HSBC has successfully executed a blockchain-enabled live trade Letter-of-Credit (LC) transaction between Duy Tan Plastics Corporation of Vietnam and INEOS Styrolution Group of Korea, which took only 24 hours, rather than the normal five to 10 days.
This is the first pilot blockchain LC transaction in both Vietnam and Korea, and the seventh globally, led by HSBC, said a statement released by the lender.
The blockchain transaction involved a shipment of raw plastic from INEOS Styrolution, the seller in Korea, to Duy Tan, the buyer in Vietnam. This was an end-to-end trade between buyer and seller, completed on a single shared application, Voltron, rather than multiple systems, with HSBC Vietnam as the issuing bank and HSBC Korea as the advising/nominating bank.
The LC was issued and advised on July 3 and the exchange was done in 24 hours. The transaction demonstrates that blockchain, as a solution to trade digitisation, is commercially and operationally viable. Conventional exchanges for paper-based documentation related to letters of credit usually take between five and 10 days.
Both Duy Tan and INEOS Styrolution saw increased operational efficiencies and greater transparency and security with regard to the transaction. The need for paper confirmations was removed because all parties were linked on the platform and updates were instantaneous.
The quick turnaround means unlocking immediate liquidity for both businesses, HSBC said in the statement.
Regarding the transaction, Nguyen Bao Quoc, CFO of Duy Tan, said, “We are very pleased to be part of the first trade transaction in Vietnam using blockchain technology conducted by HSBC. Entering the transaction was not only thrilling, but momentous, as we believe it can help us evolve all cross-border trade procedures, enabling a fast information exchange between sellers and buyers. As a business in this cross-border process, the benefits are huge for us.”
Additionally, Pham Hong Hai, CEO of HSBC Vietnam, said, “Vietnam is a country benefiting from the rapid movement in supply chains. Faster documentation turnaround time will open doors for businesses to further leverage Vietnam as a trade hub in Asia.”
HSBC has been pioneering the use of blockchain in trade finance, starting with its groundbreaking LC transaction using the Voltron platform last May. This latest transaction is a reflection on how the technology is gaining traction in markets across Asia. HSBC continues to identify markets and partners to expand the use of this technology, with the ultimate goal of commercialising Voltron.
The Voltron consortium is keen to work with more banks and companies in Korea and Vietnam interested in using this technology to give their businesses an edge over competitors.
https://english.thesaigontimes.vn/69999/hsbc-handles-first-live-blockchain-lc-transaction.html
