US-based technology firm IBM is working with eight government agencies and private entities to explore the use of blockchain-based trade finance and logistics solutions in Dubai.

The pilot project could see the use of a blockchain solution for the import of goods into Dubai as well as their re-export.

Entities involved in the project include Dubai Customs, Dubai Trade, Dubai-based telecom service provider Du, Emirates NBD Bank, Banco Santander, logistics firm Aramex and a yet-to-be named airline company.

The solution will be based on Hyperledger Fabric, an open source cross-industry trade finance solution, and utilise IBM’s data centre infrastructure.

Blockchain-based solutions such as Hyperledger Fabric aim to replace paper-based contracts with a “smart” contract. This integrates all the key trade process stakeholders from the ordering stage, in which the importer obtains a letter of credit from their bank, through the intermediary stages of freight and shipping, and ending with customs and payment clearance.

In February last year, the Dubai Museum of the Future Foundation established the Global Blockchain Council.

Dubai has said it plans to execute all its transactions on a blockchain by 2020.

According to a recent study conducted by the IBM Institute for Business Value (IBV), 90 per cent of government organisations in the Middle East plan to invest in blockchain for use in financial transaction management, asset management, contract management and regulatory compliance by 2018.