Industrializing

blockchain in
ASEAN
Unlocking the potential of
blockchain across organizations
Contents

4 15
Blockchain implications Making it real
understood

5 16
What next for blockchains Are you ready?
in the enterprise?

8
Making the choice to lead therace

Is it time to industrialize blockchain? | 3

 1 Blockchain implications understood

Distributed ledger technology (DLT), most notably
blockchain — a type of database that records an ongoing list
of tamper-proof records, or “blocks,” has already caught the
imaginations of executives in almost all types of industries and
governments across the globe. Given the extraordinary amount
of attention the technology has received, it is not hype to say
that the value creation opportunity is huge and the possibilities
of future applications are many. Like 3D printing, the sharing
economy and the Internet of Things (IoT), blockchain holds
huge potential to disrupt any industry, creating a world where
people get to participate in the value they create. During 2017,
private blockchain and blockchain-related companies raised over
US$5.5b,¹ and approximately one-fifth of the capital was sourced
from venture capitalists. Blockchain has the potential to evolve
into a core, underlying element in the technology “stacks” of
various industries as diverse as FS, energy, agriculture, and the
government and public sector (GPS).
Promising developments
In less than a decade, the technology has quickly become
a fixation in many industries, for example, FS, as a result of
its potential to revolutionize and transform our thinking about
data sharing and security, partially inreaction to bitcoin (the
cryptocurrency that is an application running on the first public
blockchain). From a purely technological standpoint, bitcoin was
an attempt to completely disrupt peer-to-peer payments,without
the need for a trusted authority (i.e., a financial institution). As
the technology that supports bitcoin, blockchain has attracted a
much wider range of supporters, and the resulting knowledge is
being applied to many other proof-of-concept projects in a whole
range of business processes and transactions.
For instance, in the energy sector, a start-up is developing an
ecosystem wherein customers can pay for electricity in real time,
directly from distributed energy providers. Another blockchain
start-up is currently developing a traceability protocol to track
the provenance of anything, from coffee beans to a roll of fabric.
Opportunities to drive efficiencies in public servicedelivery,
reduce costs and improve transparency have caught the attention
of governments too. A series of innovative pilot programs in
Sweden, Estonia and the United Arab Emirates (UAE) indicate the
potential for governments to leverage the power of blockchain
in a way that redefines their role and their relationship to
businesses, citizens and even the rest of theworld.
“To date, blockchain has transformed only people’s
thinking. We don’t yet evenknow all the questions
blockchain technology will raise, much less the
answers. But waiting for the technology to take
hold is too late. Now is the time to start defining
the questions and influencing policy that will lead
to answers.”
Channing Flynn
EY Global Technology Sector Leader,
Tax Services

We are at a phase where blockchain is no more a novel technology, but is rather, seen as integral to digital
enterprises; this is a clear indication that enterprises are now focusing on research and development, but are still
a long way from adoption at scale. Therefore, the question remains as to where and when profound impacts will
be seen.

4 | Is it time to industrialize blockchain?

 What next for blockchains in the
2 enterprise?
Numerous surveys have given us indications about the industries Global blockchain spend in 2017:US$945m
having the most number of blockchain applications. Undeniably,
FS (an industry where trust is a prime concern), in which cross- Cross-border payments and
border payments and settlements stand out, leads the way, as can settlement
be seen in the graph from a recent International Data Corporation
(IDC) report on global blockchain spending in2017. Lot lineage orprovenance
However, this hype on the FS side does not correspond to
Trade finance and post-trade
similar interest from corporations, in realizing true value from
or transaction settlements
blockchains where decentralization and interoperability are the
key elements.
Regulatory compliance
Enterprises are still conducting trials around blockchain
applications operating like distributed databases and notary
Asset or goods management
services, often with very specialized supply chain objectives, such
as verifying the origin and authenticity of a product as it moves
across the value chain, capturing information about all inputs of Identity management
a product, enabling accurate visibility and traceability into the
history of a product, and soon. $0 $60 $120
Note: Global blockchain spending 2017 (US$m) — top six use cases.
Source: IDC.2

“This is a useful start, but if we are not careful, it could be a dead end — a fancy, hacker-proof database,
where the software company has replaced the central bank as the intermediary of choice. To deliver
on the full promise of blockchain technology, we believe that enterprises must embrace the fullpower
of tokenization, and ultimately, the allure of the public network. And, 2018 is the year that this will come
into view as the future of this technology.”
Paul Brody
EY Global Blockchain Innovation Leader

Understanding blockchain technology — public, private andhybrid

Based on the participants, blockchains are categorized as public, private or hybrid. This is similar to comparing
the public internet and a company’sintranet.
• Public and permission-less: Public and permission-less blockchains resemble bitcoin, the original
blockchain. All transactions in these blockchains are public, and no permissions are required to join
these distributed entities (examples: ethereum, bitcoin).
• Private and permissioned: These blockchains are limited to designated members, transactions are
private, and permission from an owner or manager entity is required to join this network. These are
often used by private consortia to manage industry value chain opportunities (examples: Ripple, R3).
• Hybrid blockchains: An additional area is the emerging concept of sidechain, which allows for
different blockchains (public or private) to communicate with each other, enabling transactions
between participants across blockchain networks (example: ROOT blockchain).

Is it time to industrialize blockchain? | 5

 The foundation of this high-value future is the concept of
tokenization: the process of embedding data related to a real-world
asset on a digital token stored on a blockchain — not merely as items
of information, but as carriers ofvalue.

Notarization Full-cycle economic blockchain “Purist” enterprise blockchain

Value for enterprise

• Moving toward a public

blockchain: future or large,
regional or sector-specific
networks that are public,is
• Shift from notarization more likely
and synchronization,to
• Decentralization,
tokenization
interoperability and
• Possible to execute full-cycle independent securitybeing
economic contracts between the key for enterprises to
• Blockchains operating like participants on a blockchain, realize true value
distributed databases and with tokenization
notary services
Gradual emergence of
• Not optimized for business Products and services tokenized public blockchain to be
transactions — unstructured and exchanged through digital the preferred ecosystem for
data, against which it ishard smart contracts for digital digital transactions
to deliver services currency tokens
An open andtransparent
A closed-loop, tokenized industrial regional blockchain
Blockchain implementations
blockchain
are still about timestamping
and synchronizing Tokenized fiat currency
Tokenized fiat currency
information: +
+
Tokenized products and
Tokenized products and services
Products provenance services

Time
Today’s enterprise blockchain applications Moving toward “real applications” New normal: enterprise vision

This high-value future will have two clear stages:

The first stage will be the development of a full-cycle economic
blockchain, where products and services are tokenized and
exchanged through smart contracts, and value exchanged via
traditional fiat tokens.
See example below for tokenization of “mobile phoneassets,” as
they move across the valuechain.
In the example illustrated, when these mobile phones are
delivered, value in blockchain can change hands, but in tokenized
fiat currencies, say US dollar tokens, or Euros or Yen for that
matter. This means, traditional fiat currency is tokenizedin
the same way assets are tokenized. And central banks have
already started experimenting with tokenizing fiat currencies.
These discussions are centered in Northern Europe, and Sweden’s
Riksbank might be the first financial institution moving ahead to
substitute or complement cash with digital currency. But tests
and research are being done all over the world, from China
to Canada, and from Singapore to Saudi Arabia and the UAE.
There is no doubt that if we did see a major central bank issue a
digital currency, the impact could be vast. While such progress
is encouraging, the next step is to create a robust regulatory
infrastructure that enables the tokenization of fiat currency on
any closed-loop industrial blockchain.

Understanding smart contracts

Smart contracts are bits of executable code that are triggered when the conditions are right within a blockchain.
The advantage of blockchain-based contracts is that they bring down the level of manual intervention in creating,
executing and enforcing acontract, thereby lowering its cost, while raising the assurance of the execution
and enforcement processes. By automating a transaction in a fully verifiable framework (the blockchain), the
transactions can have legal validity even at high frequency — a key enabler for network balancing.

6 | Is it time to industrialize blockchain?

 Raw materials Manufacture Transport Warehouse Sell Support

The flow ofprodu ct across the networ k is represented in the blockchain …

• Purchase raw • Integrate items • Put finished • Move into • Transferto • Build true
materials to together into goods into warehouse a retailer end-to-end
build a phone manufacturing an in-transit with traceability for
• Transfer
output status a distributor product history
• Create digital ownership first
tokens to • New digital • Unload to retailer and
represent token container and then to end
those assets incorporates truck customer
the materials

… and it is matched by a similar flow of financial tokens in the other direction on the same blockchain.

The gradually increasing preference for public blockchain for
enterprise transactions represents Stage 2 of this high-value
future. This would enable secure trading of objects that can be
digitized, onto the blockchain. A look at the token history can
provide information such as customs declaration, tax calculations,
product provenance and all related spending. Besides, itis
not necessary to have different blockchains for trade finance,
payments or product provenance. Collaboration across industries
is the key to success here, because the technology becomes
exponentially more powerful as more organizations start using it,
resulting in network effects.
Historically, most industries have tended to dismiss open source
blockchains. This is unsustainable, as large companies seek to
build overlapping, parallel private networks that work in silos
and require a lot of integration. However, we are starting to see
a shift in attitude toward this, with the banking industry leading
the way forward. A recent survey reveals that 86% of the banking
executives believe that public blockchains will gain greater
prominence over the next five years.3 The shift in thinking can be
attributed to the increasing awareness of public blockchains such
as Ethereum, and the “big leap” innovations this could bring.

However, right now, there are a few obstacles standing in the way of this transformation.

Legal challenges Lack of a

Privacy
For enterprises to feel secure
that their strategic transactions
are secure, privacy tools needto
be matured (creation of privacy
options, such as zkSNARKs, or new
protocols, such as Enigma, are in
the works).
Beyond privacy, there are legal
challenges that need to be addressed
as well, including know yourcustomer
(KYC) and anti-money laundering
(AML) rules for instance. KYC and
AML procedures will be automated
as developed countries start using
digital identities. For example,
Estonia’s e-residency project is
already underway, and it willpositively
influence the opportunities for
tokenization.
standardized system
The third obstacle to tokenization is
the lack of a standardized system for
carrying out transactions — just like
every company is now using its own
accounting and reporting systems. We
believe these are challenges that can
be addressed with the development
of a global technical standard for
integration into business.

Nonetheless, we believe public blockchain networks should not be dismissed as the longer-term solution for
applications requiring data privacy and scalability. As developers expand protocol and framework offerings on public
blockchains, we believe this would create a network effect, such as the interaction of various ecosystems, which will
ultimately lead enterprises forward.

Is it time to industrialize blockchain? | 7

 3 Making the choice to lead therace

As public blockchains achieve enterprise-grade scalability and
privacy, we believe blockchain will be at the core of several viable
business models that extend well beyond today’s more narrow
understanding of cryptocurrency, including exchanges and
supply chain systems. Industries are waking up to the need to
“make the choice and lead the blockchain race” or be left behind.
This is evidenced by a recent IDC report on global spending on
blockchain, which forecasts a US$9.7b spending by2021.2
Early pilots are already under way in many industries, as
mentioned in our overview. FS Blockchain projects — whileperhaps
the most numerous — are notnecessarily
the most advanced in terms of development and production.
Their first pilots, such as transferring equities or other financial
instruments in blockchain environments, tend to focus on
exploring ways that drive cost out of business processes, by
making transactions more efficient. Also, this could be partly
because of the intense regulatory measures and high risk
involved in the FS industry, as one mistake can lead to major
consequences. While these may be highly valuable uses, there
is perhaps more room to experiment with real-world
applications, such as consumer products and manufacturing,
with finance embedded directly into the natural activities
occurring within those markets.

Global blockchain spend by sector,2016–21

86%
Manufacturing
“The long-term blockchain vision is of 85% andresources Distributio
markets that run by themselves, with 84% n
83% andservices
finance embedded directly into the
2016–21 CAGR

natural activities occurring within those 82% Financial

markets. In such an environment, the 81%

finance industry will look very different 80%

79% Public sector
than it does today.”
78%
Angus Champion de Crespigny 77% Infrastruct ure
FS Blockchain and Distributed Infrastructure 76%
75%
Strategy Leader, Ernst & Young LLP(US) 0% 10% 20% 30% 40% 50%
Share of spending
Source: IDC.² Legend: CAGR: compound annual
Note: Bubble size represents size of growthrate
opportunity in US$m in 2017

8 | Is it time to industrialize blockchain?

 “Blockchain has the potential to help Indonesia, which has a large
and scattered population, to increase efficiency in record keeping
and transparency in government operations, as well as financial
inclusion, and productivity and sustainability in agriculture.”

Indonesia Indonesia is the third-largest island country, with over 14,000 islands across the
archipelago. It is also the largest economy in Southeast Asia, with a population of
262 million.
Given its vast population and geographic distribution, blockchain holds the potential
for Indonesia to keep accurate records and increase transparency in government
operations. This includes tax, voting and distribution of government subsidies.
Understandably, the Indonesia Government has shown willingness to explore
blockchain applications. The Financial Services Authority has a dedicated team to
study how blockchain can help the finance industry. In August 2018, the Indonesia
Blockchain Hub was launched from a partnership between the Indonesia Chamber of
Commerce (KADIN), the Indonesia Blockchain Association, Creative Economy Agency
(BEKRAF), and a blockchain-based agritech startup.
Blockchain can increase financial inclusion by providing cheaper and faster services
to consumers. Hence, private sector players, particularly those in financial services,
are experimenting with blockchain. In October 2017, five leading banks collaborated
on the development and deployment of a blockchain solution to reduce settlement
time and cost of completing global payments. In May 2018, Bank Negara Indonesia
signed a Memorandum of Understanding with a FinTech startup to use blockchain to
improve performance of trade finance and remittance products.
Besides cryptocurrency exchanges, blockchain startups in Indonesia are running
interesting activities, such as a point-of-sales solution supporting payments from
cryptocurrency wallets and traditional mobile wallets.
To meet the growing demand for blockchain talent, local FinTech players are working
with universities to nurture homegrown talent. Examples include joint studies
between a local FinTech firm with the Muhammadiyah University of Gresik on the
developments of blockchain in the agriculture sector, and speaking engagements to
raise awareness and interest.
For Indonesia, blockchain holds opportunities beyond economic growth and financial
inclusion, but job creation too.

Key developments
Blockchain for voting
• In April 2018, an Australian blockchain company partnered 96 million-member socio-religious organization
Nahdlatul Ulama to implement a community voter platform in Sumatra for the regional and national government
elections.
• Beyond voting, the platform also provides services including digital banking facilities.

Improving productivity in agriculture

• A blockchain-based data exchange platform provides data on geo-tagging, field activities, weather and land,
satellite and market information to farmers. Farmers receive reward points for data they provide, which can
be used to redeem a discount on agricultural necessities. There were 3,000 farmer participants by July 2018.
• In November 2018, the company announced cooperation with a global blockchain technology solutions
developer to jointly deploy blockchain-based point-of-sales devices to farmers to facilitate data collection and
financial inclusion.

Ensure transparency, sustainability in fishing

• Indonesia is a major tuna producer, ideal for using blockchain to increase transparency in supply chains and
mitigate overfishing.
• A blockchain startup conducted a 6-month pilot in 2016, where traditional fisherman sent text messages to
register a catch, creating a new asset on the blockchain. This allowed the tracking of audit information to prove
that fishes were caught legally and sustainably.

Is it time to industrialize blockchain? | 9

 “Blockchain has the potential to help Malaysia increase
transparency and efficiency in many industries including
financial services, energy, and agriculture.“

Malaysia Many Malaysian entities are researching the potential of blockchain and testing its viability
to perform various functions including Islamic banking, supply chain,
and crowdfunding.

The Securities Commission (SC) has rolled out a blockchain pilot to increase transparency
and efficiency in regulatory reporting, and for smart contracts in the unlisted and over-the-
counter markets. As of March 2018, banks are collaborating to develop blockchain
applications for trade finance. In October 2018, a Malaysia-based FinTech startup
conducted their first cross-border transaction between Malaysia and Spain, based on Ripple
blockchain, which is a provider of enterprise blockchain solutions for payments. In
November 2018, a Malaysia-based bank joined the Ripple network, RippleNet, to enable
instant and low-cost cross-border payments.

Besides financial services, blockchain can be applied to improve transparency in energy

and agriculture. Blockchain can improve the transparency in energy transactions, and thus
encourage the production and usage of renewable energy by enabling consumers to buy
directly from the source. Buyers can even connect with private solar panel owners to buy
their excess electricity.

Agriculture contributed to 8.1% and palm oil contributed 43.1% to the country’s GDP in
2016. Placing certifications for palm oil on blockchain allows sellers and consumers to track
the source and monitor all transactions along the palm oil supply chain. This enables the
government to track whether the palm oil comes from sustainable sources, and regulate
these practices to be more sustainable.

To nurture blockchain talent, universities and the private sector are cooperating to develop
blockchain courses. In July 2018, the NEM Blockchain Centre was set up in Malaysia as a
learning center, incubator and accelerator for blockchain-related startups.

Key developments
Cryptocurrency regulations
• Malaysia’s financial regulators have taken steps to bring more regulatory clarity regarding
cryptocurrencies, such as the issuance of the Anti-Money Laundering and Counter Financing of Terrorism
Policy for Digital Currencies in February 2018. This is a policy framework for crypto exchange providers
that wish to operate cryptocurrency exchanges in Malaysia. As of November 2018, more than 40
cryptocurrency firms had registered with BNM.
• As of November 2018, the SC was developing a framework to regulate initial coin offerings, set to be
issued in 2019.

Energy industry
• Tenaga National Berhad, the largest electricity utility in Malaysia, is exploring the use of blockchain in
the energy industry

Increase transparency in education certification

• In November 2018, the Ministry of Education Malaysia and six public universities formed a consortium to
create an e-Scroll system, based on NEM blockchain technology, to tackle the increasing number of fake
degrees.

10 | Is it time to industrialize blockchain?

 “Blockchain has the potential to help Philippines’ remittance
services to be faster and more efficient, increase financial
inclusion and transparency in business transactions.”

Philippines As an archipelago, the citizens’ access to financial services is fragmented.

Moreover, a large percentage of its population is working in a different state or
overseas. This naturally creates a very strong demand for remittance services,
where Blockchain could help make these transactions faster and more efficient.
Blockchain is also expected to increase transparency. In November 2018, Budget
Secretary Benjamin Diokno said the Philippines will use blockchain in its
procurement process, adding that such a system will be “secure and less
expensive compared to a big data system.”
The Blockchain Association of the Philippines (BAP) was established in May 2018.
Its purpose is to introduce, educate, connect businesses, government and
academia to the potential of distributed ledger technology (DLT) in order to build a
thriving digital future for the Philippines.
Regulators have become more open to cryptocurrency investments such as initial
coin offerings (ICO) over time. Earlier in January this year, the Philippines
Securities and Exchange Commission (SEC) filed a cease-and-desist order against
an ICO issuance, and in March, the BSP bank did not endorse privately-issued
cryptocurrencies as a currency or investment instrument. However, in August
2018, the SEC released the proposed rules to govern ICO registration.
Blockchain startups in the Philippines are active in many other sectors such as real
estate trading, customer loyalty, and gaming.
In order to better meet the demand for talent in blockchain, technology companies
and universities are collaborating to increase awareness and encourage students
to create innovations using blockchain.

Key developments
Crypto Valley of Asia
• In August 2018, the government announced their plans to build a new fintech and crypto hub at Philippines’
Cagayan Special Economic Zone and Freeport (CSEZFP) alongside private developers.
• Dubbed the Crypto Valley of Asia, the hub is expected to generate employment for business process outsourcing
service providers of the global FinTech and crypto currency sectors.

Encouraging blockchain innovation among students

• On October, 2018, a local university and health-tech startup started a lab to generate programs and studies
to find solutions in sectors such as health care, education, transportation, agriculture, disaster response,
governance and legal affairs.

Improving efficiency in domestic remittances

• A local bank has launched a pilot to introduce a domestic remittance network using tokens on a private
blockchain platform with the aim of helping rural institutions drive operational efficiencies and save costs in
accepting and processing domestic remittances.
• The pilot was launched with five rural bank participants in early June 2018, and there are plans to onboard
many more rural banks. The project is a stepping stone for the introduction of more sophisticated financial
services.

Is it time to industrialize blockchain? | 11

 “Blockchain holds much potential value for Singaporean
government and businesses, which are exploring the use of the
technology in many areas including shipping, supply chain, health
care, financial services and more.”

Singapore Singapore could benefit from using blockchain in shipping to maintain its
competitiveness as a global shipping hub. In addition, blockchain has the potential to
enhance the supply chain and financial services.
The government has shown support for the technology through multiple initiatives.
The Port Authority of Singapore, the Economic Development Board, and the Monetary
Authority of Singapore are working with a technology company to develop blockchain
applications and solutions. Another initiative is by the Infocomm Media Development
Authority, which announced that it would give seed funding for industry players to
implement engagement platforms to grow the blockchain ecosystem in Singapore
through community engagement initiatives.

Businesses across many sectors of the economy are exploring the use of blockchain. In
November 2018, a financial institution announced that it has developed a blockchain
platform in collaboration with blockchain provider, to improve the speed at which a
global agri-commodity trading company and its vendors can transact and finance their
cross-border trades.

In May 2017, an education institution ran a pilot blockchain program to award

academic certificates to students, in partnership with a digital certificate provider.
Blockchain distribution of academic certificates ensures that digital certificates cannot
be tampered with and enables potential employers and universities to spend less time
manually verifying a candidate’s credentials.
Blockchain startups in Singapore are involved in multiple areas such as financial
services, data storage, and retail. Demand for blockchain talent has been growing. To
better meet this demand, universities have started offering courses on blockchain.

Photo credit: Singapore Tourism Board

Key developments
Clearance and settlement of payments and securities
• Monetary Authority of Singapore (MAS) is partnering with a distributed ledger technology (DLT) company to
explore the use of DLT for payments and securities clearance and settlement.
• As of November 2018, the second phase of the project has concluded, demonstrating that delivery versus payment
(DvP) settlement finality, inter-ledger interoperability and investor protection can be achieved through specific
solutions designed and built on blockchain technology.
• The next phase of the project will focus on new methods to conduct cross-border payments using central bank
digital currency.

Health database
• In July 2018, Singapore government-owned technology firm announced its investments in a decentralized
health data platform, which uses blockchain, artificial intelligence and database management system
technologies, to better manage patients’ data and enable better diagnoses.

Global Trade Connectivity Network

• In November 2017, MAS and the Hong Kong Monetary Authority exchanged a Memorandum of
Understanding in Singapore to jointly develop the Global Trade Connectivity Network.
• This is a cross-border infrastructure based on DLT, to digitalize trade and trade finance between
the two cities, with the potential to expand the network in the region or globally. The GTCN is
expected to go live by early 2019.

12 | Is it time to industrialize blockchain?

 “Blockchain has the potential to increase the accuracy and
efficiency of record keeping, increase transparency in
government operations in Thailand. It also enhances supply
chain operations, generates cost savings and speed up financial
services, especially for small and medium enterprises (SMEs).”

Thailand The Thailand government is exploring the use of blockchain in multiple areas.
Financial regulators have taken steps to bring more legal clarity regarding
cryptocurrencies.
Companies in multiple sectors are exploring the use of blockchain. In July 2018, one
of the largest operators of movie theaters in Thailand announced its cooperation
with a payment company to build a digital payment ecosystem for consumer
purchases using cryptocurrency.
In August 2018, a local bank and a cement producer are developing their supply
chain on the blockchain. Their aim is to use the technology to increase flow
efficiency, improve credibility and data transparency between businesses, and to
also help SME-sized suppliers gain better access to financing.
In October 2018, a fintech subsidiary of a local bank announced that it had produced
a procure-to-pay blockchain solution to streamline purchasing processes, payments,
and financing for Thai businesses. Blockchain technology will reduce invoice
financing time and provide security and traceability to combat fraud, while also
supporting Thailand’s e-tax invoice initiative.
Thai blockchain startups operate in diverse fields including investment, payment,
lending, identity management. The government has encouraged the growth of local
and foreign startups in blockchain, which has caused demand for talent to exceed
the supply. Some universities have started offering classes in blockchain and
carrying out blockchain research projects with the government or private sector.

Key developments
P2P energy trading
• Companies are using blockchain to help homeowners profit from their own rooftop solar systems
• Blockchain will enable energy trading to be easier and more transparent, which will in turn lower costs and a
smaller carbon footprint due to better management of renewable energy.

Central Bank Digital Currency

• In August 2018, a collaboration of 8 banks and a technology company announced the launch of Project
Inthanon, to design and develop a proof-of-concept prototype for wholesale funds transfer by issuing
wholesale Central Bank Digital Currency (Wholesale CBDC).
• The CBDC is develop by the central bank to enable quicker and cheaper settlements between banks on the
domestic interbanking system using the digital token.

Cryptocurrency regulations
• In June 2018, The Securities and Exchange Commission (SEC) announced supervision details for market
participants involved in the digital asset trade, and allows seven cryptocurrencies, used for initial coin offerings
(ICOs), to be traded as trading pairs.
• All market participants in a digital asset trade are required to register with the SEC and must also receive the
Finance Ministry's approval to conduct digital asset business.

Is it time to industrialize blockchain? | 13

 “In Vietnam, blockchain has the potential to ensure accurate
record keeping, significantly improve coverage of financial
services, and increase transparency in supply chain.”

Vietnam Vietnam is a big exporter of agricultural products. Vietnam’s Ministry of

Agriculture and Rural Development estimates that the total value of agricultural
products exported in the first four months of 2018 was about US$6.5b, up 11.9%
year-on-year.
A major problem that the sector faces is a lack of transparency and traceability in
the supply chain, which can have negative repercussions on the reputation of
Vietnamese brands. Traceability helps to verify product origins and allows brands
to regain consumer trust and increase loyalty.
In terms of financial inclusion, in 2017, only 31% of adults in Vietnam have bank
accounts. However, the population is young, with a median age of 30.9, and tech-
savvy. As of January 2018, 72% of the population were smartphone users and 64%
accessed the internet through their mobile phones. There are opportunities to
bring the underbanked into the fold through app-based blockchain financial
services.
As well, numerous industries, including finance and ecommerce, are exploring the
use of blockchain. In June 2018, the Vietnam E-Commerce Association launched
the Vietnam Blockchain Chapter (Vietblockchain), which aims at raising awareness
and conducting training for students, the business community and startups. It will
also work with regulators and policy-makers to create policies and legal norms that
support the R&D and application of blockchain technology in Vietnam. With a
populous tech talent pool, Vietnam is a popular destination of outsourcing,
producing blockchain applications for foreign investors.
As well, local blockchain startups are active in many areas including remittance,
cryptocurrency exchange, commodity trading and agriculture. An example is the
signing of a memorandum of understanding between a Vietnam startup and the
Laos Ministry of Science and Technology to deploy digital identity.
From finance and investment, health care data management, agricultural produce
supply chain through to e-government, there are opportunities to enhance the
economic growth and investment of Vietnam through blockchain.

Key developments
Agricultural produce traceability
• A blockchain company launched a fresh produce traceability solution that provides real-time information on
production, packaging, shipping, and consumption to customers. A pilot project was being conducted with
mangoes produced in the Dong Thap province in October 2018.

Settlement
• In July 2018, the National Payment Corporation of Vietnam, the country’s unified card switching center,
together with VietinBank, VIB and TPBank announced the successful completion of their pilot project for
money transfers using blockchain.

Encouraging blockchain innovation

• A 36-hour blockathon was held in Hanoi and Ho Chi Minh City in late 2017 and early 2018 as part of the FinTech
Challenge Vietnam. Co-organized by Mekong Business Initiative, and the Fintech Club Vietnam, the event
participants received mentoring, a week of intensive blockchain training, and a chance to win a cash prize and
incubation opportunities.

14 | Is it time to industrialize blockchain?

 4 Making it real

Blockchains (both public ones and permissioned) carry great proposed blockchain use cases. This clearly outlines the need
promise for cross-sector applications —but before you jump into for having some conditions which need to be fulfilled in order to
the ‘blockchain circus,’ ask yourself: do you actually need a move forward with a potential use case. These conditions can
blockchain? act as a filter to sieve out apt projects from the irrelevant ones.
A five- point test that EY applies for assessing the fit of blockchain
A CEO of an open platform blockchain technology company
for a particular process includes the followingquestions:
says: “The vast majority of the projects that his organization
received can be perfectly implemented in the traditional
relational database.” The age-old phrase “if it ain’t broke, don’t
fix it,” comes to mind when assessing the applicability of some

1 2 3 4 5

Are there multiple Is establishing Is it critical to Are we securing Does this

parties in this trust between have a tamper- the ownership or ecosystem benefit
ecosystem? all the parties an proof permanent management of from improved
issue? record of a finite resource? transparency?
Blockchains get transactions?
more securewith Blockchains Core logic in the Blockchains are
more parties improve trust Blockchains create system is designed transparent by
in the network; between permanent records to prevent double design — where
one participant participants by that cannot be counting of assets, ownership or control
networks are not having multiple edited or deleted. record ownership, of assets is public
especially secure. points of and transfers. and transparent
verification. by design.

Is it time to industrialize blockchain? | 15

 Are you ready?
The time has come for blockchain to move from a niche sector
play to reshape how entire industries work. EY is a blockchain
technology leader. The EY teams understand the implications of a
distributed world, and have been helping EY clients strategically
plan and implement blockchain solutions across industries. More
than 50 EY clients in 15countries have already signed blockchain
agreements in industries ranging from logistics and consumer
packaged goods, to banking. EY teams are building and
designing a number of blockchain platforms to support
industry processes, and operations platforms with patent-
pending applications of blockchain technology.

Blockchain
strategy Risk
management
and operations
Research and security
consulting assessments

Tax services Implementing

and strategyfor EY-developed
Product 1 2
securities services
development
Four key 8 Service 3
components
of service offerings
7 4
strategy Help
Consulting Business
services
6 5 implement
partner
third-party
onboarding
solutions

Securitization Custom
Assurance,
and initial coin blockchain
tax and
compliance offering (ICO) software
registration development

EY blockchain solution platforms: key offerings

End-to-end supply ERP Vat, and

Product Directed buy Inventory
OpsChain integration global trade
chain platform traceability procurement management
and Tax

Fractional Smart
ownership for cars Fractional
Tesseract asset (IoT)
ownership
and heavy asset management
Blockchain solution platforms

Right and Digital rights

Royalties Rights
royalties and royalties
management management
managements management

Maritime Automated marine Automated Automated Cargo

insurance insurance recording claims integration

Audit and Continuous audit Bitcoin audit Blockchain Blockchain

assurance services systems controls audits

Public Financial and

Government and ERP Advanced Document and Client
financial reporting
public sector integration analytics legal contracts onboarding
management reconciliation
Supporting
Solutions

Production Development ERP — Enterprise

Identity User and entityID resource planning
management on the network
Pilot Design

16 | Is it time to industrialize blockchain?

Sources
1.

2.

3.

4.

5.

6.

7.

8.

Further reading
Overview of Blockchain
blockchain for How this technology
could impact the CFO
energy and
commodity
trading

April 2018

Law alert
EU competitionlaw

Blockchain and How blockchain is

competition law revolutionizing
supply chain
management
Author:

Paul Brody
EY Global Innovation Leader,Blockchain

Let’s start with why blockchain exists. Four technologies are behind blockchain.
Once, blockchain was considered
A transaction between parties can only First, encryption is a technology that
a niche technology, and it was too function — particularly if the parties has been around for a long time and is early to consider competition-law
repeatedly transact — if there is trust and designed to address trust. For public- implications. Today, we know the proof of the transaction. Since a digital
key encryption, for example, which technology should be taken as asset can be replicated many times, a pairs public and private keys, a person
seriously as the development of the transaction of a digital assetmust ensure may send an encrypted message to a internet in the 1990s. This
thought that replication cannot occur when it is recipient using the recipient’s publickey
1 How blockchain revolutionizes
supply chain management

piece provides an overview of what

blockchain is and what the
not intended. Blockchain is a technological (open-source software that scrambles the solution
delivering a concept called a information). Then, using her own unique, “distributed ledger,” which
essentiallyis a privatekey,therecipientcanunscramble
2 The power of a blockchain-
enabled supply chain
stakeholders in a blockchain do.

3 supply
way of making sure changes to any piece the message. The second technology is
Once this is established, we will then Integrating blockchain into your
briefly identify whether any actions of information on the ledger can happen called a hash, which takes digital input
only by consensus from the blockchain and converts it to an encrypted digital chain doesn’t need to be
taken by blockchain stakeholders could
stakeholders. Blockchain can replace and output. The function of a hash is to ensure complex
constitute a breach of competition law. arguably improve on existing methods of that the digital output, in its journey
creating trust and proof, such as when from sender to recipient, has not been working with
lawyers, notaries, corporate tampered with. The third technology seals, counterpart agreements,
official is the chain. The chain comprises (government-organized) records, deeds of blocks of
information that have been sale and certificates of authenticity. cryptographically validated. There
is a

Note: These thought leaderships are available for reference at ey.com

Is it time to industrialize blockchain? | 17

EY | Assurance | Tax | Transactions | Advisory

About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
deliver help build trust and confidence in the capital
markets and in economies the world over. We develop
outstanding leaders who team to deliver on our
promises to all of our stakeholders. In so doing,
we playa critical role in building a better working world
for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to

one or more, of the member firms of Ernst & Young
Global Limited, each of which is a separate legal entity.
Ernst & Young Global Limited, a UK company limited
by guarantee, does not provide services to clients.
For more information about our organization,
please visit ey.com.

© 2018 Ernst & Young Advisory Pte. Ltd..

All Rights Reserved.

EYG no. 012581-18Gbl

ED None
Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in
Singapore under the Limited Liability Partnerships Act (Chapter 163A).

This material has been prepared for general informational purposes only and is
not intended to be relied upon as accounting, tax or other professional advice. Please refer to
your advisors for specific advice

ey.com

View publication stats