Future of Trade report: technology to bridge trade finance gap and accelerate SME growth – OpenGov Asia

This post was originally published and is credit to this site

According to CEO of DMCC Mr Gautam Sashittal, global trade and trade finance are at the cusp of a digital revolution.

On 15 May, the Dubai Multi Commodities Centre (DMCC), the world’s biggest Free Zone and Dubai government authority on commodities trade and enterprise, launched its latest report on the Future of Trade.

According to CEO of DMCC Mr Gautam Sashittal, global trade and trade finance are at the cusp of a digital revolution.

“Just as the shipping container revolutionised trade in the 1950s, sweeping advance in tech will reshape trade and how we move goods across borders. Our research helps us all understand how global trade will evolve, and how we can prepare, over the next decade,” Mr Sashittal said.

According to the report, technology advancements are ripe for industrialisation in the trade sector and could bridge the current US$1.5 trillion trade finance gap, with potential to inject new growth in trade.

The research highlights the emerging impact of digital transformation for importers and exporters, and the world’s top ten commodity trading hubs, along with the ongoing shifts in global economic power.

The report states that 50% of SME funding applications are rejected by banks and that alternative trade finance, powered by fintech and blockchain, is on the rise. For example, the alternative finance market in the APAC region more than doubled between 2015 and 2016 to the total value of US$245.2 billion.

The report also notes that blockchain is likely to redefine the trade sector over the next decade, providing faster, more secure and effective ways to handle workflows and move goods across borders, but much progress is still to be made.

With a ten-year outlook, the report states that the world’s economic centre of gravity is shifting to Asia and that China’s Belt and Road initiative is gathering momentum. Furthermore, China’s increasing reliance on domestic consumption and move to technology-led manufacturing will see 100 million labour-intensive jobs shift to other low-cost countries. This will lead to accelerated manufacturing growth in for example Vietnam, Myanmar and Indonesia.

“Trade and trade finance will be revolutionised by blockchain and other emerging technologies. The UAE and Dubai are advancing fast by looking well into the future to capitalise on these changes critical to retaining our position as the world’s number one commodities trade hub,” said Executive Chairman of DMCC Mr Ahmed Bin Sulayem.

The Future of Trade 2018 report includes four chapters: (1) the Changing Nature of Global Trade, (2) the Impact on Digitalisation, (3) Bridging the gap in Trade Finance, and (4) Shaping the Future of Sustainability in Trade.

The report builds on in-depth insights from 250 industry leaders, academics and experts across 6 leading commodity trade hubs, London, Zurich, Dubai, Singapore, Johannesburg and Hong Kong in partnership with Asia House, as well as quantitative global research by the Centre for Economics and Business Research (Cebr) and a global leading management consulting firm.