A Cross-Border Commodities Financial Services Platform has been established in the Shanghai Free Trade Zone by COMMIN, ValuePay, and Mastercard.
The initiative, which aims to build a safer and more secure transaction environment in the SFTZ, is supported by Mastercard’s key banking partners including DBS Bank, CIMB Bank and Bank of Shanghai, who have expressed interest in participating in the pilot test of the platform.
“With the huge increase of inter-regional trade, the Shanghai Free Trade Zone has become a critical trade hub not only for China but for the region,” says Yvette Oh, Executive Vice President, Market Development, Asia Pacific, Mastercard.
“With the new platform, whether it is governments, banks, merchants or businesses, they will not only experience enhanced connectivity and efficiency but are able to save tremendously on time and costs compared to the old administrative, paper intensive process.
“We estimate that with the Cross-Border Commodities Financial Services Platform, we are creating significant time savings in the trade processes within the Shanghai Free Trade Zone; that translates to savings in actual operational costs.”
Greater transparency and accountability
With a fully digital platform from payments to documentation, the Cross-Border Commodities Financial Services Platform is designed to bring greater transparency and accountability to the trade process. It provides authorities and stakeholders with deep and detailed visibility of the full trade cycle, including the payment of duties and subsequent transactions.
The platform is designed to bring about significant savings in terms of time and cost to all parties involved in the eco-system. In contrast with the existing system which involves heavy administration and is very labor-intensive, the new platform will enable an efficient and convenient trading environment for all parties.
Deeper connectivity and security
The platform will also bring about deeper connectivity and a higher security for the various parties and stakeholders in the SFTZ. This in turn will enhance collaboration and coordination within the SFTZ, connecting banks, regulatory bodies, bonded warehouses, merchants and businesses through one platform.
The platform will also serve as a means to authenticate the credibility of merchants and traders, opening up opportunities for more banks around the world to be a part of SFTZ’s trade financing and encouraging an increased volume of cross-border transactions.
“The availability of an electronic and digital warehouse receipt system is one of the most important foundations for commodity trade financing,” says Wang Lei, General Manager, COMMIN.
“We hope the added value services offered by the platform will enable better logistic tracking system and financial services that further promote cross-border transactions and collaborations between the various parties, for greater economic growth.”
Kevin Li, President, ValuePay, explains that the Cross-Border Commodities Financial Services Platform is an integrated platform that provides real-time resolution of key issues such as supervision and distribution of pledged goods as well as the authentication of applications and processes.
“This helps brings about greater efficiency and safety and security compared to the traditional system which is labor and administration intensive,” adds Li.
Lim Him Chuan, Group Head of Product Management, Global Transaction Services, DBS Bank, notes that trade settlement has traditionally been a paper-intensive industry for both banks and customers.
“With this first-of-its-kind platform, it is now possible for manual processes to be digitised and streamlined, offering our customers greater convenience and efficiency,” says Lim.