KUALA LUMPUR: HSBC hits another blockchain milestone in the successful execution of the first-ever live pilot blockchain Letter-of-Credit (LC) transaction in Malaysia.
The transaction involved the import of resin by Malaysia’s Simply Packaging Sdn Bhd (Simply Packaging) from a Singaporean company, both active players in the packaging and chemicals industry respectively.
HSBC Malaysia was the issuing bank and HSBC Singapore was the advising/nominated bank.
This marks a significant step for Malaysian companies in the digitisation of trade. It makes doing business simpler and faster by reducing transaction times and brings in working capital efficiency. The use of trade finance solutions like blockchain also helps to increase the velocity of trade, especially in situations like these where shipping routes are short, like the cross-border trade between Malaysia and Singapore.
Stuart Milne, Chief Executive Officer, HSBC Malaysia said, “I am very pleased that HSBC has pioneered Malaysia’s first pilot blockchain LC transaction. This showcases our strong commitment and ability to support cross-border trade by Malaysian businesses using cutting-edge technology platforms.”
Removing the hurdles of close-proximity trade
Cross-border trade between Malaysia and Singapore was worth over US$85 billion in 2018. Whilst the physical transfer of goods between neighbouring countries takes a relatively short time – usually under 48 hours – the administrative paperwork often delays their delivery. The process of exchange and checking of documents typically takes 5-10 days. The Simply Packaging blockchain exchange was completed in 24 hours.
By integrating blockchain technology, the transaction has entirely digitised the administrative process through the e-presentation of key trade documents by enabling:
· Integrating Bolero’s electronic bill of lading (eBL) platform to issue and manage an eBL
· Transfer of title completion while goods in transit
· Paper reconciliation eliminated and updates instantaneous
· End-to-end visibility for all parties
· Resulting in just-in-time inventory management, removal of demurrage charges and shortened turnaround times
“The quicker turnaround times does not just save companies money. It will help boost the efficiency of intra-Asean trade, characterised by many close-proximity shipping routes, which in turn helps trade to grow and flourish throughout the region. Intra-Asean trade was worth US$590 billion in 20172,” Milne added.
Shahid Chachia, Joint Managing Director of Simply Packaging said, “As a leading manufacturer of plastic films and packaging in Malaysia, we are always on the lookout for the latest innovative initiatives to keep up with changes in the digital and economic spheres. We are therefore proud to be part of the first trade transaction in Malaysia using the revolutionary blockchain technology – especially when we are the first in Malaysia to do so with HSBC.”