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Trafigura pilots US$20m trade on Singapore blockchain platform developed with DBS, IMDA
A NEW blockchain platform meant to tackle the perennial problems behind the trillion-dollar trade finance market has been developed in Singapore among partners including commodity trading giant Trafigura and DBS, with a US$20 million pilot trade to be transacted via it.
The open-sourced blockchain platform - known as the ICC TradeFlow platform - will facilitate this month a Trafigura shipment of iron ore from Africa to China, a press release from DBS on Wednesday said.
The platform is built on IMDA's TradeTrust, which is being developed as a globally trusted network.
It is built on a set of standards that would allow electronic trade documents to be exchanged among different digital ecosystems. TradeTrust is interoperable, such that in layman's terms, different "operating systems" - or blockchain platforms, in this case - can "talk" to one another using an accepted set of governance framework, enabling transactions to go through.
The platform runs on blockchain technology offered by a blockchain startup known as Perlin.
In the press statement, Tan Chin Hwee, Trafigura's Asia-Pacific CEO, said ICC TradeFlow is the first to be powered by the TradeTrust network. "This is a Singaporean take on how to successfully adopt global trade finance technology under the leadership of governmental stakeholders," he said.
Tan Su Shan, head of institutional banking, DBS Bank, said the initiative means that customers will be able to receive their goods at least 50 per cent faster, with much less paperwork.
"DBS is pleased to lead the industry and work with global industry anchors such as Trafigura to co-create digital solutions to make the age-old business of trade finance more efficient, transparent and productive," she said. "Solutions like these are timely as they meet our customers' demands for increased transaction speed and optimised financing to promote better cash flow and capital management."
This trusted network aims to reduce the age-old inefficiencies and complexities of cross-border trade that come from using paper documents. The problems with relying on paper documents include high cost and risk of invoice financing fraud. Moving trade onto blockchain platforms could not just tackle these problems, but also promote more growth in trade, these partners said.
ICC TradeFlow will be further developed for a more seamless process. There are plans in the pipeline to offer on-the-go trade finance, as well as provide background information and credit ratings on trade participants, vessels and couriers.
IMDA said it is spearheading the development of TradeTrust for digital trade documentation exchange. It is now working with various government agencies, including the Maritime and Port Authority of Singapore, Enterprise Singapore, Singapore Customs, Government Technology Agency, and industry partners such as Singapore Shipping Association, to do so.
Jane Lim, assistant chief executive, IMDA, said the government agency is looking forward to working with more market participants across the world to incorporate TradeTrust into their systems.
Given that Singapore is home to a strong pool of international trading companies, Singapore is "well-positioned" to connect the industry players to technology that can boost the overall efficiency of trade, said Satvinder Singh, assistant chief executive officer of Enterprise Singapore.