Govt studies help for exporters

By YOKE HAR LEE

Trade NZ is investigating the need for a Government export credit financing scheme to help exporters who cannot get funds from the private sector.

Meetings are understood to have been held with selected companies, banks and insurance firms to see whether there is a market gap in meeting exporters' need for finance.

Labour said in its election manifesto that it would revisit policies such as export credit and development finance to help boost exports.

New Zealand is virtually the only developed trading nation lacking some form of Government-backed export credit scheme.

Typically, such programmes are aimed at exporters who cannot get competitive credit from financial markets because, for example, they are small, need long-term finance or operate in higher-risk markets.

Exporters frequently cite the lack of such a programme as a reason for losing deals to foreign competitors who can access cheaper Government-backed credit.

But banks attending meetings with Trade NZ are understood to have pointed out that companies were often unaware of what export financing services were available.

The Independent Business Foundation has made submissions to Trade NZ on how it views export credit.

Its executive trustee, Ralph Penning, told the Business Herald the foundation's view was that guarantees could be provided for up to $150,000 of export credit for not more than 10 years.

"In the event that any portion of the loan secured by the guarantee is irrecoverable, the Government's liability should be limited to 90 per cent of the relevant net debt."

The guarantee should be available only to small businesses which were not subsidiaries of large companies.

Mr Penning said the foundation was also keen to see a Small Business Development Corporation, along the lines of the Australian one, to administer the export guarantee scheme using independent assessors.

"We are not necessarily in favour of the lender being responsible for the commercial assessment of all proposals coming forward under the scheme."

Small businesses have often complained that they lose out to overseas competitors when tendering for big jobs because of a lack of Government-backed finance or Government-backed guarantees.

Gilbert Ullrich, managing director of Ullrich Aluminium, feels New Zealand is at a disadvantage competing with countries which actively support export credit financing.

An example, he said, was Israel, which was using export credit guarantees to sell to Australia, where Ullrich Aluminium was unable to compete on the same basis.

Australia also used export financing, he said. Its Export Finance and Insurance Credit scheme had been operating for 25 years.

"During the Asian crisis, the Aussies used EFIC to sell into countries where the crisis hit, and that helped Australia prosper while New Zealand exporters suffered."