May 27: Export Credit Insurance (ECI) to cover the risk of non-payment of goods exported abroad is not yet available in Nepal. Many countries around the world have introduced export credit insurance targeting non-payment risks in exports.
Lately, the export of goods from Nepal has been increasing. With the increase in size of the exports, the problem of non-payment is also increasing. This has discouraged exporters. However, it seems that the concerned bodies have not paid enough attention to introduce export credit insurance to cover such risks.
Exporters have been demanding the government to bring such insurance facilities since the last 2/3 years. But they say that the government has ignored this issue. The Insurance Board, the regulatory body of the insurance sector, says it is ready to approve any such products if the insurance companies announce them.
Ashok Kumar Agrawal, general secretary of the Nepali Readymade Garment Industry Association, says that credit export insurance should be introduced. "Lately, the risk of non-payment has been increasing along with Nepal's exports," he said, "In this case, we want to insure ourselves by paying the required fee. However, we have not been able to get that facility. The government needs to pay attention to this immediately."
Export credit insurance has come into practice in many countries of the world. In case of non-payment of the exported item, up to 95% of the export value can be obtained from the insurance companies. However, Nepali exporters have not yet been able to get such facility.
Nepal should increase its exports at any cost to reduce the trade deficit. For that, exporters say that they need motivation, which is possible through such insurance facility.
Agrawal said his industry had exported its products to the United States a few years ago, but the buyers did not pay. "I then filed a lawsuit in a US court," he said, "The court asked whether there is export credit insurance or not."
He says that the need and importance of such insurance has been increasing in recent days. "The government should be positive about this issue," he said.
A few days ago, a special team from Germany came to Kathmandu and informed the insurance board and the companies about such insurance through a presentation. After that, a debate has started on the issue of bringing such a product in the insurance sector.
Executive Director of the Insurance Board Raju Raman Poudel said that the board is positive in this regard.
"So far, no such insurance product has been introduced in Nepal. The insurance companies have to take the initiative. If they bring such product, we are ready to approve it," he said.
Insurance companies, on the other hand, say that even if such insurance is introduced, it will be a challenge to implement it.
CEO of NLG Insurance Suresh Ballav Pant argues that it is challenging to implement such product. "First, the insurance company should know all the credit of the customers. Moreover, the foreigners are the customers during export," he said, "We'll need information such as loan payment to the bank by the customers while importing other goods, and business transactions which is difficult to get. So it is quite challenging."