State system supporting exports
Why was the state export support system established?
The first state system to support export in the world was introduced as early as in 1919 in Great Britain. The largest global economies soon followed suit and today there is no country or region that is a valid player in international trade that has failed to implement or is not planning to introduce such a system.
State export support systems were created to provide domestic entrepreneurs with equal opportunities on global markets when competing with foreign competition.
How does the export support system affect the provision of equal opportunities in a competitive market? Firstly, it enables payments to be safeguarded on politically and economically difficult markets. Secondly, it enables effective implementation of investment projects abroad, encouraging access to financing extended by banks.
An important aspect of the system is supporting exports of domestic products. For this reason, most countries set out exactly which goods and services are considered domestic products and can be sold abroad with the backing of state export support instruments. In Poland, these principles have been laid down in the Ordinance of the Minister of Economy of 19 December 2014 and in the Act on Export Insurance Guaranteed by the State Treasury of 7 July 1994.
Which export transactions will entrepreneurs not be able to insure at a private insurer?
Short-term transactions (export credits not exceeding two years), thus, the export of consumer goods to high political risk countries are not insured by private insurance companies for the simple reason that they find no reinsurance for them on the private market, which is imperative in view of the binding provisions of the law. In such a setting, international regulations both within the field of action of the OECD as well as the European Union permit the State Treasury to fulfil the role of a reinsurer for these kinds of transactions.
The same applies to the possibility of insuring medium- and long-term business (export credits of two and more years) concerning the export of capital goods and the implementation of investments abroad.
Also, a significant portion of Polish entrepreneurs are reluctant to enter into export contracts not only in the field of investments but also export (consumer) transactions without the security of a trade credit due to the presently highly unpredictable economic and political conditions.
What kind of export-supporting instruments can Polish entrepreneurs count on at KUKE?
The idea of creating a comprehensive export support system by insuring international transactions appeared in Poland with the establishment of the Export Credit Insurance Corporation Joint Stock Company (KUKE) in 1991. The Polish parliament adopted the Act on Export Insurance Guaranteed by the State Treasury on 7 July 1994 and empowered KUKE, as the only institution in the country, to provide such insurance.
Since 1991, we have been systematically acquiring knowledge and experience in close collaboration with foreign export credit insurance agencies and actively participating in the legislative process within OCED and the European Union. These actions have led to the creation of the comprehensive insurance and guarantee offer that is available today, allowing Polish businesses to obtain insurance cover irrespective of the sector, export direction or contract performance stage they are at.
In 2009, we were entrusted, along with the Bank Gospodarstwa Krajowego, to implement the Government Program Supporting Exports aiming to boost Polish exports by providing both foreign and domestic businesses access to financing of contracts pertaining to exports of Polish goods and services.
The export-supporting instruments provided by us are addressed directly to enterprises:
- Policy for the East
- Insurance of a single export contract
- Insurance of direct investments abroad
- Contract bonds
- Bonds concerning short-term loans financing export contracts
as well as to banks financing export contracts: