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Banking, Finance and Exchange Administration
2. Export Credit Refinancing
Export Credit Refinancing (ECR)scheme provides short-term pre- and post-shipment financing to direct or indirect exporters. It is available to manufacturer or trading company with ECR credit line duly established with any participating commercial bank.
A pre-shipment ECR facility facilitates purchases of materials and overhead expenses while post-shipment ECR provides financing to direct exporter upon shipment.
2.1 Method of Financing
Two methods of financing are available for exporters under the pre-shipment ECR i.e. the order-based method and certificate of performance method (CP).
Under the order-based method, the pre-shipment ECR financing is against the export or purchase orders received from overseas buyers or direct exporters. Whilst under CP method, the pre-shipment financing is against the CP issued by EXIM Bank.
The post-shipment ECR facility uses the bills discounting method whereby the financing is against the export documents presented to the commercial banks.
2.2 Period and Amount of Financing
The maximum period of financing under the pre-shipment ECR and post-Shipment ECR is four months and six months respectively.
Under the order-based method, exporters can obtain financing up to 95% of the value of their export order or ECR Domestic Letter of Credit/ECR Domestic Purchase Order/Local Purchase Order. Whilst under the CP method, the amount of financing is subject to the CP issued by EXIM Bank.
In post-shipment ECR, exporters can obtain financing up to a maximum 100% of the export bill value subject to availability of ECR credit limit with the commercial banks as well as EXIM Bank’s administrative limit.
Payment should be made upon receipt of export proceeds or in the case of post-shipment ECR, upon maturity of the post-shipment bill, whichever is earlier.
For more information on export credit financing, please visit http://www.exim.com.my
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