By Himanshu Maggo, Head of Trade Products Management, Transaction Banking, Singapore, Standard Chartered Bank
Singapore is spearheading global efforts to create a centralised, digital hub for trade. By connecting to the Networked Trade Platform (NTP), businesses will save time and costs, and be digitally connected to trading partners and counterparties across the globe seamlessly.
Singapore is an important global trade hub with China, the European Union and the United States among its biggest trading partners. Commerce has grown strongly in recent years with Singapore’s cross-border merchandise trade reaching SGD1,022.2 billion in 2019, an increase of 17% from three years ago.¹
The US-China trade dispute and COVID-19 outbreak could impact this trajectory, but the Singapore government’s fiscal prudence allows it to spend more in the near to mid-term to cope with these external challenges. Over the long term, Singapore’s future looks bright with Standard Chartered’s Trade20 Index² showing that the city is one of the stars of global trade and continues to display substantial trade growth potential.
While the importance of trade is not in dispute, traditionally it has been a paper- and labour-intensive undertaking. It can place a heavy burden on businesses (especially smaller companies) as they try to communicate with many, different counterparties within the ecosystem, such as government agencies, banks and law firms, as well as obtain the necessary contracts and licences.
Singapore’s NTP is a platform that will change that by harnessing digital technology to make it easier for Singaporean companies to trade in Asia and across the globe.
Creating a one-stop-shop for trade
NTP will become an open digital platform where trade-enabling companies can interact with all counterparties in one place, offering digital services that simplify trade and logistics.
For example, at present Standard Chartered and eight other banks are in discussion with vCargo Cloud to join its CamelONE portal, which will enable the banks to interact over NTP and connect with other stakeholders. This portal aims to provide trade finance products including letters of credit, import finance and export finance. The products are electronic and securely stored in one place making it easier and quicker to complete and file documents.³
Building global trade connections
While the platform currently focuses on Singapore trade, the government is working with other markets to link NTP to their systems with the aim of creating a global digital trade network. For instance, the Monetary Authority of Singapore is in ongoing discussions with the Hong Kong Monetary Authority to digitalise trade and trade finance between the two cities.⁴ Discussions are also underway with China, Indonesia, and the Netherlands to allow the international exchange of customs declaration data for trade facilitation and risk assessment.⁵
More recently, Singapore has partnered various international organisations, governments and industry players on the development of TradeTrust, to set up globally-accepted standards and frameworks. This will enable counterparties to exchange digital trade documents in a secure manner between different digital systems. Besides lowering the cost of transactions, the initiative is designed to mitigate the risk of fraud by enabling the authentication of digital documents.⁶
Singapore is also considering changing its legal framework to treat selected electronic documents as negotiable instruments,⁷ and has earmarked SGD1 billion in its 2020 budget⁸ to strengthen the country’s cybersecurity capabilities. These actions further underline Singapore’s commitment to embrace new technology and build a secure environment in which new platforms like the NTP can succeed.
Supporting Singapore’s businesses
Importantly, NTP will support businesses’ plans to grow and to advance their trade digitisation journey. For instance, companies using NTP will only have to enter information once for it to be received by all parties in the transaction, reducing the time and resources needed to complete trade deals. Indeed, estimates place the annual savings for companies in terms of manhours at SGD600 million.⁹
As a key supporter of the platform, Standard Chartered has engaged clients to connect to NTP and simulations have shown that in some instances, clients can reduce the number of steps in a trade transaction from 28 to eight.
Choosing the right financial partner
For companies to gain the maximum benefits from NTP they need to work with a bank with practical experience of the platform and is a leader in cross-border trade. Once the NTP begins to feature additional financing capabilities, picking the right banking partner can prove even more crucial as they can provide the requisite support to help smoothen the digital integration for companies; tailor a product mix that better fits client requirements; and, provide best-in-class transaction turnaround times.
As one of the world’s largest trade banks, Standard Chartered is leaving no stones unturned. From working with VAS providers to developing solutions to advising clients on their digital transformation, Standard Chartered is playing a key role in supporting the development of NTP and working with other counterparties to ensure the system is a success. Because, building the connections and relationships needed to power global trade is a long-term endeavour, one befitting of the lender that is Here for good.