vietnam-israel financial protocol agreement (ashr'a)
TRANSCRIPT
The Financial Protocol between Israel and Vietnam has been signed on April 2008 for the amount of $150m and extended on November 2011 for the total amount of $250m.Aim: - Developing the economic relations between the two countries and promote Israeli export to Vietnam using an efficient financial structure.- Broadening of the financing possibilities for the Israeli exporters to Vietnam.
Financial Protocol with Vietnam
The Players
Exporter (seller)Costumer (buyer)
Foreign bank Local bank
Insurance provider
Inter – Bank Credit Line
Cash
Insurance policy
RepaymentsRepayments
Shipments
LoanLoanLoanLoan
Exporter (seller)
Costumer (buyer)
Foreign bank Local bank
Inter – Bank Credit Line in the Framework of the Protocol
Individual Loan Agreement
Financial Protocol
Specific Commercial Contract
Fina
nce
Insurance
Framework Loan Agreement
Vietnamese Buyer
Lending bank
Israeli Exporter
Vietnamese
MOF
Guarantee
Repayment
How does it Work?
Israeli Exporter
Lending Bank
Vietnamese MOF
Disb
urse
Disb
urse
-men
ts-m
ents
Insuranc
Insurancee
Repayment of Repayment of the loanthe loan
Execution of DealExecution of Deal
Loan Loan AgreementAgreement
Loan Loan AgreemeAgreeme
ntnt
Vietnamese Buyer
Framework Agreements were signed between Israel banks and Vietnamese MOF.For each transaction a Specific Loan Agreement is signed.The exporter executes the deliveries to the buyer.Receipt of export documents by the buyer and request from Vietnamese MOF to set up the loan. The Israel bank finances the exporter and indebts the Vietnamese MOF.Ashra covers the Israeli bank against non-repayment of the loan guaranteed by Vietnamese MOF.
Description of loan procedure
Lending banks under the Protocol
Eligibility for Financing
Transaction AmountFinancing Option
Up to $25MlnOption A only ( 8 years)
Over $25MlnOption A (8) or B (10)
Credit Terms
Down Payment - 15% of transaction amount
Long Term Credit - 85% of transaction, Insured by Ashra:– Option A: 8 years Repayment Period:
• 16 semi-annual repayments commencing on 6th month• Floating Interest: Libor + 0.25% p.a.
– Option B: 10 years Repayment Period: • 20 semi-annual repayments commencing on 6th month• Floating Interest: Libor + 0.35% p.a.
Protocol Terms Min Israeli Content – 30%Min Israeli Goods and Services – 25%Max Profit & other expenses – 5%Goods – Made Entirely in Israel or Made In Israel = 100%, otherwise X%Services – above 75% = 100%, otherwise X%Declaration Form
Israeli exporter Israeli exporter / packager :
Must be Company register in Israel In each case we examine the:
ExperienceEquityPerformance ability
If needed:Ask for collateralindemnity letter Bank guaranty
Advantages of the Protocol
Well-structured and prepared process, supported by financing facilities
Enables the Israeli Exporters to offer long term credit with favorable terms to the Vietnamese Buyers
Long term credit with financing terms
Reduced risk mitigation premium
Possibility for down payment financing
Short timetable
Allows the Vietnamese Buyer to benefit from Israeli goods and technologies in different sectors such as medical and health care, agricultural development, education, water treatment, energy, etc.
Advantages of the Protocol
Type of projects
Water Treatment
Medical Device
Agriculture
Protocol Trends
Medical
Agriculture
Communication
Infrastructure
Education