UNNExT Workshops on Trade Facilitation

Transcription

1 UNNExT Workshops on Trade Facilitation UNNExT Workshop on Paperless Trade Facilitation for Small and Medium- Sized Entreprises Almaty, Kazakhstan 4-6 May 2015

2 Applications for SME trade facilitation beyond Single Window and the role of public private sector partnerships : Perspective from KTNET Sung Heun HA (Rama)

3 Korea, Used-to-be One of Poorest Countries 1950 s ODA Beneficiary Country - 2 -

4 Rapid Growth in Trade Volume Trade Facilitation- for Sustainable Economic Growth in Korea 100 Million 10 Billion 100 Billion 300 Billion 500 Billion 1.08 Trillion 1.07 Trillion 1.08 Trillion 560 Billion < Unit : U.S. Dollars > 516 Billion 1.10 Trillion 573 Billion 526 Billion Source: Korea International Trade Association 2012 Import Export - 3 -

5 Why promote SMEs export? Competitiveness of domestic market oriented company and exporting company SALES PER EMPLOYEE EMPLOYEMENT GROWTH RATE $1040, % $440, % Domestic market company Export company Domestic market company Export company - 4 -

6 Support of SME for trade promotion Korean government s policy for SMEs Support SME s participation to overseas exhibition Capacity building program for SMEs: Training, consulting, buyer & market information Support SME to overcome TBT (Technical Barrier to Trade) overseas Standard & Certification Facilitation of cross-border e- commerce Marketing & Activities Expansion of FTAs Increase the use of FTA of SMEs Regional FTA Utilization Center FTA Certificate of Origin system Korea-USA FTA: Korea-EU FTA: Free Trade Agreement Fund for Trade Financing 2014 $2.0 Billion / year Fund for Trade Insurance 2014 $4 Billion / year Trade Financing - 5 -

7 Ⅱ. Trade Finance Services through Paperless Trade Platform

8 1. Paperless Trade Platform of Korea National e-trade Committee National e-trade Committee was established in 2003 Private e-trade Committee was established in 2005 Korea e-trade Facilitation Center to implement 33 tasks from e-trade Korea 2007 Plan National e-trade Committee Chair : Prime Minister Private e-trade Committee Chair : Dr. Jung Uck, Seo Administrative Committee Chair : Vice Minister of MOCIE Ministry of Knowledge Economy Korea Customs Service Korea e-trade Facilitation Center KITA Korea Financial Telecommunications and Cleanings Institute Korea Federation of Banks KTNET Platform W/G Law W/G Finance W/G Logistics W/G Marketing W/G Global W/G e-tp PM Law Reform e-l/c RFID e-mp e-c/o e-tdr e-nego e-l/g e-catalog e-b/l e- D/O Solutions APEC,ASEM Bilateral Networking

9 1. Paperless Trade Platform of Korea utradehub Project Goal To cope with Korea s growing trade volume by upgrading the Electronic trading system into a single window system Project Period 2005 ~ 2008 Project Cost About 30 million (USD) Leading Agencies Ministry of Knowledge Economy (MKE) Korea International Trade Association (KITA) Korea Trade Network (KTNET) Year1 Year 2 Year 3 Building Core Infrastructure (2005) Introducing e-trade portal (2006) [- 8 ]- Realizing utrade by e-bl & e-nego (2007)

10 1. Paperless Trade Platform of Korea 무역포탈 utrade (utrade) ( 토의주제 ) 개요 utradehub 통합포탈 Gateway Gateway 물류포탈 ulogis (ulogis) ubankers ucustoms utrade Search 은행포탈 (ubankers) 통관포탈 (ucustoms) 마케팅포탈 (utrade Search) - 9 -

11 1. Paperless Trade Platform of Korea OGAs & Regulatory Authorities * ASPLine : Electronic licensing & Certification System developed and operated by KTNET Trading Co. Declarant 3 4 Manage and issue the license & Certification in ASPLine types of e-documents 2 B2B, B2G, G2B, Global Service Trading Communities 4 Notify the Result Private-Centric Integrated National Single Window Apply for 3 e-licensing & Certification Apply for e-licensing & Certification 5 Customs Declaration 7 3 B2G, G2B Global Service 4 Notify the Result Customs-Centric Single Window 6 G2G Other Governments Airlines Ocean Carriers Customs ForwardersBonded Bonded Brokers Banks Insurances Trading Communities in TransportationWarehouse overseas countries Successful PPP Korean Single Window Model MOTIE, KIS, Quarantines, NTS etc

12 1. Paperless Trade Platform of Korea KTNET is a Paperless Trade Platform Operator and a Customs Network Service Provider designated by Korean Government KTNET services covers the whole cycle of trade process with 600 different kinds of e-documents with over 300 Million transactions per year PAA Global e-c/o Service Advance Manifest Service S/R, e-b/l Master/House Manifest Consolidation General Declaration Cargo Visibility Advanced Passenger Information 5 Cross Border Transaction 4 1 Logistics B2B Commerce, License & Certification Korean Single Window Trade Finance Customs P/O, Invoice, P/L Certificates/License C/O, Insurance, Tax Invoice Purchase Certificate of raw material 3 2 e-l/c, e-local L/C e-negotiation Settlement Export Clearance Import Clearance Duty Draw-back (Tariff refund)

13 Ⅱ. Trade Finance System of Republic of Korea

14 1. Trade Finance in Korea Trade Finance in Korea In a larger sense, Trade Finance means activates related to raising fund for international trade (Pre/Post-Shipment Finance) In a narrow sense, Trade Finance means a pre-shipment finance system a mechanism which mandates financial support of the central bank to exporters or indirect exporters (parts/raw material supplier) by the rules of foreign trade financing program in relation to the total loan ceiling of the Bank of Korea The Bank of Korea s loan program is designed to help smalland medium-sized companies and to promote balanced regional development. It sets a maximum amount of loans for this program in a periodic manner, which is distributed to commercial banks at a lower (prime) interest rate than the market rate

15 2. Trade Finance by Criteria Pre-Shipment Finance Criteria By financing condition By manufacturing capacity L/C or other documentary proof base Export record (history) base Manufacturer Non-manufacturer Contents - Production Fund - Raw materials fund - Inclusive financing fund - Finished goods purchasing fund By purpose Production Fund Raw materials Fund Inclusive financing fund Finished goods purchasing fund

16 2. Trade Finance by Criteria Trade Finance Loan types Production fund loan: Financing for development or production of goods Law materials fund loan: Financing for law materials production Inclusive financing fund loan: total financing to SMEs who s total export value is under 50 million dollars / year Finished goods purchasing fund loan

17 3. Trade Finance Process 1. Contract for export of goods 2. Arrival of L/C 3. Purchase finished goods or in-house development of parts/raw materials In-house manufacturing Inclusive financing loan Open Local L/C for finished goods Take over goods Bill of Exchange Finished Good loan 4. Secure necessary raw materials Domestic raw materials In-house Production/Development Purchase by Cash Open Local L/C Take over goods Take over goods Bill of Exchange Production loan Production loan Raw materials loan Overseas raw materials Open At-Sight L/C (D/P, COD, CAD) Open local L/C Arrival of Shipping Documents Take over goods Import Bill Bill of Exchange Raw materials loan Raw materials loan 5. Production / Processing Production fund 6. Shipping Loan repayment Negotiation

18 4. Pre-condition for Trade Finance Pre-condition of exporter for Trade Finance Appointment of Foreign Exchange Transaction Bank Beneficiary shall appoint one or more Foreign Exchange Transaction Bank s for trade financing service Inclusive financing beneficiary shall appoint a Main Foreign Exchange Transaction Bank to prove total trade volume Appointed Foreign Exchange Transaction Bank shall keep the record of each export amount of a beneficiary and the accumulated export record amount shall determine the total ceiling of a loan

19 5. Comparison of L/C base with Record base TF L/C base Loan History base Loan Beneficiary when Exporters(or its suppliers) with L/C or other form of Guarantee With L/C or other documentary proof (D/A D/P) Exporters with export history Anytime, regardless of L/C, under the loan limit set by trade record(history) Limit of loan Below the amount of L/C or others Below the amount of Loan ceiling Limit control Balance of Loan Balance of Loan Term 365 days or less 180 days or less Convenience Special feature Inconvenient as the loan is case by case Suit for new-comers or company with less-dependency on advance raw materials inventory Convenient Suit for traders with heavy dependency on advance raw materials inventory

20 Ⅱ. Trade Finance Services through Paperless Trade Platform

21 1. HMC s Full Automated Export Process Case Documents made by Shipper 1 e-l/c Advising bank HMC P/O Dealer/Branch PC or Local e- L/C 2 Purchase Certificate or Local L/C PC or Local e- L/C Nego bank 7 Negotiation 3 Export Declaration KCS KCCI 6 C/O 4 shipment Carrier Insurance 5 Cargo Insurance

22 2. Paperless Trade Finance Services Paperless Trade Services for Trade Finance Letter of Credit Purchase Certificate Electronic Trade Facilitation Act (MOTIE) Local Letter of Credit Foreign Trade Act (MOTIE) Electronic Trade Facilitation Act (MOTIE) Export Credit Insurance

23 3. e-letter of Credit Electronic Trade Facilitation Act L/C

24 3. e-letter of Credit AS-IS of L/C Notification Paper, EDI and XML Letter of Credit Difficulties in controlling the trade loan limit & balance Documentary proof for issuing Local L/C or Purchase Certification Opening Bank Paper L/C Pick Up SWIFT MT7x x Local Bank Foreign Bank EDI L/C e-l/c EDI L/C Paper L/C EDI XML KFTC KFTC (Registry) EDI Pick up Message Broker utradehub (Registry) EDI XML Exporter

25 4. e-local Letter of Credit Electronic Trade Facilitation Act Local L/C

26 4. e-local Letter of Credit (3-1) Local L/C Advice (LOCADV) Opening Bank Korea Financial Telecommunications & Clearings Institute Bank Network (3-2) Local L/C Advice (LOCADV) NegoBank (9) Local L/C negotiation result notice (SPCNTC) (7) Bill of Local L/C arrival notice (LDANTC) (10) Bill (FINBIL) (12) Debit Advice (DEBADV) (2) Application for Local L/C Open (LOCAPP) (6) Application for Local L/C negotiation (APPSPC) (11) Credit Advice (CREADV) (8) Pay order (PAYORD) (1) Offer (DOMOFR) (4) VAT bill (VATBIL) Purchaser (Exporter) (5) Delivery receipt (LOCRCT) [ ] Supplier

27 5. e-purchase Certificate Foreign Trade Act

28 5. e-purchase Certificate Electronic Trade Facilitation Act Purchase Certificate

29 5. e-purchase Certificate Mainly for Local Tax Exemption and Duty draw-back purpose Since 2006, Purchase Certificate became a part of trade finance system KTNET Foreign Exchange Bank VAT Bill Report Revenue Authority Application for Purchase Confirmation KTNET Exporter (Purchaser) Purchase Certificate Duty Draw Back Request KTNET Customs VAT Bill(Zero VAT), Purchase Certificate Duty Draw Back /Purchase Certificate (X) Manufacturer (Supplier)

30 6. Benefits Transaction Figures (2012) Document Process Total Transaction e-transaction Thru utradehub % Note Letter of Credit Local Letter of Credit Purchase Certificate Notification 400, ,000~150,000 25% + Negotiation (Presentation) 400, ~ 1, % + Opening 350, ,000 46% Opening 250, , % Mandate use of utradehub Since Feb Notification 250, , % Mandate use of utradehub Since Feb Negotiation Mandate use of utradehub 250, ,000 11% (Presentation) from Feb Opening and notification 1,000, ,000, % Mandate use of utradehub Since Jul

31 6. Benefits Benefits for traders Identification of indirect exporters especially small and medium sized for trade finance services Traders are exempted from submitting documentary proof (Local L/C or Purchase Certificate) for Duty draw back and Local Tax Exemption by ACT on VAT and data/information are reused among agencies (Beneficiary, Revenue Authority, Customs, Insurance Company) Direct time and cost savings from Duty draw back and Local Tax Exemption as well as lower application fee than paper form Local L/C and Purchase Confirmation transactions can be certified as a export records (history) for future trade loan

32 6. Benefits Benefits for banks More business opportunities of financing service using lower interest rate from the policy loan of Bank of Korea Strengthen Risk Management in Trade Finance Service Control of loan ceiling and Prevention of fraud and double loan application to other different banks Reuse of data and less human resources /cost for trade finance service

33 7. Lessons Trade Finance System was a key for sustainable growth of Korean SMEs Legal / financial support is essential for a successful implementation of Trade Finance System Paperless Trade Platform can further facilitate the utility of Trade Finance System by interconnecting stakeholders and streamlining the process

34 - 33 -