Original article The Straits Times
The Singapore parliament has proposed an amendment to the current Electronic Transactions Act (2010) which could allow cross-border trade documents to be digitised.
Today, most maritime trade transactions use physical bills of lading that are legal and commercial documents that provide evidence for the contract of carriage, receipt, and ownership of goods. The Infocomm Media Development Authority (IMDA) and the Maritime and Port Authority of Singapore have been working with the Port of Rotterdam’s blockchain centre Blocklab on introducing title transfer capability in relation to electronic Bills of Lading.
In December 2020 Singapore was trialling digital documentation with Qinzhou and Tianjin ports in China to facilitate trade by reducing the amount of paperwork involved in cross-border trade. The trials are part of Singapore’s move to build its Networked Trade Platform that launched in 2018, which will allow for electronic exchanges of documents needed in cross-border trade.
What are the implications of these amendments to the Electronic Transactions Act for the trade and commodities finance sector?
The amendments to the ETA contemplated by the Bill would be a positive development for the trade and commodities finance sector. The Electronic Transactions (Amendment) Bill, seeks to reduce the amount of paperwork involved in cross-border trade by allowing for digital documentation with international ports. Currently, most maritime trade involves the use of physical bills of lading, which are legal and commercial documents providing evidence for the contract of carriage, receipt, and ownership of goods for a cargo shipment.
Given the intricacies of maritime trade law, the paper trail typically runs up to hundreds of pages for a single transaction. These take a large amount of time and money to process. Research by container shipping giant Maersk and tech firm IBM in 2014 showed the cost of processing trade documents made up as much as 20 percent of the cost of moving goods. Digitalising trade documents would significantly enhance efficiency and productivity.
The Bill will do this by aligning Singapore with standards from the United Nations Commission on International Trade Law, which spells out an internationally harmonised legal framework for electronic records. To date, only Bahrain has adopted the UNCITRAL Model Law on Electronic Transferable Records. Its adoption by Singapore will be a significant step in the right direction, but much more widespread adoption by states is likely to be required before we see common usage of electronic bills of lading outside of the platforms that have been set up by a number of organisations that seek to replicate the effects of a bill of lading through a contractual framework with a governing law that has been agreed to by all of the parties using the platform.
What does this mean for #dltledgers’ customers?
Bills of exchange and promissory notes: There is increasing usage of bills of exchange and promissory notes in receivables purchase transaction in recent years. The ability for these bills to be signed and held electronically results in the use of electronics platforms like #dltledgers for the sale and purchase of receivables. As our customers, you will be able to issue, approve, transfer and track your bills of exchange digitally, directly on the platform.
Bills of lading: There would be a number of potential benefits to the trade and commodities finance sector if electronic bills of lading were to be given equivalent status to paper bills of lading. There will be an increase in the transparency, reviewing, approval, and transmission of eBLs that will result in reduced risk of transactions, facilitate your compliance with the Code of best practices – Commodity Financing which was recently published by the Association of Banks in Singapore. If eBLs are issued through #dltledgers, as a customer, you will have greater transparency, traceability, and immutability that will reduce the risk of bills of lading fraud.
Bolero International partnership with #dltledgers platform
In 2020 December we went live with our partnership with Bolero International to add its electronic bill of lading (eBL) solution to our platform. With this new collaboration as a #dltledgers customer, you will be able to issue, approve, transfer and track your eBL directly on the platform, while the document itself will be transferred within Bolero. This means that we now provide true, end-to-end digitisation for our customers, enabling you to make a complete shift from paper-based trade execution to digital. “As well as delivering immediate efficiencies and cost savings, this is helping our users prepare for the next wave of data-driven trade finance” – Farooq Siddiqi, CEO at #dltledgers. You can read the entire article here.
To learn more about #dltledgers’ offerings, or to begin digitising your trades, please reach out to our customer success team here.