Good Grasp Of Incoterms Vital For Malaysian Exporters And Importers

KUALA LUMPUR, April 5 (Bernama) -- Malaysian importers and exporters must keep abreast of the updated International Commercial Terms (Incoterms) published by the International Chamber of Commerce (ICC) to ensure seamless international transactions.

The ICC's honorary chairman Victor K.Fung noted that the Incoterms, outlines clearly, the buyer and seller's costs and responsibility in international sales/purchase contracts and this helps overcome misunderstandings or uncertainties arising from differing interpretations.

"A seller from Malaysia and a buyer from Africa may interpret differently the term CIF (cost, insurance and freight), FOB (free on board) and CNF (cost and freight) as these definitions may vary from country to country," said Fung who is also the Hong Kong-based Li & Fung group chairman, after his speech at the Understanding Incoterms2010 seminar here Tuesday.

Thus, a standardised Incoterm is pertinent and moreover, as the supply chain is getting increasingly globalised, financiers too look at these terms in providing financing, letter of credits and other facilities for sales/purchase contracts.

Fung pointed out that the relevant parties have to understand the Incoterms are dynamic in nature and the definitions could change in line with changes in international trade policies and agreements.

In this regard, the ICC has been reviewing the Incoterms for almost every decade since 1936, to ensure it reflects the current trade realities.

The Incoterms revised in 2010 took effect on Jan 1, 2011 and is expected to serve as a standard bearer in international transactions for a decade.

Meanwhile, the chairman of the Malaysian chapter of the ICC Tan Sri Yong Poh Kon in his opening remarks at the seminar, said Malaysia's total trade in 2010 was valued at RM1.169 trillion, almost reaching the pre-financial crisis level of RM1.183 in 2008.

He added that exports increased by 15.6 per cent to RM639.43 billion while imports grew by 21.7 per cent to RM529.19 billion with a trade surplus of RM110.23 billion.

-- BERNAMA

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