The world’s first cross-border digital trade financing pilot was recently rolled out by Singapore and Abu Dhabi (UAE). The pilot was carried out in collaboration with the Monetary Authority of Singapore (MAS), Singapore’s Infocomm Media Development Authority (IMDA), Abu Dhabi Global Market’s Financial Services Regulatory Authority (FSRA), and commercial partners.
As a key trade hub and international financial centre in Asia, Singapore is keen to accelerate the digitalisation of trade finance to promote greater trust, efficiency, and cost savings in the financing of global and regional trade. With this pilot, we hope to see broader adoption of digital trade finance in Singapore and the region.”
– Leong Sing Chiong, Deputy Managing Director (Markets and Development), Monetary Authority of Singapore
The pilot employed IMDA’s TradeTrust framework to make it easier to transfer electronic records between countries that have approved the Model Law on Electronic Transferable Records of the United Nations Commission on International Trade Law (UNCITRAL). This harmonises the legal recognition of digital documents like electronic bills of lading (eBLs) in both countries, complementing the G7 economies’ greater global trade push toward digitally transferable records in international trade.
Due to increasing trade tensions, market volatility, and the ongoing repercussions from the COVID-19 crisis, global trade is experiencing a period of increased uncertainty. Banks that support international trade are more conscious than ever before of the relevance of digital operating models and the benefits they may provide. Although digital transformation is overtaking the financial industry, banks that facilitate international trade are still looking for new methods to improve their ageing trade finance functions.
Much of today’s global trade finance is still analogue or paper-based. This leads to obvious problems such as honest mistakes, fraud, and excessive delays. TradeTrust is an interoperable system that ensures the validity, provenance, and ownership of digital documents used in trade finance transactions. The entire procedure sets the door for a more seamless, simple, and quick digital transaction.
The pilot, according to IMDA Chief Executive Lew Chuen Hong, demonstrates how the TradeTrust Digital Utility can help with the digitalisation of trade financing procedures. “We have complemented this by providing legal certainty to electronic transferable records such as eBLs through the MLETR. With TradeTrust, businesses large and small can now authenticate their digital trade documentation and transact seamlessly in the digital economy,” he said.
IMDA, MAS and FSRA will continue to work together in an incremental approach with the goal of encouraging our businesses to phase out and replace paper documents with digital documents as the standard practice in trade finance. Following the pilot, appropriate technologies and trade platforms can be used for live goods shipments between the UAE and Singapore. Other businesses interested in implementing TradeTrust are encouraged to reach out to IMDA, MAS, FSRA, or any of the partners.
OpenGov Asia reported, the International Chamber of Commerce (ICC), with 45 million institutional members in 130 countries, has joined the Singapore Government and a growing consortium of key industry partners to accelerate the digitalisation of global trade and commerce at the annual World Economic Forum Annual Meeting in Davos
The Singapore Government and major firms from key industries have signed a historic cooperation agreement to facilitate and accelerate the adoption of digital technologies in trade and commerce.
“Digital platforms will lower existing barriers to international trade in the coming years and enable many more businesses to participate in the new global economy. In line with ICC’s 21st-century purpose, we are committed to enabling the broadest possible adoption of these digital technologies and support the development and recognition of universally accepted best practice standards for digitalisation, based on global consensus and the work being done by our partners today,” said John W.H. Denton AO, ICC Secretary-General.
