L/C for imports and exports gone

L/Cs (Letter of Credit), which has been traditionally responsible for settling the bill for Korean import and export products, have been disappearing and been quickly replaced by telegraphic transfers (T/T) in the last few years.

The Korea International Trade Association (KITA) said Jan. 9th that it found exports via L/C grabbed 43.2% of total exports amounting to $58.8 billion in 1997, but shrunk to 38.8% in 1998, 31.1% in 1999. From last January to November, 27.7% of total exports, or $43.7 billion, were traded by L/C.

Meanwhile, T/Ts holding just 29.4% of entire exports, or $40 billion, increased to 37.2% in 1998, and 40.8% in 1999. From January to November in 2000, T/Ts expanded to 42.6% of whole imports, amounting to $67.1 billion.

Imports are showing a similar pattern. L/Cs diminished to 56.0% in 1999, from 62.1% in 1998 and 76.1% in 1997. In the last 11 months from January to November in 2000, they dropped to 54.6%. T/Ts however, have increased in popularity from 10.4% in 1997, to 16.4% in 1998, and 21.9% in 1999. Over the 11 months from January to November in 2000 they grew to 28.0%.

Source from KITA said, "Credit trades between businessmen increased, based on credibilities. It was caused by long-term exports enlarging their portions, and difficult situations in opening L/Cs in some developing countries since the Asian currency crisis."