News

News Categories
Recent News

News by Month

Trade Finance for SME's pushed - WTO study

02/09/2016

Countries can initiate new efforts to support access to trade finance for their small and medium enterprises (SMEs) to help them grow into global markets, according to a study released by the World Trade Organization (WTO).

It considered a lack of trade finance as a significant nontariff barrier to trade, with up to 80 percent of trade financed by credit or credit insurance.

The study found that SMEs in developing countries face even greater challenges in accessing trade finance. The estimated value of unmet demand for trade finance in developing Asia is $700 billion.

Gaps in trade finance provision are highest in new "frontier" countries for trade, where trade opportunities are increasing as global production patterns evolve, it said.

"Bridging these gaps in provision would unlock the trading potential of many thousands of individuals and small businesses around the world," it said, noting that the availability of finance is, thus, essential for a healthy trading system.

The study stressed that various steps are already being taken to tackle this issue through encouraging global financial institutions to remain engaged and to ensure that regulations are not prohibitive; increasing the capacity of local financial institutions; and providing support measures to increase the availability of trade finance through multilateral development banks.

Apart from these, further steps could be taken, including enhancing existing trade finance facilitation programs to reduce the financing gap by  $50 billion; and reducing the knowledge gap in local banking sectors for handling trade finance instruments by training at least 5,000 professionals over the next five years.

The study further said countries can also maintain an open dialogue with trade finance regulators to ensure that trade and development considerations are fully reflected in the implementation of regulations; and improve monitoring of trade finance provision to identify and respond to gaps.

It said new efforts to support SMEs' access to trade finance "could have a very significant, positive impact."

"With so many businesses deprived of the support that they need to grow, action is needed to address these trade financing gaps," it added.    


Back to recent news

Recent News

26/11/2024

The latest newsletter is now available in the members trade information section under the category of 'Newsletters'...more

ICC release Technical Advisory Briefing No. 11 - Definition of Trade Finance 19/09/2024

Recognising that there is no global standard for the defining Trade Finance, this Briefing document provides a suggested text and has been recommended for use by the ICC Banking Commisison Steering Committee...more

Latest Question

Our client will open a letter of credit for the import of goods (spare parts). Payment terms will be 90 days after bill of lading date provided that our customer will check the goods whether they are in good order and condition prior to proceeding with the payment, either for the full amount/part of the amount/or not to proceed with payment at all if the goods are not found to be in good order and condition. Please let us have your opinion on the below 2 questions, and on the wording of the clauses which will be added under Additional Conditions of the L/C in order to secure our customer concerning the payment of the L/C: Question 1: The confirming letter which will be presented by the applicant to us (Issuing Bank), whether it should be requested under the DOCUMENTS REQUIRED Field 46A of the credit OR whether it should be considered as a special term that concerns only the payment and should be requested under Additional Conditions of the credit as follows: PAYMENT WILL ONLY BE EFFECTED AT MATURITY (90 DAYS AFTER BILL OF LADING DATE) SUBJECT TO FULFILMENT OF POINTS 1 AND 2 BELOW: 1. UPON PRESENTATION OF COMPLIANT DOCUMENTS AT OUR COUNTERS AND DELIVERY TO APPLICANTS TO CLEAR GOODS FROM CUSTOMS; 2. UPON PRESENTATION BY ΤΗΕ APPLICANT (DIRECTLY TO THE ISSUING BANK) OF A WRITTEN LETTER CONFIRMING, EITHER: (A) THAT THE GOODS RECEIVED ARE IN GOOD ORDER AND CONDITION AND THE ISSUING BANK SHALL PROCEED WITH PAYMENT OF THE FULL INVOICE VALUE AS PRESENTED OR (B) THAT ONLY PART OF THE GOODS RECEIVED ARE IN GOOD ORDER AND CONDITION AND CLEARLY STATING THE AMOUNT TO BE PAID UNDER THE LETTER OF CREDIT, IN FULL SETTLEMENT OF THE LETTER OF CREDIT (WITHOUT FURTHER BENEFICIARY'S CONSENT) AND IRRESPECTIVE OF THE INITIAL VALUE OF THE INVOICE PRESENTED. THE PAYMENT SHALL BE CONSIDERED CONCLUSIVE ON BOTH PARTIES (APPLICANT AND BENEFICIARY) AND ISSUING AND NOMINATED BANK OR (C) GOODS RECEIVED ARE NOT IN GOOD ORDER AND CONDITION AND CLEARLY STATING THAT APPLICANT REJECTS PAYMENT OF ANY AMOUNT UNDER THE LETTER OF CREDIT, WITHOUT THE NEED OF BENEFICIARY'S CONSENT AND IRRESPECTIVE OF THE INITIAL VALUE OF THE INVOICE PRESENTED. THE DOCUMENTS SHALL BE CONSIDERED CONCLUSIVE ON BOTH PARTIES (APPLICANT AND BENEFICIARY) AND ISSUING AND NOMINATED BANK. THE WRITTEN LETTER MAY BE PRESENTED AFTER THE EXPIRY DATE OF THE LETTER OF CREDIT BUT NOT LATER THAN 85 DAYS FROM BILL OF LADING DATE. Question 2: Please clarify whether the above document should be presented within the validity of the L/C (i.e., Shipment date + Presentation Period) or whether it can be presented after the expiry of the L/C (e.g., 85 days after the bill of lading date).