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The Warsaw Voice » Business » February 23, 2012
Business & Economy
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Supporting Polish Exports
February 23, 2012   
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Zygmunt Kostkiewicz, chairman of the board at the Export Credit Insurance Corporation (KUKE SA), talks to Andrzej Ratajczyk.

What is your view on Poland’s export figures last year?
Preliminary estimates show that Polish exports in the whole of 2011 were worth 138.3 billion euros, which means 10.6-percent growth compared with the previous year. In zloty terms, exports were worth zl.569.5 billion, an increase of 14.1 percent. These results show that the Polish economy is doing well in these tough times, especially as far as production for export markets is concerned. It’s also important that the destinations for Polish exports are diversifying. Polish exporters are returning more boldly to former Soviet markets. Particularly rapid export growth is reported in the case of Russia and Belarus. We are also beginning to see the effects of initiatives aimed at diversifying Polish exports to non-European markets. Today, Polish goods are sold mainly to buyers from the European Union.

Focusing on the EU market in trade does have its good points, though, as it doesn’t carry as much risk as other regions of the world. Did last year’s unrest in northern Africa and the Middle East affect Poland’s export results?
Fortunately, those regions of the world where political events could disturb normal trade are not important for the geography of Polish exports. The only big market from the point of view of Polish exporters in the Maghreb area [Northwest Africa] is Algeria, but the political situation in that particular region is relatively stable. That’s why the events of the “Spring of the Peoples” had no significant impact on Polish exports.

The Export Credit Insurance Corporation is perceived mainly as an insurer of Polish companies’ trade transactions on eastern markets. But this isn’t KUKE’s only field of activity, is it?
That’s true. KUKE is an organization that has two roles. First, it operates as a regular commercial credit insurer. In this area it operates in a competitive market, offering policies covering domestic risk as well as export risk for all the countries we call market economies—for example, EU and OECD countries. It’s worth adding that today most of the premiums collected (about 55 percent) are for insurance of domestic dues.

In its other role, KUKE is an export credit insurance agency, handling insurance of dues that have support—in other words, guarantees—from the government. Insuring dues with state support doesn’t mean the government pays extra but that the long-term balance has to even out at least. Thanks to insurance of dues guaranteed by the Treasury, Polish exporters can safely sell their products to trade partners from distant, often exotic countries. In this area, KUKE is an insurer of short-term credit, the same as in the case of commercial credit. Additionally, KUKE is the only organization on the market that also insures export projects financed from credit with a repayment period of two or more years. This is mainly financing of capital goods, construction work, manufacturing of ships, trains, aircraft.

Which of Poland’s export markets does KUKE insure the most often?
Our list of non-market economies includes 58 countries. In practice, though, 99 percent of the turnover insured by KUKE is with Russia, Belarus, Ukraine and Kazakhstan.

Do you see a lot of interest among Polish exporters in entering new markets?
Interest in developing trade appears wherever exporters see an opportunity for themselves. For example, great hopes were being pinned on the recent Polish business mission to China as part of President Bronisław Komorowski’s visit to that country. Entering that market would give many Polish exporters a chance for rapid development. We can also see an interest in all the other major developing markets—not so much in Africa, perhaps, more in Latin American and Asian countries. It needs saying, however, that Polish exporters are just taking their first steps in these markets. The overwhelming part of Polish companies’ trade takes place in Europe. The greatest growth has been in trade with former Soviet countries. This is true of Russia and Belarus in particular, and less markedly Ukraine.

What is KUKE’s role in insuring Polish exports?
The corporation provides around 2-2.5 percent of Polish export insurance, which is a standard market share for this kind of agency in Europe. Around the world, this can vary; there are countries where the figure is much higher, but also some where it is much lower. Our market share is the effect of two factors. First, a large part of Poland’s export turnover is within multinational groups that don’t insure exports between member companies. Second, a part of the trade turnover is based on cash.

A government export support program was launched in July 2009. It aims to increase Polish exports by making it easier for foreign businesses to access loans with which to finance the purchase of Polish goods and services. In this program, Bank Gospodarstwa Krajowego (BGK) grants loans to foreign buyers of Polish goods and services or to their banks with KUKE’s insurance. What is your view of the program’s effects so far?
The program seems to have fulfilled its purpose. First, new possibilities for financing Polish exports have appeared. The potential value of the transactions submitted so far is close to 1 billion euros. Second, BGK has been made a reference institution, thanks to which exporters know today that if they need funding for their export operations, there is an institution in place to provide them with that funding—of course as long as this is economically justified. From this point of view, it’s extremely important.
Can you list any sectors particularly interested in insuring their export loans?
As regards long-term financing, we have two main sectors generating the greatest sales. They are shipbuilding, which, despite forecasts, is still developing in Poland, and construction. In terms of the number of transactions, the greatest interest is shown by manufacturers of agricultural machinery and machines for the food processing industry. These are much smaller transactions, but there is a great number of them.
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