The Malta Independent 24 August 2019, Saturday

Prospects for expanding trade beyond Europe

George M Mangion Tuesday, 11 June 2019, 12:48 Last update: about 3 months ago

Last month, on the initiative of the Japan branch of the Chamber of Commerce based in Milan, a substantial trade delegation of Japanese investors visited Malta on a familiarisation tour. This was a joint initiative between the branch of the Japan/Malta Business Chamber and the government. The delegation, composed of representatives of top banks, manufacturing entities and tuna buyers, was hosted at the Chamber of Commerce in Valletta and various Ministries.

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The main objective of the visit was how to expand trade. The obvious topic was tuna exports to Japan, which stole the attention of the Japanese delegation which was all geared up for increasing its potential but other types of trade were discussed. The government is waking up to the realisation that there is scope for venturing beyond the boundaries of Europe to catch the attention of the Asian tigers.

This culminated in two strong delegations to Japan and Vietnam that accompanied Prime Minister Joseph Muscat, in collaboration with Trade Malta, seeking new ventures. Last year, in Tokyo, the Prime Minister led a trade mission composed of over 50 people. He met the Japanese Prime Minister, Mr Shinzo Abe, who was supportive of a recent EU-Japan partnership agreement, auguring that it would soon begin functioning and bearing fruit.

Malta exports more in value to Japan than it buys - the imbalance mainly due to the export of live tuna. Speaking to journalists, Dr Muscat was enthusiastic about the fact that Japan sees Malta as a pioneer country, being amongst the first to welcome blockchain technology. He said that this was not just about Bitcoin, but because blockchain technology can be used in many private and public ways.

He believes that In his vision, such technology can be transported across continents, as Malta progresses in its ambition to maintain its top post as the Blockchain island in the Mediterranean. It is such a versatile tool and can be used for myriad uses, including cross-border payments, such as in the remote gaming and in the oil and gas industries, where operators want "immediate and transparent transactions".

Malta can potentially excel in this technology and, in the near future, export its regulatory prowess to Asian countries. One such candidate is Vietnam - an emerging Asian tiger that stands out from the crowd as a major global exporter of quality products and is located in a strategic geographical position in the shadow of China - itself a major player. In the field of blockchain technology, one can see that Vietnam lacks a proper legal framework, which may slow down the way in which it can maximise benefits from this revolutionary technology.

Blockchain technology experts say that the use of such technology in Vietnam could help its industry save 30 to 50 per cent of their expenses, because the apps would help them improve the quality of production and transparency in finance and management. As is to be expected, the tech community in Vietnam is booming due to a large pool of talented and skilled developers. So far, it must be said that official recognition is slow because the country's central bank has clearly stated that it does not recognise crypto assets as legal tender.

However, one has to admire the progress made by members of the Vietnam Blockchain Club which aims to help acquaint Vietnam business leaders, educators, policy-makers, regulators and tech entrepreneurs with the new technology.

So how can Malta be of service to blockchain enthusiasts in South East Asia? Initially, we can provide Vietnam with guidance in the regulatory aspects of this nascent technology. Last year saw the promulgation of three Acts. In this context, one cannot underestimate the merits of virtual currencies and tokens which, in the future, could be used for cross-border payments, such as is happening in Malta through the use of the sandbox regime for remote gaming.  This facilitates gaming operators to exchange immediate and transparent transactions with players in vfa assets.

To quote another instance, we can see that, in Vietnam, there is a burgeoning popularity in the use of e-wallets. As is to be expected in Vietnam - an emerging market - there is a growing demand for e-wallets since a high proportion of the population do not have access to bank accounts.

There are unique advantages when using virtual currencies to help cash flow issues in industrial, fishing, logistical and agrarian sectors. Malta can help Vietnam to some extent, given that it has recently consolidated its legal framework to regulate and license operators in this industry.  Some may be cautious of this because some tech change platforms have gone out of business or have failed, yet the versatility of a virtual currency is matchless.

Both a business trader and a customer can effect payments in a virtual currency without becoming entangled in banking hegemony or the financial services market.

It is possible to earn or purchase virtual currencies. The issuance and management of a virtual currency is dictated by elaborate open source code algorithms that necessitate the property of uniqueness. We know that cryptocurrency operates by means of a combination of public and private keys. Put simply, the purpose of the public key is the confirmation of the existence of a discrete virtual currency unit and that is its uniqueness. The private key is more or less a secret code that is stored in the owner's digital wallet which is created by means of software or a platform intended for virtual currency trading and used for the acquisition of goods and services.

So what are the benefits of using such currencies in Asia? The answer is that virtual currencies are decentralised, free of bank formalities and use a secure ledger holding the details of the movement of its value. Without doubt, our Prime Minister's visit to Japan and Vietnam has oiled the wheels of progress for developing business opportunities beyond the boundaries of Europe. As always, fortune favours the brave - and proactive.

 

George M. Mangion

[email protected]

 

The writer is a partner in PKF, an audit and business advisory firm 


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