Getting Credit in developing countries Competing countries against exporters from other
Lowering financing costs
Reducing the exporter’s exposure for political & credit risks
Diversifying the portfolio risks
Establishing new potential markets for exporters
The Process…
Application Assesment: Obligor, Country Internal 1 Committee 2
Definitions (2)
“Profit and General Expenses” – Profit from the transaction and indirect production costs originated(sourced) in Israel, including financing costs, management and general expenses, marketing expenses etc.
“The New ‘Israeli Content’ Guidelines”
Adi Gross, ASHRA
6/2014
“I prefer talking about this…
but…”
Disclaimer:
In case of any wrong translation or mispronunciation for any information provided in this presentation, the only valid guidelines are the guidelines written in Hebrew dated 28/5/2014
Approval Rec
Interministerial Committee ISL MOF
Reject Rejection Letter
APPROVAL
POLICY
UW: Loan Agreement, Contracts…
Principal Approval
The Financial Protocol
Definitions (3)
“Israeli Content” A percentage or part of a transaction, product or service originated(sourced) in Israel and / or which can be defined as an Israeli content pursuant to the tests detailed in the guidelines. “Transaction Amount” The amount of the transaction (including the advance payment) insured by Ashra.
What is ECA? (Export Credit Agency)
Expert Insurance Company or Bank
Issue policies and/or guarantees and/or loans Insure against political and commercial risks Government support Aim to support and promote in export
Calculation for Products
Clause Type
3.4.1
3.4.2
Product produced entirely in Israel
Made in Israel, according to source of origin guidelines: Directed Products and or Services used to manufacture the product in Israel constitutes at least 35% of the price of the exported product. The inputs imported into Israel for purposes of manufacturing the product undergo significant processing in Israel in such a manner that they alter their characteristics. Significant processing is defined as processing that alters the Customs Item (HS) by a level of 4 digits.
All understand the same and treat the same
Create one stream process A process that can be managed / supervised
Definitions
“Direct Products and / or Services” The price of the product or service in the transaction, including the cost of direct labor and raw materials originated(sourced) in Israel. (the price of the product is the EXW (ex works) price, before the inclusion of other expenses, such as transport, insurance, etc.
Let’s talk about…
Brief about Ashra and the financial protocol The new Israeli Content Initiative & Concept The new guidelines Calculating Israeli Content – Example
Definitions (3)
“Israeli Content” A percentage or part of a transaction, product or service originated(sourced) in Israel and / or which can be defined as an Israeli content pursuant to the tests detailed in the guidelines. “Transaction Amount” The amount of the transaction (including the advance payment) insured by Ashra.
Israeli Content Initiative
Israel Ministry of Finance Israel Ministry of Economy ASHRA
The goal: setting clear, equal and general standard guidelines to increase transparency toward the Israeli Content within Ashra’s approvals, and allow
B
B-1 C C-1
1 year
4 years 1.5 years 4 years
Above $1m
Above $1m Above $5m Above $5m
2.5% FIXED
%Libor + 0.5 3.6% FIXED %Libor + 0.5
10 years
10 years 15 years 15 years
Israeli Content Concept
Who likes regulation? Worldwide definition Put the focus on “Israeli Goods and Services” – more Israeli content = more business!
Total $1,750m ex Agri-Protocol ($300m) Above 230 projects (Medical, Telecom, Water
Treatment, Education, Industry)
Financial Protocol
(Btw MOFs)
Israeli BANK
ASHRA Brokers Single Risk Political
Short Term
Up to 1 year Commodities Mainly Developed ICIC, Clal, Factoring Portfolio Risk Private
Advances of Credit Insurance
What are the new challenges?
Q&A
ASHRA: good to know…
Export Credit Agency (ECA) of Israel
Established in 1957 in order to support export Enjoys Governmental Guarantee of USD 2.5bn Export Credit Insurance for MLT and Investments Short term cover in case of market failure Political and Commercial Risks Waiver of capital allocation to banks