Singapore leading the way in promoting digital trade

BY updating its Electronic Transactions Act, Singapore has set a shining example for countries still stuck in a paper-based past.

Singapore has been at the forefront of digital trade for more than two decades. From the world-first 1998 adoption of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Commerce via the Electronic Transactions Act, to the recent creation of digital economy agreements, Singapore has crafted a powerful digital ecosystem that maximises the benefits of trade for all.

Singapore can build upon this impressive legacy with its amendments to its Electronic Transactions Act, including vital electronic transferable records, such as bills of lading and promissory notes.

The Act was enacted to provide legal certainty for digital transactions and was amended in 2010 to recognise the use of electronic signatures.

By further amending the Act to incorporate electronic transferable records, Singapore can cut back on time-consuming paper-based process, reduce costs for micro-, small- and medium-size enterprises (MSMEs), and improve trade flows. Importantly, Singapore's continued leadership in this area will inspire other countries to adopt digital measures.

Faced with the economic challenges of the Covid-19 pandemic, the shift from paper-based to digital trade has never been more urgent. Protective measures implemented to contain the spread of the virus, such as social distancing and teleworking, have exposed the inherent weakness of paper-based trade.

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Banks and other financial intermediaries have experienced growing difficulties in processing paper-based transactions, which have created bottlenecks across the global trading system.

ICC data estimates that only 46 per cent of local banks have digital strategies in place. On the receiving end of these disruptions are MSMEs, who desperately need liquidity to survive the ongoing crisis. In this context, Singapore can remove unnecessary paper-based requirements and reinstate trade-flows to pre-pandemic levels.

As the global economy continues its recovery, Singapore will be well-placed to work with other countries to ensure a rapid transition to paperless trade. Most notably, Singapore can set the stage for international adoption of the UNCITRAL Model Law on Electronic Transferable Records to create a robust legal framework for the use of electronic trade documents.

The Model Law is already being championed by ICC's Digital Trade Standards Initiative, which is working towards the establishment of a globally harmonised digital trade environment to promote cross-border interoperability.

Expanding the Electronic Transactions Act can benefit other digital trade projects too, including TradeTrust, a framework sponsored by the Singapore government, and endorsed by ICC, to facilitate the exchange of digital trade documents on a public blockchain.

ICC's Centre for Future Trade, a Singapore-based innovation hub aimed at utilising blockchain solutions to modernise global trade and reduce barriers for MSMEs, was one of the first in the world to utilise this framework to support a shipment of iron ore from South Africa to China.

There is a clear business case for governments to enable paperless trade and mitigate further disruption from the Covid-19 pandemic.

The far-reaching impacts of the pandemic have made clear that policymakers must retire outdated paper-based processes and embrace the advantages of digital trade. Now is an opportune time to update Singapore's Electronic Transactions Act to include vital electronic transferable records. By amending the Act, Singapore can send a clear signal to the rest of the world: the future of trade is digital.

• The writer is secretary general of the International Chamber of Commerce (ICC)