Promoting Malta in Vietnam

business opportunities in a number of sectors, including crypto and blockchain applications.

Why Vietnam? This is a socialistoriented market economy – the 47th largest in the world measured in GDP and 35th largest in the world measured by purchasing power parity (PPP).

The so called “Doi Moi” economic reform, which started in 1986, led to a market-based mixed economy previously with a predominance of state-owned industry. These reforms were undertaken to allow Vietnam to integrate itself with the global market economy. The primary goal of this economic reform was to improve the productive forces of the economy, developing a firm technicalmaterial base for the export-oriented manufacturing base and to enable it to create more job opportunities. It is interesting to note that Vietnam’s ultra-high net worth individuals reached 110 in 2013. Quoting Dezan Shira & Associates, this number is predicted to reach 293 by the end of the next decade, which is a growth of 166 per cent.

This amply highlights the remarkable transformation of the Vietnamese economy which, over the last 25 years, has reduced unemployment to single digits. I was enthusiastic about meeting delegates in Hanoi and telling them that Malta is a pioneer country, being amongst the first in Europe to welcome blockchain technology.

Readers know that this is not just about Bitcoin, given that the distributed ledger technology can be so versatile that in Malta it is predicted to be used to vastly improve services in the Lands and the National Health Registries. Needless to say, Vietnam is slowly catching up in the blockchain revolution, especially in the fintech sector, so during my presentation I explained about the various laws and regulations that were passed in Malta last year in the VFA sector.

In this context, we need to mention the importance of virtual currencies and tokens which, in the future, could also be used for cross border payments, such as in the sandbox regime for remote gaming where operators want to effect “immediate and transparent transactions” with players. Malta plans other applications including archiving the music industry, the collection of royalties, and smart contracts, allowing individuals in one country to purchase property in another without the need for middlemen. Other blockchain uses include applications in the public sector to render it more efficient.

In this regard, it can simplify the management of data and make it easier for citizens to access critical services in the public sector. Last year, Malta successfully passed three Bills. The first one is termed the MDIA Act, which will provide for the establishment of the Malta Digital Innovation Authority as a central regulator. It is expected that the law will promote government policy towards the industry and set the foundation stone for the development of Malta as a hub for new and innovative technologies.

Another piece of legislation, called the TAS Act, 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. This is complementary to the Virtual Currency Bill which will set out a framework for initial coin offerings (ICOs) and the regulatory regime on the licensing of White Papers compiled by issuers.

It goes without saying that virtual currencies have become a phenomenon that has reached a mainstream audience. They have become so ubiquitous that “bitcoin” has been accepted into the popular vernacular of ordinary people across the world.

Delegates at the Forum were curious to know about the resilience of Bitcoin, given its volatile past as a virtual coin. It was invented in 2008 and, during its early days, it languished as a niche currency with little adoption until 2013, after which it exploded in value and fluctuated exponentially in the last three years.

On the other hand, the IMF recently conceded that these virtual currencies are facing ‘technological’ problems that could eventually be solved, and that as such they could be “easier and safer” to hold than paper bills in remote regions, or countries with unstable national currencies or ‘weak institutions’.

In a number of cases, exchange platforms have gone out of business or have failed – in some instances due to hacking by third parties. During the Forum, speakers explained how a virtual currency 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 that it does not have a link to any particular jurisdiction and hence does not 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, to which we have traditionally been accustomed, is referred to in various ways as fiat money and is recognised in the country that issues it.

The uniqueness of a virtual currency is that in itself it does not entail prior authorisation by a centralised entity. Both a business trader and a customer can effect payments in a virtual currency without being entwined in the banking hegemony or the financial services market. In Vietnam, there is ample scope for e-wallets to be introduced, since a high proportion of the population does not have access to bank accounts.

There are unique advantages when using such currencies in Vietnam to help cash flow issues in the industrial, logistical and agrarian sectors. One appreciates that the MFSA acted in a pioneering way to license VFA agents and IT service providers while facilitating the licensing of ‘White Papers’ issued by new ICOs. The promotion of this nascent expertise in Vietnam can pave the way for cross-border consultancy projects. Without doubt, the Prime Minister’s visit to Vietnam has oiled the wheels of progress for its early adoption.