Export credit guarantees now also available for domestic export-related investments
Also large Finnish industrial companies can now get export credit guarantees for domestic industrial investments in machinery and equipment that benefit or help to create new export business. Investment loans will be granted and funded by commercial banks. The change in Export Guarantee Act will enter into force on 1 September 2014.
Under the new rules, Finnvera can be a party to financing arrangements in domestic investments that benefit exports. This will make it much easier for Finnish companies competing with foreign equipment suppliers to offer their products for investments of export industries in Finland. Eligible investments can include factory projects, projects aimed at improving the level of processing, and projects involving logistics and other areas of infrastructure that help to improve the operating prerequisites and competitiveness of export companies. Similar credit guarantee arrangements are already in use in many countries competing with Finland, such as Denmark and Italy.
– Until now, Finnvera has not been able to provide credit guarantees for domestic projects of large companies. It has been more economical to purchase the necessary machinery and equipment from foreign suppliers as this has allowed the companies to make use of the export credit guarantees provided by the export credit agencies in countries where the suppliers are operating. As a result, Finnish suppliers may have lost contracts to their competitors. Our ability to also provide export credit guarantees to Finnish suppliers’ deliveries strengthens the competitive position of domestic equipment suppliers and promotes employment in Finland, explains Pauli Heikkilä, CEO of Finnvera.
Until now, Finnvera's export credit guarantees have been used to facilitate the financing arrangements of export contracts. Companies have also been able to use export credit guarantees for insuring export receivables, bonding and financing during manufacturing. Finnvera already has a range of domestic financing products for investments by SMEs.
Under the export credit guarantee scheme, Finnvera can guarantee long-term bank credits obtained by the buyers and thereby share the credit risks with the bank. In domestic export industry investments, the guarantee issued by Finnvera may not, as a rule, exceed 80 per cent of the amount of credit or 50 per cent of debt financing of the project.
– Extending the Act on the State's Export Credit Guarantees to cover domestic business of export companies puts the companies on equal footing with their foreign competitors. Until now, only export credit agencies of other countries have been able to take part in the financing of investments in Finland, explains Jorma Turunen, Director General of the Federation of Finnish Technology Industries.
The increased export financing authorisation granted to Finnvera and the ability to guarantee domestic investments contribute to Finnish equipment producers and export companies being able to operate and invest in Finland and to sell their products from Finland.
Pauli Heikkilä, CEO, tel. +358 (0)29 460 2400
Topi Vesteri, Executive Vice President, tel. +358 (0)29 460 2676