Ireland has achieved great success in developing it's export markets.
Success which has been well documented and acknowledged by our competitors abroad.
We are all familiar with statements such as:
- One of the highest export ratios - now 63% of GDP
- Exports more per-capita than the great trading nation of Japan
- Exports account for 60% of all manufacturing jobs
- Export year on year growth rates of 8-10%.
- Trade surplus for 1993 +12% of GDP
All true? Yes! Great achievements? Yes!
Bankers I meet abroad are aware of this progress and are forever commenting that Ireland must be the export financier's paradise. As recently as the middle of April I was questioned by a senior banker in Warsaw about how we managed to finance our `export miracle'.
Contrary to what one would expect, trade finance has not played a huge part in the support of Irish Exports. In my view significantly greater volumes and values of import trade finance facilities are
provided by financial institutions to the corporate sector.
The presence of foreign owned companies has played a very important role in Ireland's export development. Such companies are well capitalised and as much of their business relates to inter group sales trade finance does not play as major a part in their financing needs as one might expect.
Why is export trade finance not well developed in Ireland?
We are not a trading nation historically - our outward focus began in the 1960's 75% of exports come from non-indigenous companies. Much (though there are exceptions) of such business relates to inter company trading.
Our traditional reliance on the UK market has been financed by our traditional finance mechanism, i.e. the overdraft.
Trade Finance - acknowledgement of the importance of the subject.
It is interesting to observe that the reporting lines of the credit controller or should I say the international credit controller has changed over the last few years. The credit controller in the past
tended to report to the financial or management accountant whereas now the trend is towards reporting to the treasurer with a line also to the commercial sales manager.
A move in the right direction I believe.
We are indeed fortunate to the have the UK market on our doorstep. However, as we expand our markets and export to areas showing the greatest growth potential we must plan our trade finance needs and establish secure payment systems.
This material has been provided courtesy
of Obrico Ltd Global Trade & Finance.
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