Blockchain Framework Connects Cross-Border Singapore-China Trade Flows
Two digital trade financing technical trials were recently completed between Singapore and China involving the use of the TradeTrust blockchain framework, Singapore’s communication ministry has confirmed.
The two digital letter of credit (L/C) transactions, involving electronic bill of lading (eBL) transaction simulations, were completed as part of the pilots which happened in mid-September 2021.
As a key legal document in maritime trade needed to prove ownership of goods in transit, the eBL concept is to enable faster transactions, lower associated processing costs and build greater trust amongst businesses.
Its supposed wider impact includes making end users benefit from lower prices of imported goods while fraud risks and forgeries are mitigated through the use of technologies like blockchain.
To complete the transaction, UOB partnered Infocomm Media Development Authority (IMDA) in one of the digital trade financing pilots. The bank’s Shenzhen Branch in China concluded the trials between its corporate clients: Manufacturing Network Private Limited, Guangdong Guangyun New Materials Co. Limited, Tri-Star Electronics Private Limited, Shenzhen Uni-Right Industrial Trading Co. Ltd., and carrier, Pacific International Lines.
IMDA spearheads the implementation of TradeTrust. It collaborates with various domestic and international agencies and industry partners to use the digital utility that enables interoperability and the exchange of electronic trade documents including for different eBL solutions.
The utility seeks to connect governments with different blockchain technologies such as IBM’s Hyperledger and R3’s Corda and to a common public blockchain. It also provides proof of authenticity of documents and offers title transfer through open-source software. Its overall objective is to accelerate the digitalisation of global trade and enable wider adoption of eBLs.
The pilots form part of plans under the Singapore-China (Shenzhen) Smart City Initiative (SCI) which was established in 2019 to increase collaborations for digital trade on both sides. The pilots, in this case, helped demonstrate a reduced processing turnaround transaction time from a few days to within an hour, paperless workflows within the trade ecosystem and lower transaction costs for businesses to boost competitiveness.
The success of the trials which were just made public could be connected to this week’s announcement of four new MOUs under the SCI. Singapore’s Ministry of Communications and Information and IMDA say the collaboration in areas like e-invoicing, IoT and blockchain are geared towards promoting trusted cross-border digital connectivity.
On the list of projects committed in this second SCI plan is the building of joint innovative solutions focusing on IoT and Blockchain integration by Singapore’s NCS and AIToS, a ministry statement says. They are to build a trusted platform for track and trace, financing and smart contracting use cases in manufacturing and trade finance targeting both the China and Southeast Asia market.
According to the Permanent Secretary of the Ministry, Ms Yong Ying-I, 39 Singapore and Shenzhen companies and organisations are to date on board to implement SCI pilots.
China’s cross-border demand has surged, especially in the e-commerce space, by over 20% since the beginning of 2020, a report citing the latest research by the global company in measurement and data analytics, NielsenIQ, says. The firm cites the application of new information technology and the strengthening of China’s digital infrastructure as a basis for the growth.