Two years ago, the Vietnamese government introduced a scheme to promote export credit insurance as a viable alternative to letters of credit (L/Cs) to ensure that exporters are paid.

Yet today, many exporters remain unfamiliar with the concept of insuring trade credit according to a spokesperson for Vietnam's insurers.

Competitive terms

According to the secretary general of the Vietnam Insurance Association, Phung Dac Loc, cash-in-advance and L/Cs are no longer competitive in the international marketplace.

He says that buying on credit is a common trend, and that export credit insurance would boost the country's exports and help exporters reduce risks because banks will lend to exporters without collateral if they have export credit insurance.

Yet according to Loc, who was speaking at a conference in Ho Chi Min city earlier this month, Vietnamese businesses are simply not keen on the idea.

Poor performance

Insurers sold just US$62,200 of export credit insurance premiums during 2011.

This provided cover for just 0.1 per cent of the country's total exports while the government has set a target for 3 per cent of Vietnamese exports to be backed by export credit insurance in 2013.

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