Speech

Eduardo Aguirre
Vice Chairman, Export-Import Bank of the United States
U.S.-ASEAN Business Council 
Washington, DC, December 9, 2002, noon
(As Prepared)

• Thank Ernie Bower [president of Council] and the U.S.-ASEAN Business Council for inviting me to talk with you today.

ADMINISTRATION POLICY TOWARD ASEAN

• I would like to begin by saying a few words about the Bush Administration's policy toward the ASEAN region, as well as about Ex-Im Bank and what we are doing in this part of the world.
   
• The 10 ASEAN nations, with a half billion people, are important to the United States for a number of reasons.
   
• We have historic security ties with ASEAN, which have only been strengthened by the global war against terrorism, as the recently announced STAR (Secure Trade in the APEC Region) demonstrates.
  
• It is also a region of dynamic political and economic changes. The emergence of democracy in Indonesia, the world's largest Muslim nation, and the opening of the Vietnamese economy are just two such examples.
    
• The United States sold $44 billion in exports to the ASEAN countries last year, with Singapore, Malaysia, the Philippines, and Thailand accounting for about 90 percent of that total. Two-way trade totaled $120 billion in 2001. But the Bush Administration is committed to significantly expanding trade with the region.
   
• On October 26, President Bush - meeting with ASEAN heads of state in Mexico --announced the Enterprise for ASEAN Initiative as a way to increase trade and investment by providing a roadmap for establishing bilateral free-trade agreements (FTAs) with all interested ASEAN countries. 
   
• Just three weeks ago, the U.S. and Singapore concluded the first of these FTAs.
   
• As many of you may know, for countries to conclude an FTA with the United States, they need to be members of the WTO and must have concluded a Trade and Investment Framework Agreement (TIFA) with the U.S. 
   
• The U.S. has TIFAs with Indonesia, the Philippines, and Thailand, and we support the efforts of the three ASEAN countries that are not WTO members - Vietnam, Cambodia, and Laos -- to successfully complete their accessions.
   
• Free trade agreements obviously can be a tremendous spark to economic growth for all participants. NAFTA has not only raised living standards in Mexico, but - together with the Uruguay Round of the GATT - is estimated to have boosted the average American family's income by as much as $2,000 a year. 
   
• That is why the Bush Administration is calling for tariff reductions and FTAs around the globe. 

ASEAN ECONOMIC CONDITIONS

• In the ASEAN region, the potential demand for U.S. goods and services could well expand dramatically, as these economies grow.
   
• Of course, this requires favorable political and economic conditions.
   
• While there is no denying that the world is a dangerous place today, and that the recovery from the 1997-98 Asian financial crisis has been uneven in Southeast Asia, there are some bright spots: 
  1. Vietnam has withstood the impact of the Asian financial crisis and the current global slowdown fairly well, and the recent U.S.-Vietnam Bilateral Trade Agreement is likely to bring it back up to its recent trend growth rate of at least 7 percent.
  2. Malaysia and Singapore are rebounding strongly, with the Asian Development Bank projecting growth of 6 percent or more next year. 
  3. The Philippines, long a laggard in the region, nevertheless now boasts a dynamic electronics industry and rapid growth in the Manila metropolitan area.

EX-IM BANK 101

• In emerging markets where there is risk, that's where Ex-Im Bank can help.
   
• As many of you know, the Bank fills a critical trade finance gap by supporting exports to developing markets where commercial bank financing is unavailable or insufficient. 
   
• As the United States' official export credit agency, Ex-Im Bank is a key player on the Administration's trade, foreign and economic policy teams. As part of these teams we remain true to our mission of supporting U.S. exports.
   
• As many of you may know, just last Wednesday, our new chairman, Philip Merrill, was sworn in by Vice President Cheney. I look forward to the dynamism and energy that he will bring to the Bank. 
   
• In fiscal year 2002, Ex-Im Bank supported $13 billion in sales of U.S. goods and services to foreign markets.
   
• Ex-Im Bank not only can help when commercial export financing is unavailable, but it levels the playing field to keep U.S. companies competitive in the global marketplace by matching the government support provided to foreign competitors.
   
• Our financing products include loan guarantees and direct loans that provide foreign buyers with competitive financing to purchase U.S. goods and services.
   
• We also provide export credit insurance to protect U.S. exporters and banks against the political and commercial risks of a foreign buyer defaulting on payment. This program is especially helpful to small businesses.
   
• In addition, we offer working capital guarantees to cover 90 percent of the principal and interest on commercial working capital loans to small and medium-sized U.S. companies that need money to buy or produce exports. These guarantees also cover standby letters of credit serving as bid bonds, performance bonds and advance payment guarantees.
   
• Ex-Im Bank's project financing helps finance U.S. exports to large projects in developing countries, including infrastructure and natural resource extraction and development. In limited recourse project finance, repayment is based on revenues from the project rather than on a guarantee of the debt by the host country government or existing corporates. This financing helps developing countries to limit their government debt, and helps U.S. exporters to compete for oil and gas and power-sector projects.
   
• We have supported about $1 billion a year in power projects on a limited recourse basis since the mid-1990s, including projects such as KEPCO Ilijan in the Philippines. 
   
• Ex-Im Bank also helps finance U.S. exports of environmentally beneficial goods and services. The Bank has a special Environmental Exports Program that provides enhanced support for a broad range of environmental exports.
   
• Even though Ex-Im Bank has a new Renewable Energy Advisory Committee to spotlight exports of renewable energy technologies, we have backed nearly $700 million in renewable energy exports during the last decade.
  

EX-IM BANK IN ASEAN REGION

• In the ASEAN region, we have a sizable portfolio, with short-, medium- and long-term credits totaling about $8 billion.
   
• The Philippines has been a steady Ex-Im Bank customer, with $1.4 billion of exposure and more than $300 million in authorizations during the last three years.
   
• For example, Sun Microsystems Inc., of Palo Alto, Calif., used an Ex-Im Bank guarantee to supply computer services, software, and installation services to the Philippine Long Distance Telephone Company for a regional Internet data center. 
   
• And we provided financing for the Leyte Geothermal Optimization Project in the Philippines, which was the first time a small business (Ormat International of Sparks, Nevada) used our project finance program.
   
• Ex-Im Bank has $1.2 billion of exposure in Thailand, and we have authorized more than $1.1 billion in export financing during the last three years.
   
• Ex-Im Bank has supported the export of 10 wide-body Boeing aircraft to Thailand's government-owned flag carrier, Thai Airways International, in the last few years.
   
• Earlier this year, we backed a $180 million satellite telecommunications project involving the Shin Satellite Public Co. of Thailand. Space Systems/Loral Inc., of Palo Alto, Calif., was the principal exporter. 
   
• In Malaysia, most of our exposure has accrued in the last few years, during which Ex-Im Bank has $1.7 billion in exposure, making it one of our largest markets.
   
• Just last year, we backed a large sale of Boeing commercial aircraft to Malaysia.
   
• In another notable transaction, a Malaysian semiconductor manufacturer used a long-term loan from Ex-Im Bank a few years back to purchase $800 million of technology, equipment and services from LSI Logic Corporation, Fluor Daniel Intercontinental, and 23 other U.S. companies to build a semiconductor wafer fabrication plant. 
   
• In Indonesia, Ex-Im Bank has more than $3.2 billion in exposure, and we have authorized $420 million in export financing during the last three years. 
   
• Like other ASEAN countries, Indonesia's flag carrier, P.T. Garuda Indonesia, has used Ex-Im financing to buy a number of Boeing aircraft in the last few years.
   
• Ex-Im Bank has also been involved in a number of project financings in Indonesia, including the expansion of the Cilacap Oil Refinery, where Fluor Daniel Inc. provided engineering, procurement and construction services. 
   
• Especially since the U.S. Congress and the Government of Vietnam ratified the U.S.-Vietnam Bilateral Trade Agreement last year, which commits Vietnam to provide U.S. goods with preferential tariff rate status and adopt other market reforms such as the new enterprise law (which allows private enterprise), Ex-Im Bank is eager to promote U.S. exports to, and investment in, Vietnam.
   
• We are hopeful that we will see some significant deals with Vietnam in the near future.
   
• Normalization of U.S.-Vietnam trade relations, Vietnam's commitment to a three-year IMF structural adjustment program, and the Vietnamese government's pledge to renew pro-market reforms create an opportunity for U.S. exporters and investors to become more engaged in the Vietnamese market.
   
• In fact, the only ASEAN countries where Ex-Im Bank does not provide financing are Cambodia, Laos, and Myanmar because we are legally prohibited. 
   
• Ex-Im Bank has a strong interest in building partnerships in the ASEAN region - including with the U.S.-ASEAN Business Council -- that will increase trade between the U.S. and the countries of the region.
   
• We are focused on finding new ways to offer our financing for small- and medium-sized businesses in the ASEAN region. We are also focused on engaging the region's banks to partner with us in this endeavor. 
   
• In short, we are committed to doing what we can to help U.S. businesses like yours to successfully do business in these important and growing Southeast Asian markets.
   
• Since I said that this would be a dialogue, I'd be happy now to entertain questions.