EFIC's mission is to support Australian businesses exporting or investing overseas by helping them to overcome financial barriers. The level of Australian content in an export contract is therefore an important factor in EFIC’s determination of the amount of financial support that EFIC is able to provide.
Here is a summary of the guidelines EFIC applies in order to assess the level of Australian content in an export contract and therefore the level of EFIC support.
What is an export contract?
An export contract involves:
- exporting goods produced or manufactured wholly or partly in Australia or
- providing a service (from within or outside Australia) to a person outside Australia.
Which EFIC facilities do the Australian content guidelines apply to?
The guidelines apply only to an export contract that EFIC supports with:
Origin of content in an export contract
An export contract may include content from up to three sources:
- Australian content
- foreign content, which originates outside both Australia and the buyer’s country and
- local content, sourced in the buyer’s country.
EFIC refers to the total content imported into the buyer’s country (the Australian content plus the foreign content), as the eligible contract value, or ECV.
What is Australian content?
Australian content of an export contract includes:
- labour, goods and materials which originate in Australia
- services (such as design, advice and technical services) provided by Australian residents
- the exporter’s profits, overheads and financing costs
- insurance, shipping and air freight costs from Australia.
How does EFIC determine its level of support?
The maximum support EFIC can provide for an export contract is:
- 85% of the ECV (that is, Australian content plus foreign content) plus
- finance for local content: the lower of the amount of local content and 30% of the ECV.
EFIC may provide maximum support for an export contract if it considers the contract to have substantial Australian content, which is determined as follows:
- If the Australian content of an export contract is 50% or more of ECV, the export contract is automatically considered to have substantial Australian content and the exporter is eligible for EFIC’s maximum support for the contract.
- If the Australian content is more than 25% but less than 50% of ECV,
- Where EFIC considers that the Australian content is substantial compared to the content from each foreign country, the exporter is still eligible for EFIC’s maximum support for the contract
- Where EFIC considers that the Australian content is not substantial compared to the content from each foreign country, EFIC’s support is limited to the value of the Australian content (no support is provided for local content).
- If the Australian content is less than 25% of the ECV, the export contract is automatically considered not to have substantial Australian content. EFIC’s support is limited to the value of the Australian content (no support is provided for local content).
The origin of content in an export contract is:
ECV (ie Australian content plus all foreign content) = $7m +$3m + $2m = $12m
Australian content as a percentage of ECV = $7m/$12m = 58%.
As the Australian content is over 50% of ECV, the export contract is automatically considered to have substantial Australian content. It qualifies for EFIC’s maximum support, which is calculated as:
85% of ECV plus the lower of the amount of local content and 30% of ECV
= 85% of $12m plus the lower of $5m and 30% of $12m
= $10.2m + $3.6m
For more information about Australian content, contact us.
NOTE: This information is supplied as a guideline only. EFIC’s compliance with legislation and OECD guidelines, together with its credit assessment and other policies, influence EFIC’s ability to provide financial support.
The information provided does not comprise advice or a recommendation and EFIC makes no representation or warranty relating to it. To the maximum extent permitted by law, EFIC will not be liable for any direct or indirect loss or damage incurred by any person on the basis of this information.