Exporters get Y2k credit warning

By Richard Bradell

WELLINGTON - Exporters looking forward to better times have reason to be cautious since Year 2000 problems could overseas customers into a position where they are unable to pay for goods, the Insurance Council has warned.

The council yesterday passed on a warning from international credit insurers that estimates of insolvencies arising from Year 2000 failures could boosted another 15 percent from knock on effects of otherwise sound customers being forced out of business by customers of their own failing to make payments.

"The big concern for New Zealand exporters is that they will export their produce to a country and not get a cheque back," the Insurance Council chief executive, Chris Ryan, said.

But while insurance policies now routinely carry exclusion clauses for direct losses from Year 2000 failures, the validity of export credit insurance when a customer in another country fails to pay up due to its own or its own customers' Year 2000 problems may depend on the efforts the exporter had made to ensure the customer was millennium compliant.

Mr Ryan said concern was rising that in some areas of the world, businesses were not doing enough to become compliant and an informal international grouping of banks, security firms and insurance companies known as Global 2000 was identifying high risk countries.

While New Zealand had failed to make it into the top quarter of countries, Australia has done surprisingly well in a recent Gartner Group survey gaining second place behind the United States in developing Year 2000 plans.

Even so, a survey in October found that 43 percent of Australian firms said they were doing nothing to address the problem.

Mr Ryan said that Asian countries, which have been preoccupied with financial problems, may have done more work than has been recognised, but may simply not have reported it to anyone.

"That's half the problem," Mr Ryan said. "It's not only got to be done, it's got to be seen to be done. Unless the international community can see that you have done it, they are not going to take the risk on you."

The impression of a good level of Australian compliance may have been reinforced by the Australian Stock Exchange which has been nagging member companies to detail contingency and business continuity planning.

ASX listed companies are required to make a new set of Year 2000 compliance statements by March 31.