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MAS chief proposes full digitalisation of China-Asean trade route
A LAND and sea trade route connecting Western China and Asean could be fully digitalised to further promote trade flows, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said on Monday.
Mr Menon was speaking at a virtual keynote address at the third China (Chongqing) Connectivity Initiative (CCI) Financial Summit. The trade route he was referring to is the New International Land-Sea Trade Corridor (ILSTC), which connects Western China to southern Guangxi, and further down to South-east Asia.
A digitalised ILSTC would further improve efficiency, reduce costs, build trust in documentation and verification, and enable better risk management, Mr Menon said. Specifically, he suggested that Chongqing and Singapore can jointly explore digitalising Bills of Lading - one of the key documents for trade - along the ILSTC. At present, Bills of Lading are mostly on paper.
"Covid-19 has reinforced the importance of digitalising trade. This would make trade flows and financing smoother, cheaper and faster between both regions, and create opportunities to tap on fintechs from China and Asean for innovative solutions to build this digital trade corridor," he said.
Mr Menon further suggested the creation of a sandbox to conduct trade along the ILSTC using electronic Bills of Lading and other negotiable trade instruments. Fintechs from China and Asean could work on creating solutions for an end-to-end digitalised trade platform, he added.
Chongqing and Singapore have already strengthened financial connectivity via the CCI over the past five years, Mr Menon noted.
As at April, there have been 117 cross-border financing deals amounting to US$11 billion. Chongqing enterprises raised US$7 billion in Singapore, while nearly US$4 billion went to enterprises in Sichuan, Shaanxi, Qinghai, Xinjiang, Guangxi and Yunnan.
There have already been some digitalisation efforts thus far, such as how Singapore's Networked Trade Platform, a trade and logistics ecosystem, and China's National Single Window, are linked. This has enabled direct exchanges of digital customs documents between Singapore and China.
Mr Menon cited how in March, 25 tonnes of citrus were shipped from Chongqing to Singapore in 13 days via the ILSTC, half the usual time. He said: "Perhaps the next import of citrus to Singapore can be even faster through an end-to-end digitalised trade process along the ILSTC."
Financial institutions from Singapore and Chongqing also continue to set up in each other's markets, Mr Menon noted. For instance, Chongqing fintech Whalet has obtained a Singapore licence to conduct cross-border remittance, while Singapore venture firm Vickers Venture Partners will be establishing a Qualified Foreign Limited Partnership Fund in Chongqing.
Separately, Singapore and Chongqing corporates signed six Memoranda of Understanding (MOUs) at the summit on cross-border financial services cooperation, financial technology and talent training and exchanges.
The CCI Financial Sub-Committee Advisory Group, with financial leaders from Singapore and China, will hold its inaugural meeting on Tuesday to discuss deepening financial services cooperation between Singapore and Chongqing.