Obtaining letters of credit (L/Cs) is the most common problem in trade finance faced by Maltese manufacturers according to a recent study by Trade Malta.

Meanwhile, manufacturers on the Mediterranean island are now looking to Algeria to replace lost business in Libya, traditionally one of Malta's most lucrative export markets but one where buyers now find it very difficult to open L/Cs to buy Maltese goods.

Exporters

In trade finance, the most common problem manufacturers encountered was the inability to open L/Cs, followed by 'collateral requirements' and 'limited access to financial assistance', the study concluded.

However, it found that companies with a high export ratio had fewer problems with trade finance than firms with a small export share.

"This most likely means that experienced exporters have found solutions to such problems," the report concluded.

Other findings

The study was conducted in the second half of 2016 by Trade Malta, a partnership between the government and the Maltese Chamber of Commerce, Enterprise and Industry.

The study also found that exports to Algeria were increasing sharply against a decline in sales to Libya where buyers face difficulties obtaining L/Cs to purchase all but essential items.

Manufacturers are also looking at new markets in Tunisia and Italy as well as continuing to sell into traditional markets for Maltese exporters such as Italy and Germany.

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