From smart city to blockchain pioneer: Dubai’s latest trade initiative

Dubai Customs has launched its own blockchain platform to improve clearance procedures by providing a more comfortable and easy way for shipping operations across Dubai and its borders.

This program, unveiled on July 8, 2024, is a key pillar in Dubai’s intention to become one of the leading ‘smart’ cities, as reported by the Dubai Media Office.

Ahmed bin Sulayem, chairman of the Ports, Customs, and Free Zone Corporation, said: “This innovation reflects our vision to make Dubai a global hub for trade and logistics.”

Numerous processes will be automated, which will significantly speed up customs clearance and commercial transactions, thanks to the time savings provided by the blockchain solution.

One of the major benefits of this platform is its ability to enhance transparency in supply chains. It increases trust and efficiency in trade operations through secure data sharing on a tamper-proof network, which helps reduce the storage of vast amounts of paper.

Dr. Abdullah Busnad, director general of Dubai Customs, said: “The platform will not only benefit Dubai Customs but also serve as a valuable tool for collaboration with other government entities. The goal is to make the business environment in Dubai smoother, more streamlined, and transparent.”

While blockchains have long been touted as a solution for tracking the real-time movement of items in supply chains and combating fraud and counterfeiting, the road to widespread adoption has not been without obstacles. In 2022, academics pointed out persistent hurdles to mass adoption. The brightest name in the blockchain supply chain industry came crashing down when IBM ended its innovative TradeLens platform in November 2022, largely due to what it saw as a “lack of global industry collaboration.”

While facing these challenges, the dynamic landscape of blockchain supply chains is maintained. This bodes well, as VeChain, a smart contract-ready blockchain launched in 2016, has established a significant presence in the supply-chain tracking industry. Launched in 2019, Chainlink has a history of applications in supply-chain enterprises. Moreover, in Hong Kong, the Global Shipping Business Network (GSBN), an important entity, has emerged.

In a related move that illustrates its commitment to blockchain and digital assets, Emirati digital bank startup Zand announced last week that it will become the first regulated institution in the UAE to offer comprehensive virtual asset and cryptocurrency services. This initiative involves a collaboration with Taurus to create digital asset infrastructure, which includes custody, tokenisation, and blockchain connectivity. In 2023, Taurus raised $63 million, with investors such as Credit Suisse and Deutsche Bank, further underscoring the growing promise of blockchain-based financial services.

Zand’s mission is to forever change the finance industry by utilising a combination of innovation and advanced solutions in AI and blockchain. Focused on the client, their innovative solutions aim to integrate traditional finance (TradFi) and decentralised finance (DeFi) applications, enabling UAE (and global) corporate, institutional, and wealth clients to seize new opportunities in a nascent digital economy.

This is not the first time Dubai Customs has dabbled in blockchain technology, and this upcoming entrant will join a slew of new projects from government entities embracing decentralised platforms. In January 2020, they unveiled a blockchain-based cross-border e-commerce platform—the first of its kind in the region. This previous project, launched in September 2019, had two phases: the first allowed couriers to carry out e-commerce export transactions, and the second addressed issues of under-declaration on imports by simplifying the declaration creation process for our auto-refund scheme and continuously optimising the fee and charge structure with a focus on onboard logistics companies.

Blockchain technology is inherently transparent and, therefore, should deliver a much higher level of trust throughout the commercial process. Every participant can access an unaltered, secure, and verifiable record directly. Furthermore, the real-time tracking of goods via blockchain helps to enforce greater transparency in the supply chain, which also directly contributes to efforts against fraud and counterfeiting.

As Dubai continues to push the boundaries of technological innovation in trade and commerce, this new blockchain platform represents a significant step forward in its ambition to become a global leader in smart city solutions and digital trade facilitation.

(Photo by David Rodrigo)

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Tags: blockchain, cryptocurrency, defi

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