PH becomes the second country after Malaysia to adopt Ztrade, a cross-border trade application Blockchain
MY E.G. Services Berhad (MYEG or “The Group”) has recently secured regulatory approval with the Bureau of Customs (BOC) to deploy its blockchain-based customs clearance and processing services for trade flows between the Philippines and China.
Photo shows (clockwise) – Enrique Y. Gonzalez (MYEG Philippines Inc.), TS Wong (MY E.G. Services Berhad), Jason Gaw Cheng (CDEC), HE President Ferdinand Marcos Jr., and Sec. Alfredo Pascual (DTI) at the signing of the MOA in Malaysia.
Together with its Philippine-incorporated companies, The Group entered into a collaboration agreement with the BOC and Cargo Data Exchange Center Inc. (CDEC), thus paving the way for the Philippines to adopt a digital solution known as Ztrade – a first-of-its-kind Web3 + Artificial Intelligence (“AI”) link between China and its trading partners – which runs on MYEG’s innovative Zetrix layer-1 blockchain platform.
“The BOC, in collaboration with MYEG Philippines, Inc. (MYEG PH), MYEG Ventures Inc. (MVI), and Cargo Data Exchange Center Inc. (CDEC), has executed a Memorandum of Understanding (MOU) for the potential use of Zetrix Platform — a blockchain-based application that will enable the verification of Certificates of Origin for exports to China and vice-versa, using express clearance and tariff exemptions under the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN-China Free Trade Agreement (ACFTA),” announced BOC Commissioner Bienvenido Y. Rubio.
“The proposed use of the Zetrix Platform shall be at no cost to the Philippine government and is expected to facilitate greater trade through seamless yet highly secure transactions between countries,” he added.
The announcement took place in conjunction with the president’s recent three-day state visit to Malaysia, where he identified new areas of synergy with the country for priority sectors such as agriculture, food security, tourism, people-to-people exchange, and the digital economy.
New platform to bolster trade between China and PH
The new platform is expected to play a pivotal role in bolstering the trade relationship between the Philippines and China, which has since grown exponentially at an average annual rate of US$50.04 billion from 2017 to 2021.
China now stands as the largest import and export trade partner of the Philippines.
In 2022, China emerged as the Philippines’ largest supplier of imported goods valued at US$28.22 billion or 20.6% of the total imports that year. This enabled China to leapfrog Japan into becoming the Philippines’ largest trading partner and also the largest source of imports.
Underpinning this notion is the Philippines’ US$10.97 billion or 27% worth of exports to China in 2021.
Under the collaboration agreement, MYEG will provide the Ztrade solution in the Philippines including ground installation, training, and assistance with customization requirements while CDEC, which is a value-added service provider of trade and logistics solutions for the BOC will support the integration of Ztrade to its platform to ensure a seamless experience for users.
The agreements shall remain in effect unless mutually terminated.
“At CDEC, we are proud to be the partner of MYEG in launching the Zetrix platform, which will increase the global trade competitiveness of the Philippines and improve the ‘ease of doing business’ for our traders and logistics service providers,” said CDEC President Jason Gaw Cheng.
This groundbreaking initiative by MYEG follows the signing in March of a partnership between the Group and East Logistic-Link Co., Ltd., a wholly-owned agency of the General Administration of Customs of the People’s Republic of China (“GACC”), to jointly provide a full suite of cross-border trade facilitation services on the Zetrix blockchain platform.
This includes the lodgment of certificates of origin as well as potentially other certificates relevant to cross-border trade like food safety, quarantine, and bill of lading, thus enabling all data to be available accurately in near real-time, hence, increasing the efficiency of tariff computation and customs clearance, especially for trade within the Regional Comprehensive Economic Partnership (“RCEP”).
Leveraging on Web3 technologies of blockchain smart contracts and AI, the Ztrade service, can overcome the prevailing limitations of conventional technology architecture in providing a reliable and automated method of securely and effectively digitalizing trade clearance processing, whilst removing the cumbersome retro-verification currently practiced, thus making it hassle-free, seamless, faster, and simpler overall.
Last April, Malaysia (through its Ministry of Investment Trade and Industry), announced its support for the adoption of a blockchain-based single window system that would allow for the mutual recognition of digital certificates of origin. Its goal is to improve trade facilitation and reduce technical barriers while ensuring much more efficient and secure processing of goods originating from Malaysia to China.
Forbes Malaysia’s “48th Richest Man,” TS Wong, who is also the Group Managing Director of MYEG, said, “At MYEG, we are pleased that the advantages of deploying a Web3 + AI-based solution i.e., Ztrade in offering secure, more intelligent, and more cost-effective processing of cross-border trades are now also being recognized in the Philippines, besides in Malaysia and China. We look forward to expanding this service to other nations as we continue pursuing our objective of deploying this pioneering solution, which leverages the power of Web3 and AI technology, across the Association of Southeast Asian Nations (“ASEAN”) and the RCEP region.”
The roll-out of Ztrade in the Philippines also marks the broadening of MYEG’s presence as a key enabler of government digitalization in the archipelago. Since commencing operations in 2017, the Group has gone on to establish itself as a leading provider of e-government services in the Philippines.
Today, the Group provides a variety of services for a wide range of government agencies including the National Bureau of Investigation, the Securities and Exchange Commission, the Bureau of Internal Revenue, LandBank of the Philippines, PhilHealth, the Philippines Economic Zone Authority (PEZA), and the Tourism Infrastructure and Enterprise Zone Authority.