The UK has quadrupled its export finance support for Bangladesh from £150mn to £625mn in a bid to boost the country’s railway industry.
A trade delegation of nine UK rail companies from across the supply chain, including systems design, operations and supply chains, were on tour to Bangladesh this week.
“Rail is an important sector for Bangladesh and the group is eager to look into areas where UK expertise can help assist with existing transport initiatives that are key to the onward growth and productivity of the country,” reads a Foreign and Commonwealth office statement.
The UK has strong business interests in Bangladesh and is one its largest foreign investors. The UK is also the third single largest destination for exports from Bangladesh.
Meanwhile, international trade secretary Liam Fox, on a trade trip to South Africa and Mozambique, announced that the UK will double its support for trade with South Africa by an additional £1.75bn.
Support will be made available through the UK’s export credit agency UK Export Finance (UKEF).
Total trade in goods and services between the UK and South Africa totalled £8.1bn in 2015, a 5.2% increase on 2014. Total trade in goods and services between the UK and Mozambique totalled £284mn in 2015.
New insurance for “complex markets”
Fox also announced that UKEF will offer UK businesses wider access to government-backed overseas investment insurance (OII) in a bid to encourage more UK companies to invest overseas.
OII will provide UK companies investing abroad with protection against losses related to political or extraneous events in a bid to widen the scope of risks against which the government can cover investors. It will offer protection where there is a commercial demand but the private sector is unable to meet the need “such as markets with complex legal or political contexts, or in which difficulties may arise over transferring local-currency earnings”.
The new policy will cover risks such as war, civil war, revolution and insurrection in the host state or expropriation or nationalisation of the business in which the investment is in (made contrary to international law). The policy will pay out up to 90% of the loss after a specified waiting period of typically six months.
Chairman of the Lloyd’s market association political risks, credit and financial contingencies business panel, James Bamford, says: “UKEF’s overseas investment insurance will greatly enhance the support the private sector can provide. Together, we can offer greater assurance to UK investors and help them fulfill their international ambitions by focusing on advantageous commercial opportunities rather than political complications”.