Two state-run financial institutions in Taiwan and Lithuania have signed an agreement to guarantee loans to Lithuanian importers of Taiwanese products, the Ministry of Economic Affairs (MOEA) said Tuesday.
Under the agreement signed between the Export-Import Bank of the Republic of China (Eximbank) and Investment and Business Guarantees Ltd. (INVEGA), a mechanism will be set up to fund such importers, in particular small and medium-sized enterprises, the ministry said in a statement.
INVEGA will provide the loans to SMEs in Lithuania for the purchase of Taiwanese goods, while Eximbank will guarantee up to 70 percent of the amount loaned, the ministry said.
Eximbank typically helps to boost Taiwan’s import and export trade by offering financial services such as export credit insurance and extending credit lines to domestic and foreign financial institutions, which then relend the funds to their clients for the importation of Taiwan products.
In Lithuania, INVEGA’s main objectives include providing financial services and support to SMEs, with the primary goal of facilitating their access to funding.
The agreement between the two state-run entities was signed on Aug. 23, marking Eximbank’s first pact with a foreign financial institution on loan guarantees, according to the MOEA.
The ministry said it will provide funding to Eximbank to guarantee the INVEGA loans for up to five years, with preferential service fees for Lithuanian SMEs. and to offer export insurance to Taiwanese exporters.
Explaining how the agreement will work, the ministry said that when Taiwan exporters receive orders from Lithuanian buyers, the buyers will be referred to INVEGA to access funding, if necessary.
Meanwhile, the Taiwanese exporters will be able to secure a guarantee of up to 90 percent of loans taken to buy raw materials for the production of goods for shipment to their clients in Lithuania, the MOEA said.
In a separate statement, Eximbank said it will also provide tailored loan guarantees to Lithuania businesses, while shouldering some of the export risks for Taiwanese exporters, in accordance with the agreement.
The agreement is expected to provide incentives to Lithuanian importers to buy more Taiwanese products, thus boosting Taiwan’s exports, Eximbank said.
The deal was fully backed by Taiwan’s MOEA, National Development Council, Ministry of Foreign Affairs, Financial Supervisory Commission, and Taiwanese Representative Office in Lithuania, the bank said.
Noting that Lithuania is poised to open a trade office in Taiwan, Eximbank said the agreement will be a congratulatory gift.
In June, Eximbank and INVEGA signed a memorandum of understanding on a loan guarantee system, during a visit to Taipei by a Lithuanian delegation led by Vice Economy and Innovation Minister Jovita Neliupšie.
In the first six months of 2022, Taiwan’s exports to Lithuania grew 15.29 percent from a year earlier to US$64.42 million, Eximbank said, citing statistics from Taiwan’s Customs Administration.
Last year, Taiwan’s imports from Lithuania rose by an annual 20.91 percent to about US$132 million, according to the bank.
Source: Focus Taiwan News Channel