Finance worries exporters most

Press, 4 March 1978, Page 19

Finance worries exporters most

By SANDY SOUTHON I Finance was the aspect of exporting that raised the most questions and comments from delegates attending the Export Symposium in Christchurch. Delegates were concerned at the delay between the making and the implementing of Government I policy. Information on the “high- ] | priority' aspects of the! | Government’s July and: (October Budgets was only ! [just being released now. i i In the meantime exporters’ had not been sure just what: areas of exporting were! considered “high-priority” for | qualifying finance. They felt that there was a; ..need for policy to be clearlv.

relayed to trade officials and the banks before it was announced. It was explained by the Department of Trade and Industry that the information contained in i Budgets was confidential land, as such, would be I difficult to obtain in advance. I "Exporters needed long! i term planning and a stable atmosphere. It was not fair Ito be stimulated with I promises (by Government) and then find that things

had changed,” said a • delegate. , “If the Government is [ thinking of channelling ; resources, into specialised ; industries, exporters would like to know what these [ were, and when such action ■ > was planned, as well as the > possibility of incentives [based on added export value. ■ The erosion of the domestic market also does J not allow exporters to I [{improve their base for , i exports. i The main problem facing ; ; exporters apart from the I crippling cost of freight J (which had been responsible I for the loss of many orders) i was pre-shipment finance,; [[and a lot of discussion was [generated on this subject. Exporters who had built- ; up an export tax credit wanted it released to them . to help tide them over the [ difficult economic climate; . more finance to be available from the Development [[Finance Corporation at .[lower interest rates than 12J 13 per cent, and less delays i in getting D.F.C. loan [moneys. |[ One delegate said that one J “had to put one’s underwear [lon the line” in order to get a loan from the D.F.C., and [ that more would enter the export market there were quick decisions on loan moneys. “A company must do its homework first, as there are many things that can go [[wrong in exporting. We [have to be sure that al , [ company is soundly based i land their plans are well I [documented,” said Mr A.| I [Langford South Island! J manager of the D.F.C. j “The D.F.C. cannot rely l

on the instinct of a businessman, we must look deeper and ask if his plans are feasible,” he said. However, Mr Langford agreed that the D.F.C. was not offering the service that he thought it should, and said the problem had been one of under staffing. A suspensory loan was a form of Government concession, and if a company hasn’t got the ability to take on that market, then such a loan was not justified, said Mr Langford, in answer to a delegate. “We used to do so much by the seat of our pants, but today we are more sophisticated, and a potential exporter must know what he is doing when he is going into exporting, said the acting manager of the Bank of New South Wales (Mr J. Pringle). Delegates who suggested that the equity-debt ratio should be lowered from the present 40 per cent for the obtaining of loan moneys to nearer the rate in Japan of 25 per cent, .were informed that in Japan the banks were large equity shareholders in a number of companies, and therefore the rate could afford to be lower.

Another problem that exporters faced on the North American market that of product liability insurance cover, was being examined at the moment by the Denartment of Trade .and Industry, delegates were told. They were also told that for every $lOO of spending. $2B needed to be earned overseas.