Can Malta emulate Vietnam’s success story?

Vietnam claims to be one of the emerging Asian tigers with a high GDP growth and is poised to expand its influence in commerce having a relatively young population of about one hundred million

Vietnam was swift in containing the spread of Covid-19, with a fairly intrusive trackand-isolate strategy, the kind that only a one-party state may be able to implement. Its economy suffered, but has bounced back more sharply than most. Vietnam was successful at limiting infections during the early months of the pandemic, but an outbreak that began in late April this year forced the temporary closure of industrial parks housing key electronics manufacturing hubs.

Despite the outbreak of the Delta virus in Vietnam, it could still report fast growth such that the World Bank’s latest forecasts point to an expansion of 4.8% in 2021. The story also underscores Vietnam’s status as a favoured venue for foreign direct investment (fdi). Vietnam has attributes that made investing in emerging markets so enticing being a fastgrowing economy, with rapid urbanisation, and an improving infrastructure. It prides itself on an expanding middle class.

Its array of listed companies includes banks and logistics firms to retailers and steelmakers. It is an established place for clothesmakers to set up. More recently, it has become a key link in technology supply chains. Vietnam is not just a darling of multinational firms but it is also beloved of investors in “frontier markets”, at the farthest edge of the equity universe. For example, in the field of blockchain technology, one observes that Vietnam is pioneering a legal framework which empowers the country to maximise benefits from this emerging industry.

Quoting Bigbom, a large number of Vietnamese people are not fully aware of the terms blockchain and cryptocurrency and often mistake them, yet Blockchain tech experts say, the use of technology in Vietnam could help industry users save 30-50% of their expenses as those apps would help them improve the quality of production and transparency in finance and asset management.

As can be expected, the tech community in Vietnam is booming due to a large talent pool of skilled developers. Still, one cannot but admire the progress done by members of the Vietnam Blockchain Club which aims to connect Vietnam business leaders, educators, policy-makers, regulators, tech entrepreneurs to get acquainted with the DLT technology. So how can Malta be of service to blockchain enthusiasts in South East Asia? Again, why Vietnam?

It is a socialist-oriented market economy, being the 47th largest in the world measured in GDP and 35th largest in the world measured by purchasing power parity (PPP). Many wonder how truly remarkable was the swift transformation of the Vietnamese economy which over the last 25 years has reduced unemployment to single digits. A delegation from PKFMalta paid a familiarisation visit to Hanoi three years ago and had enthusiastic meetings with delegates at Vietnam Blockchain Start-Up event.

Needless to say, Vietnam is also catching up with this revolution especially in the fintech sector and aims to promulgate various laws and regulations similar to the ones enacted in Malta. In this context, one cannot underestimate the merits of virtual currencies and tokens that in the future could be used for cross border payments, such as is being promoted in Malta by MFSA through the use of a sandbox regime for remote gaming.

This facilitates operators to exchange immediate and transparent transactions with players in VFA assets. It is interesting to note how locally another piece of legislation, the TAS bill, will set out the regime for the registration of technology service providers and the certification of “technology arrangements”.

This framework will allow for the registration of IT auditors and administrators of distributed ledger technology (DLT) platforms and their certification. It is complementary to the Virtual Currency bill which will set out a framework for initial coin offerings (ICOs) and the regulatory regime on licensing of White Papers compiled by issuers. Many agree that virtual currencies have become a global phenomenon that has also caught the attention of users in Vietnam.

It is true that Bitcoin had a bouncy start such that in a number of cases, exchange platforms have gone out of business or have failed – in some instances due to hacking by third parties. Proponents of virtual currency argue that this represents the concept of value and can be used in framework as a medium of exchange, a unit of account and a value storage. However, it should be noted it does not have a link to any particular jurisdiction and, hence, doesn’t qualify for a legal tender status.

As it were, no jurisdiction guarantees the performance of its functions, which is only held together by the mutual consensus of the community of users. Paper and coin money, as we have traditionally been accustomed to, is referred to in various ways, as, fiat money and is recognised in the country that issues it.

By contrast, one notes the uniqueness of a virtual currency that in itself it does not entail prior authorisation by a centralised entity. Both a business trader and a customer can affect payments in a virtual currency without being entwined in the banking hegemony or intermediaries in the financial services market. As can be expected, Vietnam is an emerging market that offers ample scope for e-wallets to be introduced since a high proportion of the population do not have access to bank accounts.

There are unique advantages when using virtual currencies in Vietnam to help cash flow issues in industrial, fishing, logistical and agrarian sectors. One appreciates that Malta can somewhat emulate the success achieved by Vietnam if we strive to seriously invest in the digital economy.

The promotion of our expertise in Blockchain methodology by Malta Enterprise can pave the way for future cross-border consultancy projects in Vietnam by locally qualified VFA agents.