Q: Could you please first give us a simple introduction to the Korea Export Insurance Corporation (KEIC) for those readers who are not yet familiar with the corporation
A: KEIC is a non-profit organization established in 1992 for the promotion of Korea's exports. When after exporting, if an importing country or an importer has a problem and, therefore, the exporter cannot collect the export money, the corporation pays insurance money and compensates for the losses. Hence, exporting companies can engage in exports without any worries and without any risk. And financial institutions can provide export financing to companies with export insurance as security, thereby supporting the delivery of funds to companies.
Especially, the export insurance system is the only official export support system that has been operated with the recognition by the whole world in the free trade market. Our corporation supports around 20% of the whole export achievements of Korea through insurance. In terms of the size of the support, KEIC ranks among the top five biggest export credit institutions in the whole world.
Q: Last year, for the first time in history, the era of US$300 billion in exports started. I believe that the support of KEIC played a big role as the representative export supporting institution. Can you tell us about the results of the support with export insurance in 2006
A: We have supported 21.4% of the total exports of US$326 billion with export insurance. We achieved the biggest support results in history. The total support in 2006 amounted to 82.7 trillion won, which was a 13% increase compared to the previous year. This is the result of continuing to excavate new systems in response to market demand and the improvement of customercentered work processes and systems.
We have been endeavoring to prevent the worsening of the payability of small and medium sized exporting companies through the strengthening of the support of exchange rate fluctuation insurance. We have supported a total amount of 16.3 trillion won through exchange rate fluctuation insurance, which was a 32% increase from the previous year.
KEIC has strengthened the resale insurance for IT export support and the mediumto long-term insurance items for shipping and plants. The total amount of resale insurance support amounted to 23.5 trillion won last year, which was a 10% increase compared to the previous year. The total amount of support for medium- to longterm items reached 4.4 trillion won last year, which was an 18% increase compared to the previous year.
We anticipate not only the achievement of the result of support that will be the greatest in history but also black ink management for three consecutive years through the strengthening of the efforts to collect debts and through making the management more efficient.
Q: This year, in which you will be celebrating the 15th year anniversary of foundation, you probably have a lot of plans. What are the management directions and important tasks to be pursued that KEIC has this year
A: The topic of conversation for management is to make the leap, once again, to become an institution that leads citizens' economy through putting into practice leading management. The target of the total support in the year 2007 is 88 trillion won, which is an increase of 6.4% compared to the result of the support last year.
The main management orientations include the strengthening of the functions and roles of the corporation for leading citizens' economy and the expansion of the domain of support. We will concentrate our capabilities for the execution of the overseas business financing insurance.
This corresponds with the government's policy to invigorate overseas investments. We will establish early the overseas resources development fund insurance and invigorate it. For the early achievement of US$1 trillion and income of US$30,000, we will concentrate our support on industries that provide power for growth. We will reinforce the support for exports of knowledge services. By exercising original and flexible thinking, we will develop head-start systems for industrial development and we will endeavor so that export insurance can serve the function of a rudder for exports.
KEIC will establish a many-angled support system for strengthening the physique of small- and medium-sized enterprises. It will seek the formation of a basis for a healthy, coexisting, and harmonious relationship between large companies and small- and medium-sized enterprises. In order to cultivate 30,000 innovative smalland medium-sized enterprises, it will fortify selective support, including discounts for insurance fees, and preferential treatment regarding guarantee limits.
We will improve the system for expanding the usage base of export insurance. We will introduce semi-comprehensive insurance, improve the export credit guarantee system, deliberate on plans for expanding the support of credibility insurance, and seek for the strengthening of the management of uncollected debts. By fortifying research functions, information on countries and industries will be provided.
Also, we will establish the status as an institution fully in charge of exchange rate risk management.
We will launch optional exchange rate fluctuation insurance and put in the efforts to invigorate it. We will execute regular investigations of the actual conditions related to exchange rates of exporting companies, gather information on the problems of enterprises, and reflect responses to problems when improving systems. We will regularize free-of-charge exchange rate management education through the exchange rate fluctuation consulting center. In addition, we will improve our customer relations.
Q: What is the ultimate picture of progress of KEIC that you think of I am curious as to what specific contents your medium- to long-term visions and management strategies contain.
A: After my assumption of office in May 2004, I proclaimed a new vision: it was to make the leap as a top-notch export credit institution that provides the highest values to exporting enterprises. In order to support exports, respect customers, and value efficiency, the highest customer values are created - Customer -- the function of leading exports is strengthened - Capability -- the capability to compete globally is strengthened -Competitiveness -- and the corporate culture of change and innovation is materialized -- Culture. These comprise the 4C Movement.
Q: I am aware that KEIC has been operating diverse systems for export support. Could you please explain the representative operational systems
A: We have been operating 13 export insurance items and 2 export credit guarantee systems. In particular, the exchange rate fluctuation insurance is a system that guarantees exporting enterprises the payment with the exchange rate of the point in time of the export.
Also, we have been operating diverse systems for supporting small- and mediumsized enterprises that export. The representative support system for these enterprises is the export credit guarantee system. This is a system through which when such an enterprise receives a loan from a bank, we provide the security by issuing a letter of guarantee. Furthermore, we have been operating the service of being an agency for collecting not-yet-collected overseas debts from 2004.
The most general export insurance item is the short-term export insurance. Many kinds of preferential treatment are provided to small- and medium-sized enterprises. In order to cope with the change international trade environment, many kinds of new insurance items have been launched. They include the resale insurance, credibility insurance, and knowledge service export insurance.
Q: KEIC has been receiving excellent external evaluation, including capturing the number one place for two years in a row in the management evaluation of government-affiliated institutions announced in July last year. What have you been pursuing so far
A: We accomplished, at the same time, the biggest support in history and black-ink management. The total amount of support in 2006 was 82.6 trillion won, which was the greatest in history. And we forecast the accomplishment of black-ink management for the third year in a row this year through scientific risk management, strengthening of the debt collection function, and rational and transparent fund management. We have been pursuing innovative management, which is very important.
Q: What is your forecast of the unfolding of the export insurance work in the future
A: The export-led economic structure of Korea will continue in the future. The trend of the world is converting to the method of indirect support through insurance. Hence, it is predicted that the role and importance of export insurance will be more greatly increased than ever.
Especially, the domain of support of export insurance must be expanded to a more comprehensive domain of supporting the invigoration of international transactions on the national interest level, including overseas investments, resource development, etc.