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Australian exporters overcome export barriers to expand into Papua New Guinea

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Australian exporters overcome export barriers to expand into Papua New Guinea article image

According to Efic’s latest SME Exporter Index research, 53 per cent of small and medium-sized enterprises (SMEs) expect even greater difficulty in sourcing finance for their overseas business activity over the next 12 months.

SMEs often highlight negative experiences with financial institutions, weakened financial performance, and banks’ lack of understanding of potential offshore markets, as the main barriers to accessing finance.

But assistance is available for small businesses that know where to look.

There are examples across Australia of small businesses turning to alternative sources of funding when their bank is unable to help.

One such example is the collaboration between Western Australian companies, Shawmac Consulting Engineering and Infra Tech.

Export opportunity

Shawmac Consulting Engineering, a boutique engineering consultancy firm that specialises in delivering civil, road, traffic and transportation services, and Infra Tech, which provides specialist geotechnical and pavement consulting engineering services, formed a partnership to bring forward a new highway in Papua New Guinea.

The Ramu Gateway Joint Venture (JV) helped pave the way for Papua New Guinea’s future, with its involvement in the construction of the Ramu Highway, one of the country’s planned priority national highways.

The Ramu Gateway JV was formed to complete a full road scoping and design study in preparation for the construction of the Ramu Highway.

This was one of 16 national highways identified as being key to building stronger infrastructure for the country. The two companies had significant experience working together on road projects within Australia and throughout Asia.

On-the-ground presence

As part of the project, the partnership established a project office in Papua New Guinea to complete the scoping and design study, which was run by a team of Australian engineers.

The joint venture also used local resources for security and technical roles to deliver the project, in order to transfer skills and knowledge to the local workforce.

Overcoming financial barriers to export

In order to deliver on the A$1.12m contract, the Ramu Gateway JV required an advance payment bond of A$280,500, representing 25 per cent of the total contract value.

Unfortunately the partners’ banks were unable to provide this bond without 100 per cent cash security, which was not possible given the companies’ available equity.

Efic, Australia’s export credit agency, was able to provide the advance payment bond to support the delivery of this contract and help ensure the project went ahead.

The bond was issued to the project’s contractor to provide security for their advance payment for the Ramu Gateway JV’s scoping study.

“This was an important project and we’re pleased to have been able to help two successful Australian companies play their role in delivering this,” said Efic’s Tegan Davies.

An example to all small business exporters

Overseas markets continue to offer excellent export opportunities for Australian small businesses who are looking to take that next step on their export journey.

However, to do so, small businesses have to overcome a number of hurdles such as securing finance to fund their expansion and meet new contracts.

The Ramu Gateway JV is just one example of the innovative ways Australian small businesses are securing funding for export when their bank is unable help.

There are options available to small businesses across Australia if they know where to look.Andrew Watson, Efic Executiver Director, SME

For more information on Efic visit www.efic.gov.au.

Andrew Watson, Executive Director, Export Finance, Efic

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