Trade finance is vital in stimulating exportsMay 10, 2018
On May 10, 2018 a workshop titled ‘Trade Finance as a Key Factor in Trade Promotion’ was held in Tashkent to discuss opportunities for introducing new trade finance instruments in Uzbekistan.
The experience of foreign countries shows that financial support of exporters serves as an effective tool of stimulating exports. According to the survey of the Asian Development Bank among entrepreneurs from 114 countries, an increase in export and import financing by 25% leads to an increase in production volumes by an average of 30%, an increase in employment by 20% and growth in investments for business development by 19%.
To familiarize representatives of ministries and state agencies, commercial banks and companies with advanced international experience and modern instruments of trade financing, the Ministry for Foreign Trade and the United Nations Development Programme, the International Islamic Trade and Finance Corporation, and the International Trade Center have collaborated together to organize this workshop.
“In Uzbekistan, the current system of export support is in the process of fundamental reformsd. For the first time in Uzbekistan, commercial banks’ export financing mechanisms has been introduced in foreign trade operations. This area of support for domestic exports in Uzbekistan is new and requires consultative and technical assistance from international organizations and financial institutions, which in turn will serve to create a solid trade finance system,” highlighted Sakhib Saifnazarov, Deputy Foreign Trade Minister in his welcoming address.
Experts of international organizations and Eximbank of Turkey shared their experience in developing trade finance.
"Only 27% of global trade was completed through Documentary credits in 2017. Currently, traditional trade financing is being replaced by schemes based on technologies, for example, Supply Chain Finance, online trading platforms, block chain and others,” said Ian Sayers, representative of the International Trade Center.
Representatives of the International Islamic Trade Finance Corporation (ITFC) explained procedures for allocating funds in ITFC for export financing, ways of political risks insurance and their advantages in cross-border investment. Experts of Eximbank of Turkey provided detailed information on the instruments of export financing implemented by Eximbank, including crediting foreign buyers, export receivables discounting programme, loans under the state guarantee, etc.
A separate session was dedicated to the development of trade financing in Uzbekistan. Nishanbay Sirajiddinov, consultant of UNDP’s ‘Aid for Trade’ project presented the analysis of trade financing schemes applied in Uzbekistan and proposals on their further development with the aim to improve competitiveness of national exporters.
It is expected that familiarizing with international experience will enable local specialists to identify the most effective trade financing instruments and implement them in Uzbekistan.
The initiative of UNDP and the Government of Uzbekistan on the development of international trade to increase incomes and create jobs is carried out in accordance with the Strategy of Action on development of Uzbekistan for 2017-2021, as well as with the global activities of UNDP to assist countries in achieving Sustainable Development Goals (SDGs).
UNDP’s ‘Aid for Trade’ project as a national component of the regional ‘Aid for Trade in Central Asia – Phase III’ project aims at increasing income generation, creating jobs and expanding exports.