to have arranged at least 25 per cent coverage from the private sector.

Exporters wanting to take advantage of the scheme will be appraised initially by the ECO, chaired by Anthony Ractliffe, deputy chairman of ACC and former general manager of National Mutual New Zealand (now AXA Asia Pacific).

The ECO will probably filter out some applications, but the extensive investigation will be done by EKF, which will carry out operational tasks such as processing applications, portfolio management, collections and recommendations on risk management and pricing.

The Treasury (and by extension the Minister of Finance) has final control over the ECO and the final say on EKF's recommendations, but Mr Hodgson said in practice EKF's decision was unlikely to be changed.

The scheme's structure will be reviewed in 12 months and Mr Hodgson indicated that its management might come back to New Zealand if the expertise here had been developed in that time.

Trade New Zealand will be the initial point of contact for exporters on the scheme, through its website Tradenz, its hotline (0800 555-888) and a series of nationwide presentations.