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Joining hands for greater cross-border trade
ANNUALLY, over 250 million companies around the world transact goods and services worth US$120 trillion - making the opportunities in international trade tremendous for the businesses involved.
The potential for a single business to transact with hundreds to thousands of buyers or suppliers around the world should be the dream of any business owner. However, it is typically the larger corporations - and even so only a fraction of them - that are able to internationalise successfully.
In many nations, the top 5 per cent of exporters, the largest exporters, account for over 80 per cent of exports. For the rest, the idea of engaging in cross-border trade remains beyond reach.
The risks, complexities and costs of venturing overseas are often too much to bear for any single business. Going global means facing off against not just hundreds but thousands more competitors. In addition, firms are more susceptible to ripples in the global economy - for instance caused by trade conflicts.
Indeed, businesses - especially small and medium-size enterprises (SMEs) - have to battle a number of friction points before they can even attempt to internationalise.
To ignore these gaps is to risk encountering significant losses in revenue and reputation; identifying and rectifying them would help improve efficiency, agility and resiliency.
Working together to unlock global opportunities
No single player can eliminate these gaps alone. It will take a collaborative and holistic effort between companies and governments to create the infrastructure and integrated networks required to promote cross-border trade and ultimately elevate countries as trading powerhouses. After all, the bounties reaped from international trade do not just benefit the company but its base country as well.
Collectively, the two sectors of corporate and government can work together, tap into each other's strengths and common interests, and drive businesses across borders. The public sector can leverage the insight and on-the-ground knowledge of the private sector to guide policymaking and unlock new solutions that stimulate cross-border trade, making it easier for businesses, especially SMEs, to participate in global trade.
For one thing, effective trade facilitation needs a mutually symbiotic relationship that allows for a balanced two-way dialogue between the public and private sectors. Together, the two entities can collaborate to design and develop trade facilitation platforms that enable businesses to scale up, and for the public sector to optimise its investments.
Around the world, a number of such national trade facilitation committees have been set up including in Indonesia, India and the Philippines.
A one-stop trade portal for all
Today, while parts of the business-to-business (B2B) process are being digitised, large and costly gaps still exist - estimated at US$500 billion in annual administrative costs. According to the World Trade Organization (WTO), improving business inefficiencies could contribute US$1 trillion to the global economy.
Businesses are combating a patchwork of debilitating processes, systems and network, with no single system to connect them all. Many need better infrastructure solutions, and this is where the public sector can step in and act as a glue that binds the separate pieces together.
In Singapore, the lead agency on trade facilitation and revenue enforcement, Singapore Customs, led an effort supported by leading tech companies to develop an online trading service - the Networked Trade Platform (NTP) - which takes the concept of a single window system one-step further.
A one-stop trade platform, it brings together key functions such as movement of goods as well as regulatory and financial elements for players across the trade value chain. Integrated within the platform is Mastercard Track, which aims to remove frictions in the global trading system and make it easier for businesses to participate in global trade.
Come 2019, businesses will be able to access, retrieve and exchange key information relating to themselves and their trading partners through the Mastercard Track Trade Directory, a secure central database with over 150 million companies registered worldwide.
It will also integrate feeds from more than 4,500 compliance lists, and businesses can proactively monitor and manage all their business relationships in one place.
Partnerships such as these spell out the vision to blend B2B and business-to-government (B2G) services on a single platform that will bridge silos across sectors and deliver greater efficiencies in cross-border trade.
Cross-border trade involves not just the traders but the government of each country too. Together, public and private entities must join hands to build partnerships that ignite successful internationalisation and drive positive impact on the economy. Public-private partnerships reflect the unified mission to build a truly connected and global network, enabling end-to-end international trade to help businesses raise productivity, boost competitiveness, and gain access to new opportunities.
Ultimately, the goal is to make the business of doing business easier.
- The writer is vice-president, enterprise development, at Mastercard Asia Pacific