This is the first time a cross-border blockchain transaction has been executed in Bangladesh
The Hongkong and Shanghai Banking Corporation (HSBC) has hit another blockchain milestone by successfully executing the first-ever cross-border blockchain letter-of-credit (LC) transaction in Bangladesh.
The transaction involved the import of 20,000MT of fuel oil by United Mymensingh Power Limited, Bangladesh from Singapore, for their power plant.
This is the first time a cross-border blockchain transaction has been executed in Bangladesh, said a press release from HSBC on Saturday.
The transaction was completed using the Contour platform and the LC processing time was reduced from the standard five-to-10 days to less than 24 hours.
Md Mahbub ur Rahman, chief executive officer of HSBC Bangladesh, said, "I am very pleased that HSBC has pioneered Bangladesh's first-ever cross-border blockchain LC transaction. This showcases our strong commitment and ability to support cross-border trade by Bangladeshi businesses using cutting-edge technology platforms."
"I believe this will usher in a new era of routing international trade transactions as businesses and governments recognise the transparency, security and swiftness in performing tasks using blockchain technology," he added.
This marks a significant step for Bangladeshi companies in the digitisation of trade. It makes doing business simpler and faster by reducing transaction times and boosts working capital efficiency – something that is especially appealing to local firms navigating the current economic challenges.
Moinuddin Hasan Rashid, group chairman and managing director of United Group, said "We are very enthusiastic over the use of blockchain technology for our imports. We understand that we are headed towards a digital era and we are ready to evolve in our effort to adapt to the changes."
He further said, "Fuel Oil LCs are highly time sensitive where every second counts and we believe this blockchain technology will help to manage time efficiently and also ensure increased efficiency and better cost management."
For the first half of 2020, Bangladesh's trade under LCs was over $34 billion according to SWIFT. So the potential efficiencies for domestic companies are tremendous.
HSBC has effectively pioneered the blockchain platform in many countries including, but not limited to: India, Dubai, Malaysia, Oman, Saudi Arabia, Singapore, South Korea, and Vietnam.
The Contour platform is built using R3's Corda Blockchain technology. It links together banks and corporations on a decentralised trade finance network.