South Korean exporters look set to benefit from a new arrangement to obtain letters of credit (L/Cs) direct from Banco Exterior de Cuba (BEC).

Exporters currently find L/Cs for sales to Cuba difficult to obtain and they have to be confirmed by a bank in a third country.

Memorandum of understanding

The arrangement is an anticipated product of a memorandum of understanding (MOU) signed by South Korea's state-run trade insurer to set up a formal credit line and payment guarantee mechanism with Cuba.

Under the MOU, the Korea Trade Insurance Corp (K-sure) will provide a EUR 60 million credit line to Banco Central de Cuba (BCC) and BEC, and establish a payment insurance arrangement.

Improved access

The arrangements would allow South Korean companies to access BEC-issued L/Cs approved by the central bank.

"The MOU removes a major uncertainty that has held up local companies from entering the Cuban market," said K-sure President Kim Young-hak.

Considerable demand

The agreement has been made in the wake of improved US-Cuban relations according to K-sure.

The trade insurer says it sees considerable demand in Cuba for power generators, electronic appliances and a range of essential items.

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