Going for Seamless Paperless Trade UNECE UN/CEFACT Going for Seamless Paperless Trade Ki Hyun OH Managing Director/KTNET basecamp@ktnet.com

Contents 1. Who is KTNET? 2. KTNET Services 3. Global Projects UNECE UN/CEFACT Contents 1. Who is KTNET? 2. KTNET Services 3. Global Projects 4. Vision

UNECE UN/CEFACT 1. Who is KTNET?

Profile of KTNET Establishment established on December 1991 by the initiatives from MOCIE Employees About 200 employees Capital 70Million (USD) Revenue (’04) 50Million (USD) Transaction About 9.6 Million Times/ Month e-Docs 300 kinds of e-documents in service User Group Trading Firms, Banks, Customs Brokers, Bonded Warehouses, Shipping Companies, Airlines, Korea Customs Service, Other Government Agencies and trade-related authorities.

UNECE UN/CEFACT 2. KTNET Services

KTNET Service Overview Business Scope Services Service Type Mega portal VAN Web(portal) Commerce - Export/Import License - Marine Cargo Insurance - Export Insurance - Application for ((Issue) Letter of Guarantee - C/O, P/L C/S eTFTM Trade Finance - L/C Advice - Local L/C - Remittance C/S eTFTM CTradeWorld eCustoms Customs Declaration Manifest Consolidation System Duty drawback C/S eCFTM eLogistics - Shipping Request & Order - Bill of Lading Advice - Marine Cargo Insurance Policy C/S eLFTM

2-1. Commerce and Trade Finance UNECE UN/CEFACT 2-1. Commerce and Trade Finance

KTNET Who participates in Commerce & Finance service? About 16,000 trading firms and most of trade related organizations participate in Commerce and Finance service network Trading firms(16,023) Korean banks(19) KTNET Insurance companies(6) Foreign banks In Korea(23) Industrial Associations(18) Korean Chamber of Commerce and Industry(2) Korea Export Insurance Corporation(1)

L/C Opening/Advice 1. BUSINESS CONTENT : L/C open, Opening Charge Notice, L/C advice, Advising Charge Notice 2. BUSINESS FLOW ① ADV700 (L/C Advice) ① APP700 (L/C Application) SWIFT ② FINBIL (charge advice) ② Nego L/C PRESENTATION IMPORTER OPENING BANK FOREIGN NOTICE BANK EXPORTER

Local L/C Opening/Advice/Nego 1. BUSINESS CONTENT : Local L/C open / advice, VATBIL or LOCRCT(local receipt certificate), Application for Bill of Exchange negotiation 2. BUSINESS FLOW ⑦ Nego/settlement ② L/C open ⑥ Nego/ settlement Opening Bank ③ L/C advice Negotiating Bank ⑧ Nego/settlement ① Offer sending ④ VATBIL issue ⑤ LOCRCT issue Exporter Manufacturer

Letter of Guarantee MFCS KTNET 1. BUSINESS CONTENT : L/G Application, L/G Sending, L/G Issuing inquiry & Confirmation, Letter of Guarantee, Cargo Exit 2. BUSINESS FLOW Bank L/G issuing inquiry and confirmation ‘ Bank L/G Issue (LOGUAR/LOGADV) FORWARDER KTNET MFCS BANK Cargo Delivery Order (GODAPP)  EDI*NET  L/G Application (APPLOG) Bank L/G Issue (LOGUAR) Exit Cargo Delivery Order & bank issuing D/O agreement yes or no confirmation taking out IMPORTER WAREHOUSE

choice of document handling (on - offline) Certificate of Origin e-C/O Scenario Import Dec. Customs Customs Bank KCCI Import Doc.(e-C/O, INV) e-C/O e-C/O, Inv, P/L TDA for Customs CO APP TDA e-C/O, Inv, P/L e-C/O DVCS Exporter Overseas Hub e-C/O, Inv, P/L e-Trade Platform e-C/O, Inv, P/L Importer print out choice of document handling (on - offline) e-C/O, Inv, P/L by paper handling Import Process TDA : Trusted Document Authority DVCS : Data Validate Certificate System Export Process Paper Process

UNECE UN/CEFACT 2-2. e Customs

Network Service Provider KTNET Networking As of June 2005 Trading Firms (16,000) Bonded Warehouse (1,176) Forwarder - Sea(1966) - Air (1278) Bank (20) Customs Broker (722) KTNET ARINC Bonded Transportation (308) SITA Network Service Provider Tallying Firms (22) Global Networks Shipping Companies (574) Air Lines (53) US Customs ASEM PAA *OGA: Other Government Agencies OGA (120)

e-Customs Service Teaming up with the Korea Customs Service,KTNET has developed the Customs Information System handling cargo-related activities rapidly and precisely. ‘Electronic Data Interchange(EDI) System for Export Clearance’ was launched in 1994. Followed by ‘Import Clearance’ in 1996 and by ‘Automated Duty Drawback’ in 1997 and reached close to 100% Paperless Customs Procedures. Traders Shipper/Airline Forwarder Organization eCustoms Bank/Insurance Transport Customs Service

UNECE UN/CEFACT 2-3. e-Logistics

e-Logistics Service Drives the processing speed of Logistics and reduces Time and Cost for Cargo Management. Covers 100% Complete Cargo Management Process, from arrival, unloading and warehousing to delivery to customers. Using EDI based Document Standards and Simplification, KTNET provides 24-hour real-time Logistics service. INFORMATION INFORMATION Airlines KTNET Customs House Arrival & Departure Traders Transport Forwarder Warehouse Load Shipper Export Import

e-LogisFrameTM Service eLFTM transmits e-documents such as ; Shipping Company Airline FFM/FWB Master Manifest Transmission Korea Customs Service Master Manifest Transmission Manifest Acceptance Internal business of Customs Suspicious Cargo Selectivity Arrival Notice Paperless Nego ARINC Trader Freight Forwarder House Manifest Transmission D/O, L/G L/G Information Confirmation for shipment of Export cargo House Manifest Transmission eLogisFrameTM MFCSTM Cargo Information Inquiry Pre-arrival Customs Clearance Bank Manifest Entry Agent Work order list for Cargo allocation Unloading Report Expected Check List Expected Carry-into information Bonded Transportation List Customs Broker * D/O : Delivery Order * L/G : Letter of Guarantee Stevedore Warehouse Tallying Firm Trucking Company

Sharing Cargo Data- Suggestion for Int’l Cooperation Connecting Korea’s Manifest Consolidation System(MFCS) with the cargo management systems of foreign countries will enable a global sharing of cargo information resulting in better Customs Service administration Airliner Forwarder MFCS Korea Customs Shipping company Foreign cargo management system Foreign Customs Bonded transporter Bonded warehouse Information Sharing

Global Visibility service As the backbone of KTNET e-Logistics, Intelligent & proactive track & trace platform with global connection Data sharing by the actions of touch points like uploading from legacy or inputting data Booking from customers to logistics service providers via on-line Pre-alert, event management, inventory(in motion & at rest)control provided P/O Issue P/O Accept Goods Issue Pick Up Shipment B/L Issues Transport Transfer Import Arrival, Customs- Release Inland Cartage Delivery Invoice Goods Receipt Account Payable End to End, Real & Near Time Shipper Goods Issues Goods Receipt Consignee Global Visibility Supplier/ Factory DC/Buyer Integrated & Centralized Pick Up Connection Delivery Trucker Export clearance Import clearance Trucker Build up Forwarder Departure Arrival Break down Forwarder Terminal Airlines Terminal Carrier

Global Visibility Service Business Case of Visibility in service HP(Headquarter in US & Korea) & its logistics service providers connected with KTNET Data uploaded and shared with trading partners Real time cargo status information created and supplied for customers Cargo status information(delay, on time or in time) acquired from the WEB Time and cost for cargo tracking reduced SCM:Production, Inventory Commercial Invoice SCM:Delivery, Shipment [HP Singapore] [HP GLOBAL] [HP Korea] Visibility Monitor Visibility Monitor ATHENA Commercial Invoice VISIBILITY in KTNET Import Clearance Cargo in & out of W/H Transportation Status [Customs Broker] [Bonded Warehouse] [Inland Transportation]

3. Global Projects - PAA - ASEM - GSCM UNECE UN/CEFACT 3. Global Projects - PAA - ASEM - GSCM

Domestic Paperless Trade PAA Members and Business Scope 9 members ; KTNET (Korea), CIECC (China), Tradelink (Hong Kong), TEDMEV (Macau), Trade-Van (Chinese Taipei), TEDI (Japan), CrimsonLogic (Singapore), DagangNet (Malaysia), CAT (Thailand) Asian Paperless Trade Domestic Paperless Trade Trader Chinese Taipei e-MP Carrier Manufacturer Customs China Korea Customs Broker 260,000 Customers KTNET Japan Macau Forwarder Trucker Authority Hong Kong Malaysia Warehouse Bank Insurance Singapore

PAA Performance Secure Cross Border Transaction Service Technical Standard PAA Club Agreement As Is: B2B & B2G e-Doc’s, Visibility Service, etc.. To Be: e-B/L, e-Nego, e-Payment Interconnection Standard (Interoperability) e-Document Standard Security (Public Key Infrastructure) Background for legal issues Multilateral Agreement

Introduction of ASEM Beginning Approved by ASEM members at the 1st ASEM Conference on e-Commerce(2001) Trade Volume with Korea Objectives (US$3,976million) (US$12,425million) Facilitate International Trade between Asia and Europe Public-Private Joint Efforts e-B2G Doc’s as well as e-B2B Seamless Paperless Trade process by e-B/L, e-Nego and e-Payment ASEM Paperless Trade Network (US$56,658million) (US$6,798million) Source : 2004, KITA

ASEAL-A Booster to ASEM Project

Introduction of GSCM Object - Building up Public SCM platform for Korean SME’s Background Big corp. Private SCM A Supplier1 To upgrade private companies’ competence A Buyer A Buyer 2 GSCM-Hub To support investment on overseas manufacturing facilities A local factory A overseas factory To support SME’s IT-based business activities Market Place A Supplier 4 A Supplier 3 To increase business flexibility by corresponding to global market changes Company A Supplier 2 Domestic Global

UNECE UN/CEFACT 4. Vision

Korean Single Window - e-Trade Platform Financial Settlement Bank Marketing Credit Card KFTC License/Certificate Insurance eMarketPlace Credit Evaluation Company Insurance Company Insurance Company Global e-Trade Hub Trading Company (Including SME) e-Trade Platform (KTNET) e-Trade Single Window Global Networking Certified Certificate Authority Customs Service National Logistics Single Window Standardization Agency Document Standard

Seamless Paperless Trade Legal Documents  Bill of Lading Administrative(B2G) Documents Certification of Origin Export License Acceptance of e-Doc’s by Customs Other administrative Doc. Private Documents I/V, P/L, Delivery Schedule, DELJIT, P/O, Payment Notice, Shipping Order, and other private doc.

Requisite for Paperless Trade Embodiment of Global paperless Trade Embodiment of International paperless Trade Local Mission International Mission Local Promotion International Promotion Public-Private Co-Work International Cooperation By PP partnership Related Laws/Systems/Process Enhancement Conventions/Agreements for the Effectiveness of Paperless Trade Standardization & Guidelines Standardization

UNECE UN/CEFACT Thank you! Basecamp@ktnet.com www.ktnet.com