KUALA LUMPUR, 14 October 2019 – 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 crossborder trade between Malaysia and Singapore.
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, 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
“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 2017.”
Stuart Milne, Chief Executive Officer, HSBC Malaysia
Blockchain solutions apply to companies of all sizes. This transaction demonstrates how blockchain solutions can be easily applied to all companies, regardless of size. Simply Packaging is an example of a local firm that’s grown from an SME to a mid-tier company, that uses digital expertise and technical experience to streamline and increase its business efficiency.
Trade has been the cornerstone of HSBC’s strategy for more than 150 years. Being a leading provider of international trade and supply chain finance for businesses of all sizes, HSBC provides access to 90% of global trade flows.