Can you define digital commerce? Fintech? – National Press Foundation

Digital economy agreements have been ongoing for more than two decades, but there is still no single accepted definition of digital trade, Nydia Ngiow told NPF’s International Trade Fellowship journalists in Singapore.

Ngiow, CEO of BowerGroupAsia, is a former international trade negotiator with the Singapore government who worked on the Trans-Pacific Partnership as well as the EU-Singapore Free Trade Agreement.

“Which lots are ready [about] however, is that a digital product is anything that is digitally encoded. A program, text, video image produced for commercial sale that can be transmitted electronically. They just haven’t decided whether this is a good or a service or both,” Ngiow said. “If you check the definitions of the digital economy agreements, the general consensus is that this includes digitally enabled transactions of commercial goods and services, and that this involves consumers, companies and governments.” [Transcript | Video]

Ngiow and Sheldon Goh of Microsoft explained acronyms and terms that business journalists covering digital commerce are likely to encounter:

Digitization of trade finance: Digitizing trade finance seeks to address the significant gap in global trade finance by partnering with the public and private sectors to identify and develop technologies and associated technology standards that facilitate connections between digital islands, the inclusion of trade finance for SMEs and trade tech for EME, according to Microsoft’s Sheldon Goh. Supply chain disruptions have increased the focus on digitizing trade finance, converting the processes and paperwork into electronic documents, enabling text analysis and mining, Goh said.

SMEs: Small and medium-sized enterprises.

EMEs: Emerging market economies

Digital Currency: Currency available in digital form that exhibits characteristics similar to physical currencies but can allow instant transactions and borderless transfer of ownership, according to Goh. “Cryptocurrency will continue to make news for the next 12 months at least … but when we talk about digital currency, it’s not just about cryptocurrency,” he said. Other examples include virtual currencies and CBDC. “As we speak today, there could be a new digital currency being invented and floating around in some way. The law and regulations are not able to keep pace with such a speed of innovation and also the sentiments of the consumers in their interest.”

CBDC: Central Bank’s digital currency. Goh calls CBDCs an area to watch because it’s “being explored by every major economy in the world,” although he doesn’t expect them to fully replace physical currencies in the next decade.

DEA: Digital economy deals. “These appear to include digital trade rules and … to contribute to what is the development of international frameworks to promote the interoperability of standards, systems, support businesses, especially SMEs engaged in digital and e-commerce,” Ngiow said . “In addition, DEA also supports cross-border data flows, safeguards personal data and consumer rights, and promotes cooperation in new areas such as digital identities, AI and data innovation.”

Fintech: Technology used to extend, streamline, digitize or disrupt traditional financial services in the form of apps, algorithms and software, according to Forbes.

Like digital commerce, fintech has a very broad definition.

“I actually hate the word fintech because it means absolutely nothing. Who is fintech?” asked Truera Chief Strategy Officer Shameek Kundu. But he said the name shouldn’t matter when it comes to how these companies are treated. “How regulators view fintech increasingly [is] if it walks like a duck and quacks like a duck, treat it like a duck. … I don’t care if you call yourself fintech or Timbuktu, doesn’t matter. If you lend, you will be subject to the lending regulations.”

Goh predicts that the fintech model will grow, while traditional banking will fade.

“You’ll hear bankers talk about how much they have to spend on regulatory compliance for them to survive and continue to grow, where fintech doesn’t really have to,” he said.

There is also debate about governments regulating cryptocurrencies.

“Governments, when it comes to emerging technology, have always had to walk the fine line of deciding when, if ever, they want to regulate. If you look at when Uber first came into the picture for ride-hailing, governments didn’t really regulate for [later]”, Ngiow said. “They recognize that blockchain technologies can be very, very useful, but how much warning can they do before they actually start regulating?”

Kundu said governments should regulate cryptocurrencies for a number of reasons, including “the ability to use cryptocurrencies for money laundering and financial crime … cyber threats are often paid for through cryptocurrencies – and the contingent effect on mainstream financial services.”

Still, “despite many warnings, people expect 18% interest. Is it the government’s responsibility to protect them? There are pros and cons. If it causes social unrest, it might be a good idea to do it. If not, you can say: ‘Yeah, tough luck. You made your choice.'”

Goh called crypto a “schema”.

“The meaning and definition of cryptocurrency itself has changed a lot, and it’s changing as we speak, every second. The way I look at it is that it’s created as a medium for speculation. … LUNA crash, it could happen with any major cryptocurrency … because there’s really no basis for how the currency value goes up and down,” he said. “Cryptocurrency is a new term, but if you look at the history of financial services, you might have seen schemes that happened like happened before.”

Regulatory debates, taxation and other barriers to trade and financial services have existed well before the digital economy, Kundu said, but “data protectionism” is a more recent obstacle.

“Data is the center around which the world revolves,” he said. “Every country has a right to think, ‘How do we ensure that we as a country and our citizens are able to keep control of this data … and that it is not misused by other countries?'”

In Asia, some countries went in opposite directions when it comes to data retention.

“The Indonesia model for a very long time was, ‘I don’t care where you send the data. But what I care about is that you must have the data at least in my country … You must have everything you need to run this bank and for us to monitor you in this country,” Kundu said. India, on the other hand, “went to the other extreme and said, ‘you can’t send any domestic payment information outside the country’.”

How to strike the right balance between protecting data and promoting digital commerce is the question, Kundu said.

Goh advised journalists to keep an eye out for the following topics for stories:

• Changes in international trade law in your country
• What are the new trade finance networks? How does blockchain facilitate these networks?
• Where do disruptions occur in the supply chain and what solutions can be found regionally or globally?
• What are the areas of innovation, automation (blockchain, AI, machine learning, Web3.0, 5G, IOT)?

“There is no doubt that digital transformation has reduced the costs of engaging in international trade. It has simplified the coordination of global value chains and connected businesses with consumers globally,” said Ngiow. “But this has also given rise to more complex international trade transactions and political issues, which are taking place at unprecedented speed, and trade rules must also be able to reflect that.”

The National Press Foundation’s International Trade Fellowship in Singapore is sponsored by the Hinrich Foundation. NPF is solely responsible for the content.