2000 Press Release
Traders on pilot project leverage on Trade Finance Portal. Developed by Singapore Network Services, this E-commerce initiative has the potential to reduce paperwork and errors and provide a faster turnaround and cost savings for trade businesses.
Singapore, 08 March 2000 – Singapore Network Services Pte Ltd (SNS) is all set to offer trade financing on the Internet. This follows a pilot run of the portal with three traders and The Hongkong and Shanghai Banking Corporation Limited (HSBC) since 1 July 1999.
A first for the trading community in Singapore, the web-based Trade Finance System (TFS) is developed by SNS and spearheaded by the Singapore Trade Development Board (TDB).
The pilot group of traders has been applying for three commonly used trade financing instruments - Letters of Credit (LCs), Demand Drafts (DDs), Telegraphic Transfers (TTs) - with HSBC over the Internet. To date, more than 100 online transactions - with a total value close to S$5 m - have been successfully conducted.
With web-based trade financing, traders have greater flexibility as trade finance instruments can now be accessed anywhere and at any time of the day. In addition, the time taken to prepare and submit the form electronically and later*, retrieve the approved message takes five to 10 minutes. A significant reduction in paperwork and errors has also been reported.
* processing of applications is subjected to operational banking hours
How TFS works
Previously, to apply for LCs, TTs and DDs from banks, traders used the conventional means -- telephone or facsimile – and send the original forms via courier. The sending of forms to the bank and picking up the approved document from the bank could take an hour. Alternatively, traders can secure these trade financing instruments electronically via the bank's in-house systems.
However, banks offer different, disparate and proprietary bank systems. This can cause complications with systems interface and gives rise to multiple manual documentation, multiple points of data capture and the maintenance of different systems, which have proved to be costly for the traders.
With the TFS as a central banking portal for banks and financial institutions in Singapore, traders can enjoy a single connection to bank (s) and other benefits such as greater flexibility, faster turnaround time, reduced paperwork, elimination of errors and reduced costs (Please refer to Paragraph 4 for quantifiable benefits).
A spokesperson from YGM Marketing Pte Ltd, a pilot user of TFS with HSBC, said: "TFS allows us to leverage on the easy accessibility of the Internet to apply for trade financing instruments. It is one-stop and hassle-free. This helps us to save costs as we no longer need to engage courier or despatch services. With each application now, we save more than 80 per cent of the time previously needed to send the documents to the banks, not to mention the time saved from making phone calls and faxes."
Mr Chan Kit Whye, General Manager (Finance) of Enthone-OMI (Singapore) Pte Ltd, another pilot user with HSBC, said: "With Trade Finance System being offered via the World Wide Web, it opens up a whole new dimension of applying for trade finance instruments. Harnessing this online application would enable our company to jumpstart the application of Business-to-Business E-commerce and reap substantial benefits that include greater flexibility, cost savings and reduced paperwork.
"We look forward to additional value-added enhancements that HSBC and SNS will be introducing such as integration into SNS' existing services, to offer holistic and one-stop trade services for us, traders."
Secured transactions over the Internet
As TFS incorporates leading-edged Public Key Infrastructure (PKI) technology, traders are assured of secured transactions when conducting their trade financing activities over the web.
A private key, issued to traders in the form of a Smartcard, must be used throughout a transaction to ensure that each electronic application is digitally signed and encrypted.
Meanwhile, digital certificates from Certificate Authority, Netrust, further guarantee data integrity and authentication.
TFS was developed as a trade financing and payment module of the TradeNet Plus framework. The TradeNet Plus project is spearheaded by TDB.
Mr V. Mathivanan, Chief Executive Officer of SNS said: "As a leading applications service provider in the trade and logistics industry, we are ready to provide trade financing as part of our value-added E-commerce services for the industry.
"The TFS forms the integral payment fulfillment component of the supply chain as it effectively complements our existing offerings to realise SNS' vision of integrated and holistic services for the trading community."
Mr Michael Lee, Head of Banking Services, said: " We are pleased to be an integral part of this pioneering national e-commerce initiative which will certainly add immense value to Singapore's trade development."
"We see our collaboration with SNS in successfully piloting this seamless financial service for the trading community as an excellent start to what we believe will be a key development for Singapore as a major e-commerce and trading hub.
As a central and online system between the trading community and the banks, the TFS provides a win-win situation for both parties."
Further enhancements
Plans are in the pipeline to provide other online trade financial instruments. These include Bankers' Guarantee, Trust Receipts and loans.
SNS is also in discussions with other banks to conduct trade financing transactions with traders via the TFS.
In the near future, the TFS will be seamlessly integrated with SNS' existing services. There will also be connections with other international trading networks.
Jointly issued by The Hongkong and Shanghai Banking Corporation Limited and Singapore Network Services Pte Ltd