Bangkok Bank and PermataBank collaborated to facilitate a Letter of Credit (L/C) through blockchain technology, highlighting the strength of both banks' cross-border business networks to enter the Thai-Indonesian chemical market. The first customers are TPE and Lautan Luas which use trade finance services to help reduce the process, risks and costs. This will increase customer satisfaction while supporting businesses to digitalize their work processes in line with the concept of green business for sustainable growth.
Bangkok Bank Executive Vice President Pipat Assamongkol said, "International trade is crucial for a country's economic growth. International trade transactions need multi-step processes and require a large amount of paper documents which is a major obstacle. To help resolve this problem, the Bank has developed blockchain technology innovation for L/C, a service that uses Distributed Ledger Technology (DLT) or Enterprise Blockchain Platform as an integral part of the work to provide full commercial services*."
The Bank recently joined PermataBank to provide this innovation to both banks' customers in the chemical industry. The Bank was successful in supporting Thai Polyethylene (TPE), a company under SCG Chemicals or SCGC exporting plastic resins from Thailand to Indonesia, to be able to submit a full electronic presentation for container ships. This helps reduce paper use, carbon emissions and container yard charges for temporarily keeping containers at the port. Therefore, trade partner in Indonesia receives goods faster, which increases business opportunities. Both trade partners satisfied and appreciated with good experience from the services.
The Bank joined PermataBank and TPE to provide a L/C through blockchain technology for exporting goods to Lautan Luas, one of TPE's largest clients in Indonesia. Lautan Luas supplies chemical products to 2,000 industrial end-users throughout Indonesia and Asia Pacific. This service enables both trade partners to check changes in the L/C application anytime, enhancing transaction transparency, reducing risks for mistakes and enabling quick information tracking via digital channels, creating satisfaction for both trade partners and continuously plan for using the service.
Regarding the Bank's success, Mr. Pipat added, "This underscores the strength of Bangkok Bank and PermataBank's service network cooperation to support international trade services through the L/C on blockchain technology that can be adapted to support the various needs and nature of customers' businesses, such as supporting multiple shipments and billing documents under the same L/C, etc.
"As a trusted partner, Bangkok Bank is proud to participate in financial development to help increase business efficiency, while increasing the speed of working processes amongst parties involved in trade transactions and reduced costs. The strong international network and cooperation with PermataBank has allowed us to deliver good service and experience to our customers in Thailand and their overseas partners. More importantly, the digital end-to-end process also reduces the use of paper and transportation, which are carbon-emitting activities. Therefore, this service is also helping to promote the concept of green business, which is another dimension of sustainable business that Bangkok Bank attaches importance to as well."
Mr. Darwin Wibowo, Director of Wholesale Banking at PermataBank, said, "The implementation of blockchain technology in trade transactions is PermataBank's effort to help entrepreneurs and corporations save time and reduce the risk of fraud, as well as streamline the transaction process, so that businesses can grow faster. Additionally, the use of blockchain technology is more environmentally friendly by reducing paper usage and carbon pollution. PermataBank has become the first bank in Indonesia to provide trade finance transactions on a blockchain platform."
Mr. Kulachet Dharachandra, Executive Vice President and Chief Financial Officer of SCG Chemicals Public Company Limited or SCGC, said, "TPE, a company in the SCG Chemicals Group, is committed to applying innovation to deliver safe, convenient and fast services which also align to a greater emphasis on ESG guidelines. We joined Bangkok Bank and PermataBank to implement blockchain technology in L/C transactions with a partner in Indonesia, Lautan Luas Tbk. The technology makes it possible to track the transaction status of all parties immediately and transparently, streamlining the whole process of drafting L/C applications, receiving L/C and digital billing. Not only does it significantly reduce time and the use of paper in the transactions, but it also helps Lautan Luas cut additional costs that may occur from container yard charges, for keeping containers at the port in case the goods arrive at the destination port before the bill of lading. This has increased Lautan Luas' satisfaction and the company aims to continue using L/C through blockchain transactions with TPE."
Mr. Richie Masrin, Corporate Banking Manager of Lautan Luas Tbk, said, "The blockchain technology provided by PermataBank has facilitated our import L/C transactions. Communication with suppliers regarding L/C can be done through this blockchain platform, from drafting to settlement. Shipping documents can also be obtained digitally through the platform, which helps us to expedite the goods retrieval process at the port."
Customers interested in the L/C via blockchain service and who need more information can contact Bangkok Bank's Business Customer Service at 0 2031 7888
*The service is under the Bank's sandbox policy.
Source: Bangkok Bank