Asian banking giant DBS and multinational commodity trading firm Trafigura Group are tapping blockchain to facilitate global trade.
Alongside the Singapore government and the International Chamber of Commerce, these firms are looking to reduce the number of paper-based processes involved in global trade. Distributed ledger technology firm Perlin is providing the blockchain background to build the open-source platform, dubbed ICC TradeFlow.
DBS claims the new platform will connect partners from different countries, reducing end-to-end document transit time from 45 days to just 20. A $20 million trade in iron ore from Africa to China is expected to be the first transaction processed, according to a press release.
The ICC TradeFlow Platform is based on the Trade Trust network infrastructure provided by the Infocomm Media Development Authority (IMDA), which is a statutory board under the Singapore Ministry of Communications and Information.
The partners plan to add more enhancements to the platform as more countries join the new trade finance system. According to the release, the participants claim they can build a more trusted relationship between counterparties, adding more background information such as credit ratings on trade participants, vessels and couriers.
The partnership could foster new innovations that can reinforce Singapore’s position as a leading commodity trading hub, said Satvinder Singh, assistant CEO of Enterprise Singapore, an agency under the Ministry of Trade and Industry in the country.
Trade finance has been one of the frontiers for enterprise blockchain adoption. The trade finance blockchain Marco Polo has partnered with over 20 global banks, including Bank of America, ING and BNP Paribas. It has piloted its first trading arrangement between Germany and Russia in October.
A slew of Chinese state-owned banks have also launched their own blockchain trade finance platform to facilitate short-term financing between export companies and financial institutions, and the Construction Bank, one of four major commercial banks in the country, has revamped its blockchain platform with new factoring abilities as the platform’s trading volume surpasses $53 billion overall since its April 2018 launch.
Trafigura itself has been involved in the blockchain space since 2017, when it participated in the development of a crude oil trade finance platform alongside IBM, Natixis and Hyperledger.
Singaporean flags image via Shutterstock