THE United States and Cyprus are in the “early days of a new harmonious engagement” over trade that offers new business opportunities both locally and regionally, says Bijan R Kian of the US Export-Import Bank (Eximbank).
Speaking to the Cyprus Mail during his two-day visit to Cyprus at the invitation of the Cyprus-American Business Association (CyABA), Kian – one of Eximbank’s six directors – said that through working with US counterparts who use Eximbank financing, Cypriot companies can purchase goods and services at much lower cost of capital, and can even work with US companies on joint projects in third countries while utilising Eximbank financing to help provide funding.
Kian said he had had a “productive discussion” with Commerce and Tourism Minister Antonis Paschalides, during which he had “got some very good ideas from the Minister” as to how a mutually-beneficial relationship could be established.
“For instance, as a way of boosting the construction sector, local construction companies could take on contracts in the region that might benefit from Eximbank-supported materials or services”, he said.
Kian’s focus is on markets in the Middle East, Central Asia and the Caucasus. “I know this part of the world fairly well, though this is my first time in Cyprus. I’ll have to listen very carefully to government representatives, bankers and business leaders”, he said, adding that he was keen to “talk to anyone who can give me a better insight into how to promote US exports”.
On Wednesday evening, Kian addressed some 130 business figures and representatives of financial institutions at CyABA’s annual dinner in Limassol, on the topic of how Eximbank can help Cypriot companies lower their costs and become more competitive in the global economy. He said he regarded it as a chance “to have a dialogue, not to give a lecture.”
Kian said that although traditionally, a big part of Eximbank’s portfolio has been “big-ticket items” such as aircraft financing or energy sector projects – “which support a lot of jobs” – the export credit agency is seeking to broaden the scope of what it can offer, and to whom.
He said that “out of the $21 billion total exposure in 2009, 80 per cent of transactions and 20 per cent of our dollars went to small companies” in the form of loans, guarantees and export-credit insurance. “There is no minimum or maximum loan for us”, he added.
But “more important than the sectoral perspective is the programmatic perspective. Our facilitation of financing is aimed at linking up small companies with new markets. For example, we have devised new programmes that encourage wind energy producers – we think that the smaller technology can go a long way”, he said.
Eximbank has had dealings with Cyprus in the past. Last year, it still had $4.1 million of credit insurance on its books, down from $18.3 million in 2008. An important part of Kian’s visit to Cyprus was to deliver the message that by Eximbank “making it easier for US exporters to make their offer”, Cypriot SMEs could uncover new business opportunities.
In short: “We’re open for business”.
The role of Export Credit Agencies
Many exporting countries have an Export Credit Agency (ECA), usually in the form of a private or quasi-governmental institution acting as an intermediary between the national government and exporters to facilitate and issue export financing.
The financing can take the form of credits (financial support) or credit insurance and guarantees (pure cover), or both, depending on the mandate the ECA has been given by its government. Some ECAs agencies are government-sponsored, others private, and others a hybrid.
In practice, incorporating an ECA’s guarantee is regarded by financial institutions as a reliable way to mitigate a large proportion of the risk of financing an export contract. Often, the participation of an ECA will help potential lenders to overcome their hesitancy over a particular loan. This means that the strong competition between ECAs to promote the exports of their respective countries can also influence the choice of financial institution for the financing of a particular contract or project.
