KR Srivats

The Asian Development Bank (ADB) is working hard with member countries to combat “digital poverty”, said Bambang Susantano, Vice-President, Knowledge Management and Sustainable Development.

While adoption of latest digital technologies will help bridge the trade finance gap, which is estimated at about $1.5 trillion, care must also be taken to ensure that it is equitable and that all segments gain from it, Susantano told BusinessLine.

He was in the Capital to attend the 9th Asia-Pacific Trade Facilitation Forum 2019. Susantano said that adoption of digital technology has two dimensions — while it would bring transparency, efficiency, and accountability in many things — it also had the potential to leave a portion of the population behind, resulting in widening of inequality, he warned.

“Digital poverty — unlike conventional poverty — will be a new form of poverty. We don’t want to see that. We want digital technology to be both efficient, sustainable, and also equitable,” he said.

ADB is trying to combat digital poverty through its interventions in the form of capacity building, providing guarantees, and better access to trade finance for segments such as SMEs.

“We will continue to focus on supporting our member countries on trade facilitation. This is a programme benefiting the member countries and especially enrich the bottom of the society that requires support,” he said.

Removing all barriers and providing more access to SMEs is very important for trade finance to become more inclusive, according to Susantano. “Because that is the area that people are having difficulties. Most of them are women. We are financing intermediary financial institutions to provide loans to this segment,” he said.

SMEs are facing information asymmetry, and this is a challenge that can be surmounted by the use of digital technology, reveals a new ADB-UN ESCAP joint report released on Tuesday.

“By providing guarantees to Letter of Credit (LC)-based loans from private banks, we can ease the barriers to SMEs in accessing trade finance. Digital technology will help close the trade finance gap in the market. Digital technology can facilitate predefined trade finance transactions by filling the gap on information asymmetry,” said Susantano.

Susantano also said that digitalisation, especially of the trade-facilitation process, will help India become more efficient and get integrated into the global value chain quickly.

Susantano said that ADB is now working on Customs, Immigration, Quarantine and Security (CIQS) to assist its member countries to facilitate seamless and frictionless trade.

Well-positioned

With India already at the forefront in digital identification technology and processes, Susantano felt that the country had all the ingredients of emerging as an advanced nation by applying digital technologies not only in trade facilitation but also in many other sectors.

“Not every country in Asia-Pacific has embarked on the massive scale that India has on digital identification. This is a stepping stone for the next stage. You have potential to embark on more digital trade facilitation that will facilitate digital coverage (of goods) from origin to destination,” he said.

ADB officials felt that the report — Asia Pacific Trade Facilitation Report 2019 — could be the basis on which India could work upon the trade facilitation process digitalisation in the coming days, and this could help in improving the country’s export competitiveness.

“The report not only identifies the magnitude of the trade finance gap, but also highlights that governments and sectors, along with ADB, can work together to help close the trade finance gap. We highlight the importance of digital standards, and legal entity identifier to facilitate KYC procedures,” added Susantano.