Officials of Etihad Credit Insurance and Indonesia Re during the signing ceremony.
Etihad Credit Insurance (ECI), the Federal export credit company of the UAE and Indonesia Re, the state-owned reinsurance agency of Indonesia have signed an agreement to boost bilateral exports and investments through their trade credit insurance, reinsurance and guarantees.
The MoU was signed by Benedictus Mulyawan Waworuntu, President Director of PT Reasuransi Indonesia Utama and Massimo Falcioni, CEO of the Federal Company Etihad Credit Insurance, in the presence of Dr. Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade and Deputy Chairman of ECI Board of Directors and His Excellency Kartika Wirjoatmodjo, Vice Minister of State-Owned Enterprises Republic Indonesia and a high delegation from both countries of Government officials, Chamber of Commerce and UAE entrepreneurs.
Indonesia, which has the largest economy in Southeast Asia, is one of eight countries which the UAE is seeking trading agreements with as part of the ‘Projects of the 50’.
Commenting on the agreement Dr. Thani bin Ahmed Al Zeyoudi, said: “The UAE considers Indonesia as a vital strategic partner and this agreement will be a significant force in creating new opportunities, attracting FDI, boosting trade and exports, and accelerating the global economic recovery. Greater collaborations like this will enhance sustainable development and will fuel the growth of UAE’s knowledge-based economy.”
Meanwhile, Kartika Wirjoatmodjo, said: “Indonesia and the UAE have enjoyed remarkable trade and relations for a long time. With this agreement, we are pleased to strengthen these ties by collaborating with Etihad Credit Insurance in the area of trade credit insurance and reinsurance. This will assist us in achieving our goals in developing more export markets for Indonesian companies.”
Under this agreement, ECI and Indonesia Re will work on easing trade and export between UAE and Indonesia; facilitate access of SMEs and Mid-caps to funding; and utilise Shariah compliant insurance and finance solutions to grow halal trade.
Both organisations will also collaborate in enhancing business relations of the two countries; provide information on ongoing and potential new projects; explore opportunities for insurance, reinsurance, and co-insurance for export and investments; explore recoveries of claims to be collected in Indonesia or in the UAE; and share expertise and best practices in commercial underwriting, risk management, country assessment, claims and recovery. ECI and Indonesia Re will also support strategic economic sectors such as steel and aluminium, ceramics, renewable energy, mechanical, and waste management industries.
Though the two predominant Muslim nations established diplomatic ties 45 years ago, their relationship started to gain momentum over the last few years as Indonesia began seeking new sources of investments to finance ambitious infrastructure programs, while the UAE accelerated efforts to wean itself off reliance on oil.
The UAE’s long-established bilateral relationship with Indonesia is rooted in close cultural ties and a shared commitment to facilitating greater economic development and prosperity between the countries. During the last five years, the total worth of non-oil trade between the countries surpassed $11 billion. In 2020, the total value of the UAE’s non-oil trade with Indonesia stood at $2 billion. Etihad Credit Insurance was established by the UAE Federal Government and its founders, the governments of Abu Dhabi, Dubai, Ras Al Khaimah, Fujairah and Ajman.
The company started its operations in February 2018. ECI plays a catalyst role in supporting the UAE’s non-oil exports, trade, investments and strategic sectors development, in line with UAE Vision 2021 agenda.
The UAE Federal export credit company is tasked to accelerate and sustain national economic diversification as well as support the export and re-export of UAE goods, works, services, and the foreign investments of the UAE businesses as well as support the exporters in the domestic trade through a range of export credit, financing and investment insurance products. Since 2020, in response to the country’s economic needs, it started providing credit insurance support to domestic non-oil trade and project financing guarantees too.
To provide UAE businesses with solutions that meet their growth objectives locally and internationally, ECI builds a comprehensive platform of strategic partnerships across government, insurers, re-insurers, brokers, banks and lenders, regional and international Export Credit Agencies, governments and trade promotion agencies in addition to world organisations for economic development.
ECI has also been assigned for the third consecutive year this 2021 with an Insurance Financial Strength (IFS) Rating and an Issuer Default Rating (IDR) of AA- (Very Strong) with Stable Outlook according to Fitch Ratings.
Earlier in April 2021, the Khalifa Fund for Enterprise Development and the Etihad Credit Insurance (ECI), the UAE Federal export credit company have partnered to shore up the export capabilities of the country’s small and medium enterprises (SMEs). An MoU was signed by Mouza Obaid Al Nasri, Acting CEO of Khalifa Fund and Massimo Falcioni, CEO of ECI.
The agreement aims to bolster SMEs and local enterprises registered under Khalifa Fund as part of their support for the UAE’s national diversification programme. Businesses and exporters under Khalifa Fund stand to gain from this partnership as ECI guarantees to provide them access to a range of export credit, financing and investment insurance products.
According to the Federal Competitiveness and Statistics Authority, the contribution of the SME sector to the UAE’s GDP is estimated at 53 per cent in 2019, up from about 49 per cent in 2018. SMEs, in addition, also contribute to 95 per cent of the companies in the country and employ 86 per cent of the total workforce in the non-oil private sector.
Underscoring the importance of this sector, the Federal government aims to increase the contribution of the SME sector to the national economy to around 60 per cent by 2021, a reason ECI offers ‘SME Protect’, a trade credit solution designed to support the growth plans of SMEs globally and assist them while entering high-growth markets. The launch of this product makes ECI the first government export credit company in Middle East and Africa to offer UAE SMEs an online trade credit solution to secure trade and export to more than 50 countries.
Under the agreement, the two entities will establish a committee that will implement initiatives in a bid to bolster the country’s exports. The number of members, the structure of the committee and the means of financing, as well as the schedule of meetings, the working mechanism and the decision-making process will be finalised by ECI and Khalifa Fund.
As part of the agreement, ECI will support businesses under Khalifa Fund through organising workshops regarding the benefits of trade protection solutions, as well as offering bespoke trade credit services that can significantly help cement their presence in the global arena their exports globally.
The Federal export credit company will also provide market intelligence and country risk report to highlight the commercial and political risks associated in international trade activities.
Khalifa Fund will promote the said relevant workshops and events to respective members, as well as facilitate referrals to ECI for enquiries involving trade credit, trade finance, and surety bonds solutions. The Fund will also uphold ECI’s services and products through its newsletter, website, magazine, direct mailing, and events.
Mouza Al Nasri, Acting CEO stated: “The partnership with ECI is an embodiment of Khalifa Fund’s unswerving commitment towards further enhancing the export operations of SMEs in the UAE. Khalifa Fund and ECI share the same vision, and have both always been vital to the growth of the UAE’s non-oil economy.
I’m extremely confident that this collaboration will fortify the operations of our members, thereby further reinforcing the country’s economy towards greater heights.”
Highlighting the importance of this strategic agreement, Falcioni said: “We are incredibly honoured to undertake this partnership with Khalifa Fund, which aims to give a boost to UAE’s SMEs in the global arena. Our institutions share a common mandate to support small businesses and help them prosperously expand, and this alliance will allow us to facilitate new development of products that will help us achieve our aggressive goals of positioning the UAE as the global hub for trade and business. I am looking forward to the many opportunities that this alliance will offer in the interest of the country’s SMEs.”
Established in 2007 under the vision of His Highness Sheikh Khalifa Bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi, Khalifa Fund is an Abu Dhabi-based independent, not-for-profit economic development agency known for supporting entrepreneurs and the development of the SME ecosystem in the UAE.
It helps develop small businesses in the capital through fostering an investment culture amongst UAE nationals. Khalifa Fund began with a total capital of Dhs300 million, which gradually increased in 2009 to Dhs1 billion, in order to meet the growing demand for the Fund’s services.
In 2011, the Fund’s total capital was increased to Dhs2 billion, and the Fund covered all of the UAE through a network of branches.
ECI has also shown its steadfast commitment to boost SMEs in line with the UAE’s national export activity and economic diversification, as it has issued Dhs420 million worth of trade credit support to these businesses from January to November 2020, which translates to Dhs1 billion non-oil trade insured turnover. It has insured the exports of SMEs as well as operations in the domestic market—allowing them to stay competitive in the trade industry amidst the height as well as the easing of the coronavirus disease (COVID-19) pandemic.
The guarantees helped protect the liquidity of SMEs amidst this challenging economic cycle, assisting businesses in reducing their cost of banking funding and allowing them to request their preferred bank to discount the invoices—secured by ECI—at a preferential rate.