The Land Transport Authority of Singapore (LTA) will now be able to disburse mobilisation advance payments to its main contractors with better transparency as a result of the multinational banking and financial services corporation, OCBC, integrating a blockchain-based conditional payments solution with its business banking platform.
This payment solution allows LTA to digitally transform the payout of mobilisation advance payments of its construction projects for better governance and more transparency over utilisation. This mobilisation advance payment, often amounting to millions due to the scale of the construction projects, helps the main contractors to defray heavy upfront capital outlays at the start of their construction project, and is usually a percentage of the total project value.
With OCBC’s blockchain-based conditional payments solution, the mobilisation advance payments are automatically disbursed to the intended contractor once the smart contracts verify that the conditions are met.
Melvyn Low, head of global transaction banking, OCBC said: “We are excited to embark with LTA on this journey of transforming the way payments are handled in the construction industry. This blockchain-based conditional payment solution will improve the governance and transparency of utilisation of the mobilisation advance payments that LTA extends to its contractors.
“There is much more that can be done in this area. In the spirit of our commitment to helping people and communities achieve their aspirations, we look forward to developing more such solutions in future to help our customers transform their businesses and reduce reliance on manual processes.”
The solution allows LTA to have full transparency over the use of the mobilisation advance, and integrating it within OCBC’s business banking platform provides a real-time overview of the transactions and bank balances.
The pilot involves three main contractors for the Cross Island Line projects. To date, over S$22million has been disbursed to the main contractors and sub-contractors with this solution.
Having actively participated since 2022 in Monetary Authority of Singapore’s (MAS) multi-year, multi-phase Project Orchid to develop the technology infrastructure and technical competencies necessary for a digital Singapore dollar, OCBC has concurrently developed its own capabilities in blockchain-based conditional payments.
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