As a significant financier of trade flows in the Asia-Pacific region, efficiency in the ‘wiring’ of trade is essential to ANZ’s presence in over 20 countries in the region.
" Improvement is about eliminating the use and delivery of paper-based documentation which in turn creates greater efficiency and ensures greater security through the supply chain”
Much can be done to improve efficiency but a key priority is the need to focus on facilitating trade through digitising documentation - with emphasis on the cross-border elements of digital trade. Simply put, documents required at all stages of the supply chain should be prepared and transmitted electronically.
Paper has served us for centuries but it is not the best way to document trade.
Improvement is about eliminating the use and delivery of paper-based documentation which in turn creates greater efficiency and ensures greater security through the supply chain. Part of that efficiency comes from reducing the higher risk of error manual handling and paper documents introduce.
As an international trade bank, ANZ would welcome such a digital transition but ANZ is not the focus of a better system: it would deliver significant benefits to Australia and in particular small and medium-sized businesses, including agricultural exporters. One company which processes around 1,000 export documents a year saved close to $A250,000 by moving to a digital trade solution.
A digital trade platform can send a bill of lading – traditionally a paper-based document - through an entire supply chain in a matter of minutes. It eliminates the need for physically checking and couriering documents. It also assists in the detection of financial crime and the prevention of money laundering.
There are a number of projects currently taking place around the region, notably two regulator-led platforms in Singapore and Hong Kong, in which ANZ is directly involved.
The Hong Kong Monetary Authority's trade platform is a combined public and private sector initiative which will transact its first live trade next month. It covers open account trade with 'documentary trade' being a second stage. Other industry participants such as shipping companies and insurers will be progressively added over time.
Singapore has taken a slightly different approach, with the Monetary Authority of Singapore responsible for building all aspects of the platform. The platform will encompass all open account trade as well as documentary trade and government documentation.
Both these trade platforms offer lessons for Australia and are important initiatives for the global economy. The International Chamber of Commerce’s (ICC) 2018 Global Survey on Trade Finance estimates there are approximately four billion documents in circulation for documentary trade transactions.
Documentary trade represents approximately 20 per cent of global trade. This gives a relative insight into the magnitude of the operational cost and complexity for businesses moving all this paper around the globe.
Singapore and Hong Kong are collaborating to connect their digital trade facilitation projects. This is creating positive momentum and other consortia in the region and from other parts of the world are interested in joining.
ANZ is also involved in work to advance global standards. This is a key element of moving to a digital platform in which sharing overseas experiences may help bring together key private sector players.
We also recognise the complexity of government-led major IT projects and the reality of how hard it is for these to succeed. Given this, a similar approach to that adopted by Hong Kong or by Australia in regards to NPP (the New Payments Platform for real time payments) may be considered appropriate for Australia.
However it works, the government will ultimately be the one to decide on an approach in terms of trying to facilitate, streamline and bring more customers to participate in cross-border international trade.
Mark Evans is Head of Transaction Banking at ANZ