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HSBC Malaysia uses blockchain to upgrade the letter of credit

Wednesday 16 October 2019 11:44 CET | News

HSBC Bank has announced the first live pilot blockchain letter of credit 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. For the purposes of this transaction, HSBC Malaysia was the issuing bank and HSBC Singapore was the advising/nominated bank.

HSBC Bank also believes that the use of trade finance solutions like blockchain will help to increase the velocity of trade. This is especially true in situations where shipping routes are short, like the crossborder trade between Malaysia and Singapore where the physical transfer of goods takes a relatively short time – usually less than 48 hours – and the administrative paperwork often delays their delivery.

The process of exchange and checking of documents typically takes five to 10 days. However, through HSBC, Simply Packaging was able to complete the transfer in 24 hours, which not only speeds up trade velocity but also helps reduce transaction times and brings in working capital efficiency. The bank, with several clients in the SME and enterprise space in the country, believes that the successful execution of the transaction marks a significant step towards the digitisation of trade.

 


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Keywords: HSBC Malaysia, Malaysia, blockchain, letter of credit, trade finance, Asia, APAC, pilot blockchain letter of credit
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Countries: World