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Business Published At: 07 Jul 2024, 22:01 p.m.

Digitalizing shipping docs could boost global trade by $30-$40 billion: ICC Roundtable

ICC Roundtable Press Photo

Digitalizing international shipping documents could generate an annual growth of $30-$40 billion in global trade, according to discussions at a roundtable on Sunday organized by ICC Bangladesh jointly with ICC DSI of International Chamber of Commerce.

The Roundtable has been sponsored by ADB TSCFP alongwith US Department of State (US DoS) and ITFC of Islamic Development Bank while Standard Chartered Bank was the Knowledge Partner.

The programme was held at the Dhaka Sheraton which underscored the transformative potential of paperless trade for economies worldwide.

Mahbubur Rahman, President of ICC Bangladesh, while chaired the programme said that digitalization enhances efficiency, reduces costs, and broadens market access.

He introduced the Digital Standards Initiative (DSI), a global effort based in Singapore supported by entities such as the Asian Development Bank and the World Trade Organization.

“By adopting digital trade solutions, businesses can manage the challenges of international markets more effectively and sustainably, the Digital Standards Initiative (DSI) is a global initiative based in Singapore, backed by an International Governing Board comprising leaders from the International Chamber of Commerce (ICC), Enterprise Singapore, the Asian Development Bank, the World Trade Organisation and the World Customs Organisation” he said.

He said every year, ocean carriers issue about 45 million bills of lading, a crucial shipping document. Many international shipping documents are still not standardized and mostly paper-based, needing physical exchanges.

Using electronic bills of lading (eBLs) will speed up transactions, save costs (like reducing administrative expenses for cargo handling and document processing), and reduce fraud risks with digital authentication.

Citing from A McKinsey study during the event he said that 100 per cent adoption of electronic bills of lading (eBL) could unlock $30-$40 billion in global trade growth by reducing trade friction.

This shift could also save 28,000 trees annually and significantly cut carbon emissions.

He said Bangladesh ratified the UNESCAP Framework Agreement on Facilitation of Cross-Border Paperless Trade in 2020.

He said ICC Bangladesh, in collaboration with ADB and ITFC, is spearheading the DSI initiative in the country.

This roundtable marks the first step in introducing DSI, with plans to draft rules and regulations aligned with global digitalization trends by 2027.

Lawmaker Salman Fazlur Rahman, Adviser to the Prime Minister for Private Industry and Investment, highlighted Bangladesh's progress in digitalization under the leadership of Prime Minister Sheikh Hasina.

He noted the substantial GDP growth and the development of robust digital infrastructure, including optic fiber networks and submarine cables.

He said one of the most important components of digitalization is interoperability.

Highlighting on Bangladesh’s success in creating an enabling atmosphere for digitalisation, the Adviser said Bangladesh is making rapid progress in establishing digital and cashless Bangladesh.

However successful international digital trade depends on other countries too, he said.

“International trade is not only dependent on Bangladesh, but also dependent on the counterparts who also have to make various reforms,” he said, adding that there are also some challenges rising from developed countries.

“Now we are seeing more and more protectionism, especially from the United States, even we are seeing that in Europe,” he said.

Mr Rahman added that with the rise of technologies there are growing concerns with cyber defence.

He said artificial intelligence is now evolving faster with exponential growth in its IQ level.

Regarding the export data mismatch among National Board of Revenue (NBR), Bangladesh Bank (BB) and Export Promotion Bureau (EPB) he said the EPB has double counted the value of merchandise sent abroad from the export processing zones(EPZs).

“The mistake which EPB made was double counting the export from the export processing zones,” he said.

Edimon Ginting, Country Director, Bangladesh Resident Mission, Asian Development Bank said effective digitalization of trade will increase growth and create jobs by expanding access to global trade networks for developing economies.

There are two key impediments that we need to jointly work on and address that include a need for common standards and protocols that will enable effective interoperabilities among the players in supply chains, from exporters to logistics, customs, warehousing/logistics, finance, etc. and the need to enhance legislation supporting the use and enforceability of key documents in trade.

To tackle these two important challenges, ADB, the Government of Singapore, and the International Chamber of Commerce founded the Digital Standards Initiative, or DSI, he said.

DSI is working on addressing these challenges and helping promote a globally harmonized digital trade environment.

Promoting a harmonized legislative framework supporting digitalization of trade is one of ADB´s key focuses.

In order to address the lack of recognition of electronic versions of key trade documents -such as bill of lading-, the United Nations Commission on International Trade Law (UNCITRAL) developed The Model Law on Electronic Transferable Records (MLETR), he informed.

He also said adoption of MLETR would serve the purpose of further improving domestic legal frameworks and facilitate cross border trade.

Ms. Rupa Chanda, Director of Trade, Investment, and Innovation Division at UNESCAP, highlighted that digital trade is crucial not only for Bangladesh but also for global trade efficiency and sustainability.

She said Bangladesh, in particular, stands to benefit significantly from these advancements. The country could reduce trade costs by 11-12% and gain an additional $0.6 billion in exports by embracing digital trade processes.

Iftekhar Alam, Regional Head for South & South East Asia at the International Islamic Trade Finance Corporation (ITFC), spoke about the ongoing efforts to streamline trade, particularly for major cotton-importing countries like Bangladesh.

Muhammad A (Rumee) Ali, Chairman of ICC Bangladesh Banking Commission, delivered the welcome address, emphasising the critical role of digitalization in modernizing trade infrastructure.

Lawmaker A K Azad, also Vice President of ICC Bangladesh, concluded the event by emphasising the importance of digitalization for reducing operational costs and enhancing trade efficiency as Bangladesh aims to become a middle-income country by 2026.

This roundtable showcased a collective commitment to leveraging digitalisation for sustainable economic growth and a more efficient global trade system.

Pamela Mar, Managing Director, Digital Standard Initiative (DSI), International Chamber of Commerce (ICC) presented the keynote while Mohammad Navid Safiullah, Additional Secretary of Ministry of Commerce, Mursheda Zaman, Joint Secretary, Ministry of Commerce, Md Sarwar Hossain, Director (Foreign Exchange Policy Department) of Bangladesh Bank, Raich Uddin Khan, First Secretary (Customs Automation) National Board of Revenue, Kutubuddin Ahmed, Member, ICC Bangladesh Executive Board, Naser Ezaz Bijoy, Vice President, ICC Bangladesh and & Chief Executive Officer, Standard Chartered Bank, Md. Saiful Islam, Former President, MCCI, Muhammad Zahangir Alam, CFO, Square Pharmaceuticals Limited also spoke, among others.

The roundtable proposed forming a National Committee to collaborate with ICC DSI and create suitable rules for digitising international trade in Bangladesh.

The initiative aims to enhance efficiency, transparency, and market access, solidifying Bangladesh's position in the global trade landscape.