There is no denying that the COVID-19 pandemic is a turning point for global business. From international travel and workplace culture to international trade and supply chain logistics—COVID-19 has impacted virtually every industry. With serious disruptions causing a pronounced business slowdown around the world, it is becoming apparent that the old way of doing things is over, including for Singapore.
A long time hub of economic activity within the Asia-Pacific region, Singapore is home to numerous MNCs, an international talent pool, and much of the region’s shipping activity —it’s a city made for the globalised economy. However, as markets face a global pandemic, Singapore has entered recession following its worst quarter on record with a -42.9 per cent contraction in the economy (on an annualised, seasonally adjusted basis). This is almost double that which followed in the wake of the 2008 financial crisis.
It is off the back of this dramatic change in Singapore’s circumstances that Trade and Industry Minister, Chan Chun Sing, has announced his belief that Singapore must now chart a new path, focusing on agility and resilience.
COVID-19 and the frailties of global trade
COVID-19 has resulted in increased trade restrictions on a global scale, which —combined with the deepening geopolitical tensions at play between the US and China— have dramatically slowed international commerce and laid bare the frailties of the global trade finance sector and international supply chains.
Already before 2020, the complexities of global trade were well-known, with cumbersome numbers of participants to transactions, arduous financial settlement systems, and outdated means of information exchange. However, the old fault lines of the globalised economy are under increasing pressure.
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For Singaporean businesses, this means that now, more than ever, leveraging technological solutions to reorient and strengthen their operations will be vital to their success. Minister Chan Chun Sing is correct to call for a new path for local businesses; in this “new normal”, it will be digitally-empowered organisations who emerge as leaders. Also, it is new technologies, such as blockchain, which will serve as the vital underpinning of the evolution of business’ technological solutions.
Evolution of business and digital solutions: Blockchain’s role
As Singaporean businesses seek to orient themselves within the new normal, digital adoption should be top of the agenda for decision-makers and business leaders. In particular, how to embed emerging technologies into their business to streamline operations, reduce costs, and better manage information.
This will prove incredibly important as the rules of business continue to change and the scale of value chains continues to expand.
Distributed Ledger Technology (DLT, or more commonly termed as blockchain) is uniquely capable of reducing the complexity of elongated and complicated value chains needed to operate on a global level, particularly in the realm of international trade. Allowing parties to check that every link in a supply chain network is authentic, without the need of an intermediary, blockchain can be used to record, track, monitor, and transfer assets in a cost-efficient and transparent manner.
As businesses seek to reduce costs, become more resilient, and overcome challenges presented by a changing international business landscape, blockchain promises to provide faster and more affordable means of conducting financial transactions, storing and transferring information between parties, maintaining data security across industry value chains, and facilitating increased transparency.
The technology also creates an entirely “trust-free” environment and provides a new model for the way organisations interact with one another and operate internally.
One example of the profound impact which blockchain can have upon the supply chain is the Siam Cement Group (SCG), the largest building material company in Southeast Asia. SCG, in partnership with Siam Commercial Bank and Digital Ventures, has been operating a blockchain procurement platform to ensure that data from throughout the procurement process is secure and immutable for easy auditing, analysis, and invoice verification while decreasing the risk of fraud. Built on R3’s Corda enterprise framework, SCG’s Procure-to-Pay solution has cut the company’s average procurement processing time by 50 per cent, while reducing costs for the business by approximately 70 per cent.
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With such impressive early returns, it is safe to say the blockchain integration can have a transformative effect on business sustainability and long-term success.
Singapore’s future as a global leader
The good news is that Singapore is no stranger to digital innovation. In fact, the island nation enjoys a reputation globally for being forward-thinking and technologically daring. Already, financial actors such as DBS, are implementing blockchain technology to digitise cross-border financial processes while the Singapore Fintech Association (SFA) announced a partnership with R3 in July 2020 to provide startups with the blockchain tools needed to drive digital transformation.
Additionally, the local regulatory environment is highly supportive of technological experimentation, with government startup accelerators, grants programmes, and guidelines in place to help steer local enterprise towards more streamlined, future-proof business models.
Looking ahead, a business will be defined by a renewed premium on resilience, transparency, efficiency, and collaboration. By bringing together fragmented processes, information silos, and value chains onto a decentralised, secure, permissioned blockchain —many of the challenges presented by the new normal may be overcome.
Just as digital platforms disrupted trade in the past, COVID-19 will set similar change in motion and we are likely to see the replacement of physical offerings and ways of working, with digital. The success stories of tomorrow will be digitally empowered, lighter, and more agile than the corporate giants of today.
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Although Singapore sits at the top of the global trade and business sectors, decision-makers must remain cognisant of intensifying competition to emerge from the current pandemic as the leader of the new economy.
The time for continued innovation and digital transformation is now. 2020 has shown us that no company or market is safe from disruption. If Singaporean enterprise wishes to remain competitive, it will need to change its way of thinking and adopt the new tools required to overcome new challenges.
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