Samsung SDS on Friday announced that South Korea's Customs Service will use the company's blockchain solutions to implement a decentralized customs clearance system. SDS is the company's IT division that houses innovations such as Nexledger blockchain and biometric solution Nexsign.
Per a new agreement, 48 Korea-based institutions such as public agencies, shipping companies, insurers and other stakeholders will participate as distributed nodes to bring transparency, efficiency and security to the customs process. Use cases include sharing of necessary documentation and fraud prevention such as inability of smugglers to forge documents.
In May, Samsung and Korea Customs Service began collaborating on customs-related use cases, which includes possible new processes in shipping and logistics. The conglomerate expects to reduce costs in the shipping sector by as much as 20%. South Korea's government has announced blockchain initiatives and funding to improve the country's public services. There are currently six pilot projects.
Replacing Legacy Systems
Blockchain, tokenization and digitization can improve notoriously inefficient requirements mandated by governments.
A Sept. 2018 whitepaper by World Economic Forum (WEF) and Bain & Co., "Trade Tech – A New Age for Trade and Supply Chain Finance," outlined blockchain's ability to boost trade finance globally
by more than $1 trillion, especially in emerging markets. According to the authors, a test shipment of flowers from Kenya to the Netherlands produced a paper stack of 200 required documents.
Distributed ledger technology (DLT) is seen as improving efficiency and transparency, and can replace manual, paper-based systems that have been in place for decades or even centuries.
"Archaic processes pose a significant obstacle for small and medium-sized enterprises (SMEs) and trade with emerging markets," according to Sept. 13 whitepaper by World Economic Forum. Transforming paper-based documentation into electronic formats and applying smart tools and technologies help to reduce trade barriers and improve processing times at borders, particularly for small businesses and companies in higher risk developing countries."
Blockchain For Convenience And Transparency
Samsung SDS late last year won an order from Seoul city government to draw up a roadmap to apply blockchain for administrative use by 2022 with the goal of improving convenience and transparency. The first application would be for the collection of private information of citizens, according to company's website.
"Samsung SDS will … take a comprehensive look at Seoul's governance environment to see how to apply and expand the use of blockchain. The IT service provider will design a future model and come up with a step-by-step approach for application," the company announced in November 2017. "Samsung SDS, together with affiliate Samsung Card, first commercialised its blockchain platform Nexledger earlier this year. In May , it joined global blockchain alliance EEA, whose members include Microsoft and Intel, to spread blockchain use globally."
Last year, the company announced that it would apply its blockchain solutions to the shipping industry. Its security solutions include Nexledger and Nexsign (biometric).
Distributed ledger technology (DLT) has several features that can reduce inefficiencies in supply chains, according to Sept. 2018 WEF study: faster credit risk assessments; minimized human error in document checks; instant verification and reconciliation of records; automatic execution of workflow steps through smart contracts; instant and low-cost exchange of data.