Australian companies will benefit from a Reciprocal Risk Participation Agreement signed last week between the Export Finance and Insurance Corporation (EFIC) and the Export-Import Bank of China (EXIM China).
Designed as a framework for financing goods and services exported from Australia or China and overseas investment from the two countries, the new agreement follows a multi-lateral framework agreement endorsed by the Asian EXIM Banks Forum at its 16th Annual Meeting on October 2010 in Busan, South Korea.
Under the Agreement, eligible Australian exporters can benefit from financing jointly provided by EFIC and EXIM China particularly when Australian and Chinese companies are working together in a third country.
According to Angus Armour, CEO and Managing Director of EFIC, the agreement will help broaden the ways the two organisations work together to help exports and investments to continue to grow between the two countries to the benefit of Australian and Chinese companies.
The agreement could also be used to facilitate the financing of resource projects in Australia where the resources are to be exported to China.
Mr Armour explains that risk-sharing agreements allow the two organisations, EFIC and EXIM China to pool resources to meet the financing needs for projects that they wish to support including in the resources sector.
Australian companies can take EFIC’s support to win sub-contracting work to these projects either as tier-one suppliers, supplying directly to the project, or as tier-two sub-contractors to these suppliers.
EFIC is the Australian Government’s export credit agency, working directly with exporters or their banks to provide loans, guarantees, bonds and insurance products.