By Mark Ford

The Vietnamese government is to introduce a trial programme offering export credit guarantees as an alternative to letters of credit (L/Cs).

The guarantees will be made available for trades in 23 commodities in the trial, which is scheduled to start at the beginning of next year.

Commodities

Guarantees against political and commercial risks will be available in the trial for exports of commodities including seafood, rice, coffee, fruit and vegetable, textiles, garments and footwear.

The government aims to have export credit guarantees covering around 3 per cent of the total export revenues by the end of 2013.

Demand

The non-life insurance companies that will operate the government-backed scheme see opportunities to win business from L/C providers according to local media.

There is apparently substantial demand for the guarantees. A survey by the Ministry of Industry and Trade (MIT) of over 200 companies found that 95 per cent of exporters were interested in using export credit guarantees.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.