SABIC Asia Pacific Pte Ltd (SABIC) has been awarded Asia Pacific’s Best Fintech Solution in the Adam Smith Awards Asia 2020, with HSBC named as its banking partner. The win follows the completion of a fully digitised trade transaction in which HSBC supported SABIC with the sale of resin from Singapore to a buyer in Malaysia in October 2019.
HSBC Singapore was the advising/nominated bank, acting on behalf of SABIC and HSBC Malaysia was the issuing bank of underlying letter of credit, acting on behalf of the buyer in Malaysia.
APAC’s Best Fintech Solution
SABIC processes a large amount of short-haul trades between Singapore and Malaysia. Physical goods take a relatively shorter time to transfer in comparison to the time needed to process the exchange paper documents.
Utilising the Contour Platform, a single shared application, to conduct the transaction, the exchange of fully electronic documents was completed within 24 hours, resulting in just-in-time inventory management, removal of demurrage charges, shortened turnaround times and release of man-power handling paper documents for other activities.
By integrating the LC blockchain platform through R3’s Corda blockchain platform in the back-end with Bolero’s electronic Bill of Lading (eBL) system, the transaction entirely digitised the administrative process through the e-presentation of key trade documents, enabling:
- Transfer of title completion while goods in transit
- Instantaneous updates and the elimination of paper reconciliation
- End-to-end visibility for all parties
The use of blockchain in trade also takes trade finance a step closer to a more sustainable future; by digitising the entire process using electronic version of bills of lading and other trade documents, the solution eliminates paper and physical dispatch.
Iain Morrison, Head of Global Trade and Receivables Finance, said: “We are delighted to have supported SABIC in being recognised for utilising such a cutting-edge solution. Trade between closely located markets is regularly hampered by the laggard of paperwork, which follows behind physical delivery of goods. The result for businesses is high storage costs and product delays. This transaction marked a stepchange in reducing the administrative hurdle.”
Janardhanan Ramanujalu, Vice President & Regional Head for South Asia, Australia and New Zealand, said: “We are delighted to win the ‘Best Fintech Solution’ Award and this win underpins the strong collaboration between SABIC, HSBC and Simply Packaging. Harnessing blockchain technology to digitize and optimize transaction processes allows us to respond swiftly and effectively to supply chain network challenges and seize emerging opportunities. We look forward to expanding this solution to more customers across Asia Pacific next year.”
New technology reduces the hurdles of close-proximity trade
Cross-border trade between Singapore and Malaysia was worth over US$110 billion in 2019. 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.
Mr. Morrison continued: “Solutions like this could also help boost the efficiency of intra-ASEAN trade, characterised by many close-proximity shipping routes and strong trading relationships, which in turn helps trade to grow and flourish throughout the region.”
The Adam Smith Awards Asia are recognised throughout the globe as the ultimate benchmark of corporate achievement. A full list of the 2020 awards can be found at the website: https://treasurytoday.com/asa-2020-winners
The transaction adds to HSBC’s credentials in the digitsating trade finance using blockchain. Globally, HSBC has completed a number of groundbreaking transactions including several in Singapore including the world’s first fully-digitised trade transaction for Rio Tinto and Cargill2 in 2018, and industry first fully integrated paperless trade transaction in 2019.3