The Malta Independent on Sunday
Can Malta emulate Vietnam’s success story?
Vietnam is one of the fastest-growing economies in the world. The country’s economic boom is attributed to the shift in labour allocation from agriculture to the manufacturing and services sector.
Vietnam also received a boost from private investment, strong tourism, higher wages and increased urbanisation. It prides itself of an expanding middle class.
Its array of listed companies includes banks and logistics firms to retailers and steelmakers. It is an established place for clothes makers 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 is also a favourite for 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. The rapid expansion of industries, such as textile, electronics and seafood production, propelled export numbers to new heights. Vietnam recorded 10-year high GDP growth of 7.1% in 2018 and 7.02% in 2019.
Despite the Covid outbreak in 2020, the country was one of the few economies that recorded positive growth with 2.91%. Its aggressive public health measures were able to minimise the impact of Covid-19 on Vietnam’s economy. In 2021, the Southeast Asian country’s GDP grew by 2.58%. The Vietnam economy is expected to recover fast and record GDP growth of 6.6% this year, according to the International Monetary Fund (IMF).
Government is targeting GDP growth of 6%-6.5% in 2022 which compares favourably with the rate forecast for Malta. This year Uglobal organised an industry-wide gathering in Ho Chi Minh City, Vietnam for migration agencies, immigration attorneys, global service providers, regional centres and project developers from across the world. Its educational panels were moderated by industry key players who provided valuable insight about a range of global residency by investment and citizenship by investment programmes.
The event also featured business exhibits and networking opportunities. A delegation from PKF, led by Dr Samuel Sciberras, attended the Uglobal event and was very successful in promoting Malta as a residency, citizenship by investment and general import and export opportunities. This visit follows a previous delegation from PKFMalta led by the author, which paid a familiarisation visit to Hanoi three years ago and had enthusiastic meetings with delegates at the Vietnam Blockchain Start-Up event.
Needless to say, Vietnam is also catching up with the digital 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. 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 and tech entrepreneurs to get acquainted with the DLT technology.
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.
This facilitates operators to exchange immediate and transparent transactions with players in virtual assets. It is interesting to note how in Malta four years ago it promulgated a unique piece of legislation called the TAS bill. This sets 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.
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 that 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 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 solve 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 future promotion of our expertise in Vietnam by Malta Enterprise, the Chamber of Commerce, FinanceMalta and TradeMalta is seriously encouraged to pave the way for dialogue with visiting delegations to expand business exchanges.
“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.”