Singapore’s Infocomm Media Development Authority (IMDA), the Monetary Authority of Singapore (MAS) and the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), in collaboration with commercial partners have successfully concluded the world’s first cross-border digital trade financing pilot of its kind.
The pilot used IMDA’s TradeTrust framework to facilitate the transfer of electronic records between jurisdictions that have adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Transferable Records (MLETR). This harmonises the legal recognition of digital documents such as electronic bills of lading (eBLs) across both jurisdictions and complements the larger global trade movement by the G7 economies on adopting electronic transferable records in international trade.
Cross-border trade finance is largely paper-based and vulnerable to fraud, due to the complex flow of transactions and the multiple number of parties involved. IMDA developed TradeTrust as an interoperable framework that provides proof of authenticity, origin and ownership of digital documents used in trade finance.
This enables trading counterparties and transacting banks to validate documents digitally and securely even when they are on different trade finance platforms, and allows such documents to be exchanged with another party in real-time. This helps mitigate the risk of fraud, reduce costs, and improve trust and efficiency.
The adoption of MLETR into statute law also provides increased legal confidence and commercial predictability to parties in both Singapore and ADGM in the recognition of electronic documents and digitalised transactions. This will pave the way for a more seamless, easier, and faster way to transact digitally.
The commercial partners collaborated closely with IMDA, MAS and FSRA in this pilot, and used IMDA’s TradeTrust to validate, review and transfer ownership of simulated eBLs. In doing so, these partner banks gained insights into potential benefits such as reducing the operational costs of fraud detection and document verification.
The digital economy is the future. Digitalisation and technological disruption, accelerated by the impact of the COVID-19 pandemic, have transformed consumer behaviours and business models considerably and created new opportunities. For example, e-commerce has enabled manufacturers to reach consumers directly.
The rise of platforms and apps with multiple integrated services from transport to finance and telemedicine have changed how services are consumed. Businesses are also increasingly reliant on electronic transactions and digital solutions, from sourcing to invoicing and payments. Secure and seamless cross-border data flows are essential to the growth of the digital economy and to ensure that consumer’s interests are safeguarded.
As reported by OpenGov Asia, Singapore and the United Kingdom (UK) have substantially concluded negotiations on the UK-Singapore Digital Economy Agreement (UKSDEA). The trade deal – Singapore’s third DEA – is intended to boost digital trade and data flows, such as the promotion of interoperable e-payment systems and the prohibition of local data storage requirements. It will also encourage digital economy participation, through channels such as online consumer protection rules, and e-commerce platform access for small businesses.
The agreement includes binding disciplines on cornerstones of the digital economy, such as data, as well as cooperative elements in a wide range of emerging and innovative areas such as Artificial Intelligence (AI), fintech and regtech, digital identities and legal technology.
Under the UKSDEA, Singapore and the UK are also pursuing cooperative projects that provide a dynamic framework for bilateral cooperation on forward-looking and emerging issues. Singapore and the UK enjoy strong economic ties, with the UK being Singapore’s largest services trading partner in Europe. In 2019, bilateral services trade exceeded S$22 billion, of which around 70% could have been digitally delivered.
The UK is also Singapore’s second-largest European investor and European investment destination, with over S$100 billion worth of UK investment stock in Singapore, and close to S$60 billion worth of Singapore investment stock in the UK.