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Mongolia Embraces Blockchain for Trade Modernization
In a significant step towards modernizing its trading framework, the National Chamber of Commerce and Industry (MNCCI) of Mongolia has launched an initiative to use Blockchain and Distributed Ledger Technology (DLT) for issuing Certificates of Origin (COO) . This innovative effort aims to streamline operations under various trade agreements, including the Generalized System of Preferences for 37 countries, the Asia-Pacific Trade Agreement (APTA) for six countries, and the Mongolia-Japan Economic Partnership Agreement (EPA).
Traditionally, the process of verifying the authenticity of COOs has been fraught with inefficiencies. Companies often face inconsistencies that require direct verification with the MNCCI. This process not only entails additional costs and delays, but also undermines the benefits of preferential trade agreements and increases the risk of fraud.
In response to these challenges, MNCCI, with support from the Asian Development Bank’s (ADB) Digital Learning Labs and in collaboration with ADB’s East Asia Department (EARD), has initiated an exploration of blockchain technology. The project required an innovative solution that guaranteed security, efficiency and scalability. Morpheus.Network, a company known for its expertise in blockchain services, has been selected as a partner for this initiative. Between April and November 2023, Morpheus.Network developed a Minimum Viable Product (MVP) that digitizes, tracks and manages COO digital footprints on the blockchain. This innovative approach aims to eliminate the inefficiencies associated with paper-based systems by providing an immutable record of authenticity, thereby improving security and trust between all stakeholders.
Implementation and integration of Blockchain technology
The blockchain solution, called “Trust Powered by Blockchain,” integrates seamlessly with MNCCI’s existing systems, ensuring a smooth transition with minimal operational disruption. Despite the inherent complexities of integrating advanced technology into established infrastructures, Morpheus.Network successfully delivered the project on time and on budget. Particularly noteworthy were their problem solving skills, responsiveness to MNCCI and ADB requirements and ability to meet challenges.
This blockchain initiative is expected to bring numerous benefits. By providing an immutable and easily accessible digital record, the solution improves the transparency and accountability of COOs. This reduces the likelihood of fraud and errors, thus increasing trust between international trading partners. Furthermore, the efficiencies gained from digitalizing COOs can lead to faster processing times and lower costs, making Mongolia’s business operations more competitive on the global stage.
Future prospects and international collaboration
Looking to the future, MNCCI is eager to expand this blockchain solution through partnerships with international donor organizations. This expansion highlights MNCCI’s commitment to leveraging cutting-edge technologies for greater transparency and efficiency in international trade. By collaborating with global partners, MNCCI aims to further improve its business processes and ensure that Mongolia remains at the forefront of digital innovation in the business sector.
The successful implementation of this blockchain project serves as a model for other countries and commercial organizations looking to modernize their systems. It demonstrates the potential of blockchain technology to transform traditional business processes, making them more secure, efficient and transparent.
In conclusion, MNCCI’s adoption of blockchain for issuing certificates of origin marks a significant advancement in Mongolia’s trade framework. By addressing the inefficiencies and risks associated with traditional COO verification processes, this initiative promises to improve the country’s business operations, foster international trust and pave the way for future technological innovations in the business sector.