27 August 2003 10:04
EXPORTERS TO RUSSIA BEWARE NON-PAYMENT
Exporting to Russia may appear a bright prospect now that import duties have been lowered, but Russia's unregulated economy raises significant risks of non-payment. This was the warning on Wednesday from Credit Guarantee's general manager of exports, Gernot Kruger. Government announced this month that a number of South African products could now be exported to Russia at lower import duties than before. This followed the Russian Federation's decision in April to recognise South Africa as a developing country and include it on its list of countries enjoying preferential access in that market. The move is expected to benefit fruit exporters and producers of other agricultural products, but Credit Guarantee has warned exporters to beware of the risk of non-payment. "Russia is a difficult market to trade in as obtaining reliable credit information is a very challenging task, even for Credit Guarantee, the largest credit insurer in Africa," said Kruger. Russia has moved from a strictly regulated socialist economy to a highly unregulated "free for all" economy. Fraud and corruption were endemic and it was estimated that 50 percent of trade was controlled by organised crime, Kruger said. Under socialism, the only entity responsible for purchasing imported goods was the Soviet state, and there no trade credit records were kept. For the time being Russia has neither the necessary legal and commercial structures in place, nor reputable agencies like Dun & Bradstreet to rely on. So how does a South African exporter safeguard his title to payment for bona fide exports to Russia? Kruger urged exporters venturing into Russia to secure payment in advance if possible. Alternatively, they should make sure that a letter of credit from a reputable bank is established and confirmed prior to shipment, or have a water tight payment mechanism in place. Any other arrangement should be considered high risk. Credit insurers worldwide are faced with the challenge of obtaining sufficiently reliable information to make the underwriting of risk acceptable. Until the situation improved, cover on export shipments into Russia would remain scarce and the onus was on exporters to be especially cautious and careful when negotiating ventures, said Kruger. Sapa 08/27/03 11-54 C=102
[AIW [Asia Africa Intelligence Wire]] |
RUSSIA IN FACTS
