"Achieving transparency and speed in transactions with purpose bound money" - Powered by OCBC
Melvyn Low from OCBC and Yong Yenn Leng from the Land Transport Authority discuss the use of blockchain technology and smart contracts for digitalising manual conditional payments in the construction industry.
Key highlights
Challenges of facilitating payments in the construction industry
- No visibility over the use of the funds in a project such as buying materials, mobilising the equipment at the construction site or engaging sub contractors.
- Payment flow to the contractors can take several months because of manual verification, document processing.
The solution: Purpose bound money
- LTA funds a PBM account for the contractor to access when required.
- Smart contracts are executed. When pre-set conditions are met, funds will be dispersed.
- Visibility over different payments made - used to be done manually or in an opaque process that isn't digitalised.
Conclusion
The integration of blockchain technology and smart contracts in the construction industry represents a transformative shift towards greater efficiency, transparency, and accountability. By digitalizing manual payment processes and introducing purpose-bound money (PBM) accounts, the industry can overcome long-standing challenges such as delayed payments and lack of visibility over fund usage.
Speakers:
- Melvyn Low, Head Global Transaction Banking, OCBC Bank
- Yong Yenn Leng, Chief Financial Officer, Land Transport Authority