Exporters ignore Government's assistance plan

By CHRIS DANIELS

The Government is defending its new Export Credit Office, despite it not receiving a single application for help in its more than five months of existence.

After years of lobbying by exporters, the Government set up the office this year to help exporters with short-term credit reinsurance.

This covers export payments that take up to about a year to come through, and was limited to small and medium sized firms.

Nearly all developed nations have similar Government assistance.

The Government initially expected its scheme to support export sales of at least $100 million a year, spread over four or five medium to long term projects averaging $15 million each.

In what the Government claims is an entirely separate issue, a spokesman for Deputy Prime Minister Jim Anderton yesterday confirmed that investigations had begun into how it could help local firms who needed to put up huge bonds before competing for overseas contracts.

Many of these bonds are for up to or more than the total contract price, and could be worth more than the value of the company bidding for the work.

Bankers, insurers and some exporters have been asked how such a scheme might work.

Despite leaving this out of its initial exporter assistance plan announced this year, the Government said the current interest in a bond assistance scheme was not due to the lack of interest in the rest of its package.

The president of the Auckland branch of the Export Institute, Bob Fenwick, said it came as no surprise to him that the Export Credit Office had received no applications.

The scheme was too limited in its scope and did not focus on the difficulties that exporters faced.

"I don't think the Government has been altogether to blame for this," said Mr Fenwick. "I think that it has been misled by the officials. It started off on the right track - the right questions were being asked but then when it came through, these had all been ignored."

The officials delivered a pared-down and narrowly focused scheme that was of little worth, he said.



Export Institute national president Murray Davies said the scheme may have been oversold, making many believe it covered a much wider scope than it did.

It seemed designed to provide help to the large exporter, so a new system that would help smaller firms was probably needed.

A spokesman for Pete Hodgson's office said the fact no applications had been received by the Export Credit Office did not mean the system was not working.

Applications for assistance were part of more complex financing arrangements, that often took a long time to work out.

In response to a written answer from National MP Shane Ardern, Mr Hodgson said that although no company had applied for help from the Export Credit Office, it had "discussed a number of potential transactions with financiers and exporters" to assist in developing proposals.

"This is not unexpected," said Mr Hodgson. "These deals have long gestation periods because export guarantees are only one part of complex financing packages offered to the exporters."

Interest in the scheme had mainly come from exporters of manufactured capital goods and services.