Blockchain holds great potential to enable Vietnam to become a bigger part of the global trading network and advance the country’s national branding, especially in agriculture, economists from the RMIT Blockchain Innovation Hub said in a recently-released RMIT report.

Dr Chris Berg, a core research team member at the Hub, said the emerging technology provides many opportunities for Vietnam once the country further develops trade lines and has the capacity to change regulations and policies in line with trends.

“By definition, blockchain is a governance technology for governing ledgers of information,” he explained. “It also acts as a foundational economic infrastructure on which supply chain information, such as provenance and trade finance, can be trusted and coordinated, and this is where it can help governments and economies around the world, including Vietnam.”

Despite the modern creation of standardized shipping containers and trade organizations that aim to reduce costs such as tariffs, quotas, and import restrictions, the way that supply chain information is produced and governed has hardly changed for centuries, he added. “As is the case in Vietnam, or any part of the world, the majority of the information about the characteristics and provenance of goods is paper-based and opaque,” he said.

Dr Berg demonstrated this with an example of a single shipment of goods from Africa to Europe, which “was estimated to include over 200 different communications between over 30 different organizations and individuals.”

“Such a system is error-prone and susceptible to fraud,” he went on. “Reducing these information costs is now critical to usher in the next wave of globalization that Vietnam is a part of.” He believes that this is where blockchain can help. “It is the new way to overcome the information costs and trust problems that are facing Vietnamese and global supply chains,” he said.

“Rather than relying on paper-based communications between supply chain parties, blockchain can act as a public and trusted ledger of information. It can be a centralized point of trusted information to record and maintain information. Each time a good passes hands along a supply chain, information about that good can be updated on a blockchain-based ledger.”

Meanwhile, Professor Jason Potts, Director of the RMIT Blockchain Innovation Hub and Adjunct Fellow at the Institute of Public Affairs in Melbourne, sees blockchain technology as a chance for Vietnam to not only be a part of the global supply chain but also to take a leadership position by providing high-quality regulatory frameworks to neighboring countries.

“Blockchain is basically a whole new form of economy,” he said. “The hurdle Vietnam faces of figuring out how to use blockchain technology is the same hurdle that everyone else faces in the world, and mostly it is about experimentation, about collaboration between government and firms to try experiments and learn how to use this technology. This provides an opportunity for leadership.”

Dr Berg noted that blockchain is also a powerful technology for Australia, as the country exports a large amount of high-quality agricultural products.

“We can demonstrate things like quality governance, organic aspects, GMO-free, or something like that, to consumers at the end of the supply chain,” he said. “It will bring back value to the original producers of the good, to the farmers, rather than having that value spread across the whole supply chain or captured at the very end, like at restaurants or supermarkets.”

“It will enable Vietnamese farmers to capture more value,” Professor Potts added. “It’s not only a win for farmers, but also for local economies, as the quality of the product depends on the information about the product.”

The two economists believe blockchain presents a huge opportunity for Vietnam to move from basic to advanced manufacturing.

“Blockchain technology allows for much faster and clearer demonstrations of the quality of the product as the country moves up to more advanced manufacturing,” said Dr Berg.

Professor Potts sees this technology as a very powerful tool to leverage country branding as well. “If you are doing good work, this is a good way to demonstrate it,” he concluded.