International Business Machines Inc. Tuesday said it is collaborating with several government agencies in Dubai to try out blockchain, a technology that will help improve efficiency in tracking the import and export of goods in the Middle East trading hub.
The company is working with Dubai Customs, Dubai Trade and its IT provider DUTECH, to explore the use of blockchain for a trade finance and logistics solution, IBM said.
Blockchain--the technology behind the digital currency bitcoin--uses a shared digital ledger to track transactions or items. It has gained most attention globally in the financial services industry but is also attracting interest from supply chain management and other sectors.
For instance, in Dubai, the blockchain-based solution aims to replace paper-based contracts with smart contracts, which will help reduce complex documentation for the tracking, shipping and movement of goods. This will allow key stakeholders to receive real-time information about the state of goods and the status of the shipment, IBM says.
"The technology will help improve security and transparency and reduce frauds such as money laundering," Arvind Krishna, a senior vice president and director of research at IBM, told The Wall Street Journal.
With little oil of its own, Dubai has used its ports and free zones to become a major hub for trade in the Middle East, connecting the markets in Asia with those in Africa, Europe and beyond. Non-oil foreign trade in the emirate amounted to about $259 billion in the first nine months of 2016, according to its statistics center.
Dubai's government last year said it plans to shift all transactions to blockchain by 2020, part of a strategy to achieve a high degree of efficiency in its departments.
Blockchain is yet to be deployed widely for commercial use but many big global companies such as Wal-Mart Stores Inc. are testing the technology.
As part of the Dubai solution, IBM said it will also be working with bank involved in trade finance.