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Box 4.6 Financing of Services and Turn-Key Contracts, Saudi Export Programme
The Saudi Export Program (SEP) was established in 1999 within The Saudi Fund for Development, to
promote the export sector in Saudi Arabia and assist in diversifying the national economic base. SEP
aims to assist the national industry and Saudi exporters by providing them with funding and
guarantee/insurance facilities and mitigate risks associated with international trade transactions
The programme Financing of Services and Turn-Key Contracts specifically seeks to encourage
specialised Saudi companies that have experience in rendering services and executing projects outside
the KSA. The participation of SEP in these projects is according to the following:
 Transactions (projects) in which the value of Saudi components (goods /services of Saudi
origin) equal less than 50% of the total cost of the transaction (project): the participation
of SEP in the financing of such projects may reach 100% of the value of the Saudi
components.
 Transactions (projects) in which the value of Saudi components (goods/services of Saudi
origin) equal 50% or more of the total cost of the transaction (project): the anticipation of
SEP in the financing of such projects may reach 85% of the total value of the transaction.
 The export or construction contract (either direct, or as a subcontract) shall be concluded
with a Saudi firm. In case there is a joint venture between a Saudi firm and a foreign
partner in the execution of a contract, the share of the Saudi firm in the joint venture
agreement shall not be less than 70%.
Export Credit Agencies operate in most of the countries surveyed. For instance, Egypt’s Export Credit
Guarantee Company (ECGE), whose main shareholder is the Export Development Bank of Egypt,
provides a broad range of services to exporters, including credit insurance, factoring, buyers
information reports, and export debt recovery. At a transnational level, the Islamic Corporation for the
Insurance of Investment and Export Credit (ICIEC), an affiliate of the Islamic Development Bank,
provides reinsurance facilities to Export Credit Agencies in OIC Member States.
In Malaysia, to promote trade and contribute to develop non-traditional markets, Bank Negara
Malaysia has been establishing Bilateral Payments Arrangements with other countries, also intended
to foster closer economic and banking relationships between Malaysia and the participating countries
(Box 4.7)
Box 4.7 Bilateral Payments Arrangements (BPA), Malaysia External Trade Development Cooperation
The main objectives of a Bilateral Payments Arrangement is to promote trade and to foster closer
economic and banking relationships between the participating countries. Bank Negara Malaysia signs
two types of BPA with Malaysia’s trading partners:
1) Iranian Model: Central banks are not involved in the settlement of financial claims arising from
trade. The central banks guarantee to pay the respective foreign exporter for the export value in the
event of default by the importer in their country. Five participating countries: Bosnia Herzegovina,
Botswana, Iran, Fiji, Mozambique.
2) ALADI Model: For exports, central banks pay their exporters for the export value in domestic
currency through designated banks. For imports, central banks receive the import value in domestic
currency from their importers through designated banks. The central banks will settle the net amount
due in an agreed currency on a periodic basis. Eighteen participating countries: Albania, Algeria,
Argentina, Chile, Indonesia, Kyrgyz Republic, Laos, Mexico, Peru, Philippines, Romania, Seychelles,
Thailand, Tunisia, Turkmenistan, Venezuela, Vietnam, Zimbabwe.
Exporters can apply for this facility from all Malaysian domestic banks.