Singapore chamber brings trade documents onto blockchain
The Singapore International Chamber of Commerce is to move electronic certificates of origin (eCOs) onto a blockchain-based platform in a bid to improve transparency and security.
A new solution was launched this week, with 10 of the chamber’s largest certificate of origin users using it in pilot mode. The chamber’s CEO, Victor Mills, tells GTR that the aim is to have all customers who currently process applications manually to be on the new system by the start of January 2019.
A certificate of origin is an export document to certify the country of manufacture of a shipment. It is required by customs, banks and traders to verify goods and is commonly among the documents required in a trade finance transaction.
The use of eCOs – that is, those in which the required documents such as invoices, manufacturing declarations and factory licenses, are uploaded electronically – is not new. Indeed, trade digitisation company Bolero processed its first eCO in 2003.
In this case, however, the certificate will be digitally captured, embedded onto a blockchain and stored on a private ledger. Customs, trade finance banks and any other parties that need to access it, will receive a digital copy in order to validate its authenticity. This can then be used to allow the goods’ release for export, or to release funds for a trade finance transaction.
The solution was built by Singapore-based company vCargo Cloud (VCC), a trade facilitation solutions provider. VCC has built single-window systems for governments around the world. This is its first implementation of a blockchain solution, which has been built as a module of its flagship CamelOne trade facilitation suite.
It was developed on Ethereum infrastructure, however, VCC’s CEO, Desmond Tay, says that the company is also looking to develop enhancements on Hyperledger technology. VCC is working with governments in Japan, Myanmar and Sri Lanka to implement similar solutions.
He explains to GTR that for those importing countries without the technological capabilities to confirm via blockchain, a paper document is also created, linked to the digital counterpart stored on the ledger. Again, the aim is to enable the goods to be traced and verified at all points of the supply chain.
“For destination countries, the paper certificate can be shipped with the cargo. What makes this different is the QR code, which is linked to a blockchain address. The two go in parallel: there’s a blockchain-based digital record linked to the paper certificate. Users can scan the QR code, which goes back to the blockchain and verifies the authenticity,” Tay says.
The solution will still require visual sighting by chamber staff, who will examine the original documents, looking for counterfeits. VCC is currently exploring ways to improve the security of this stage of the process.
Chamber CEO Mills says that while he does not have statistics on numbers of fraudulent certificates, “we know from the cases customers share with us that it does happen more often than you might think”.
In one high-profile fraud case in 2015, a Singaporean company director was fined S$434,000 for submitting hundreds of false certificates of origin and import and export permits. The businessman had imported boxes of zippers and sliders from China, then re-exported them to Europe. His documents, however, declared that the goods were from Indonesia, meaning that they benefitted from lower tariffs upon entering the EU.
At the time, the head of Singapore Customs’ trade investigations branch, Wan Boon Oon, said: “Making false statements to obtain certificates of origin and fraudulent import and export permit declarations are serious offences under the regulation of imports and exports regulations.”
The Vietnam Chamber of Commerce and Industry has previously warned about the circulation of such fraudulent documents, claiming that in 2012 there was 80 registered forged certificate of origin dossiers.
The platform fits with the overall trend of trade digitisation in Singapore. The city state is looking to co-launch its global trade connectivity network (GTCN) with Hong Kong in 2019. The eventual aim is to digitise cross-border trade between the two markets, with initial functionality likely to be focused on restricting the duplication of trade documents, such as letters of credit.take me back