TRƯỜNG ĐẠI HỌC KINH TẾ - ĐẠI HỌC QUỐC GIA HÀ NỘI

KHOA KINH TẾ VÀ KINH DOANH QUỐC TẾ

BLOCKCHAIN AND ITS POTENTIAL TO

REDUCE TRANSACTION COSTS IN
VIETNAM'S CROSS-BORDER TRADE

Lớp: QHE-2023 KTQT 1

HA NOI, 2024
 ABSTRACT

I. Introduction:
1. Context in Viet Nam’s Cross-border trade:
1.1. Vietnam’s economic context since 1990 up to present:
 1990 – 2000

- Since 1990, After “Đổi mới” (Renovation) policy has been applied in 1986, Vietnam
transitioned from a centrally planned economy to a socialist-oriented market economy.
- Since then, GDP of Viet Nam grew rapidly, averaging around 7-8% per year during
1990s.
- Vietnam gradually shifted from an agrarian economy to industrialization and opened up
its markets.
- Vietnam began attracting significant foreign direct investment (FDI), particularly from
Japan, South Korea, and Western nations, after normalizing diplomatic relations with the
United States in 1995.
 Consequently, Per capita income increased, poverty rates decreased, and the overall
quality of life improved markedly.
 Living standard was improved

 2000 – 2010

- This is the deep integration period of Vietnam’s economy

- Export-oriented industries, especially textiles, footwear, and electronics, grew rapidly.
- In 2007, Viet Nam Joined the WTO – which provided Viet Nam with more Opportunities
for deeper integration in worldwide market (Cross-border trade).
- GDP of Viet Nam still stably grew at 6 - 7%, despite the global financial crisis in 2008
- Besides, Rapid urbanization occurred, with many cities and industrial zones being
developed, particularly in major economic hubs such as Hanoi and Ho Chi Minh City.

 2010 – 2020

- This period shows Vietnam’s sustainable growth and development, especially in high-
tech industries.
- Vietnam started focusing on developing high-tech industries, services, and the knowledge
economy, especially in information technology and telecommunications.
- Vietnam signed and participated in numerous free trade agreements (FTAs) with major
partners, such as the EVFTA (Vietnam–EU Free Trade Agreement) and CPTPP
 (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), creating
significant opportunities for export businesses.
- The economy continued to grow, with average GDP growth rates of 6-7% annually, and
the government increasingly emphasized sustainable development and environmental
protection.
- FDI continued to flow into manufacturing, high-tech industries, and services, with large
corporations such as Samsung, LG, and Intel investing heavily in Vietnam.
- Also in this period, Viet Nam focused in improving infrastructure, such as: transportation,
electricity, water, and telecommunications, …Which supported country in
industrialization and modernization efforts.
 2020 – Present:
- Since 2020, due to the Widespread of
Covid – 19 Pandemic, global
economy has hugely been affected,
and so do Vietnam’s Economy,
especially in tourism and service
sector.
- However, in the pandemic era,
E – commerce and logistic aspect has been supremely grown and has changed the
consumer’s buying behaviour since then. This led to the rise in Vietnam’s Cross-border
trade as consumer’s demand rise day by day.
- At the same time, Vietnam has accelerated digital transformation across various
economic sectors, aiming to develop a digital economy and embrace Industry 4.0.
- By 2045, Vietnam aims to become a developed, high-income country through
industrialization, modernization, and deeper international economic integration.

Mini – conclusion:
Since the “export boom” after the joining WTO, it can be observed that Vietnam’s economy has
strongly been advantaged by the increase in FDI Flow and Cross – border trade.

1.2. Vietnam’s cross – border trade background

 Viet Nam has been a medium export country in various industries. In 2023,
Vietnam total value of export is 453,693,565 (thousand USD), Instantly:
- Electronics and Telecommunications remained Vietnam’s largest export sector with
165,208,768 (thousand USD)
 - Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof was
followed by with 59,092,903 (thousand USD)
- Besides that, Textiles and Garments, Agriculture and Seafood, Footwear were also in top
export industries of Viet Nam.
- Here is some more details about Vietnam’s export products

([Link], 2000)

- In recent years, Viet Nam’s cross-border payment market has noticed significant
expansion. This was said to be driven by the rapid growth in cross-border e-commerce
and digital payment services.
- In past 5 years, Viet Nam gradually becoming an international e-commerce hub in
Southeast Asia with remarkable statistics:
- Vietnam and the broader Southeast Asia region are experiencing an annual growth rate of
20% in cross-border e-commerce from 2021 to 2026 (Techinasia, 2024)
- According to Amazon, Products sold by Vietnam on their platform have increased over
300% in the past five years. (Techinasia, 2024)
- E – Commerce will replace traditional stores in the future, and due to high demand,
Cross-border trade will also grow.
 Mini conclusion:
Throughout Vietnam’s economic development in each specific periods, it can be predicted
that Cross – border trade, (especially in E – Commerce sector) will continue to grow and play an
important role in Vietnam’s future economic growth. So how to improve cross – border trade will
be an head – scratching issue for Vietnam’s economy. Along with the rise of Cross – border
trade, Cross-border payment will also be considered to be in higher demand in Vietnam’s Future
cross-border Trade market.
1.3. Challenges and complexities in Vietnam’s cross-border trade logistics.
 Although Vietnam’s trade Logistic services has remarkable development in the
past few years up to now, there are also some notable disadvantages:
- Limitations in infrastructures:
 Although undergone rapid growth recently, Vietnam's transport infrastructure,
particularly in remote and border areas, remains underdeveloped.
 Moreover, Border checkpoints can experience long wait times due to limited capacity
or outdated facilities, hindering the smooth flow of goods.
- Complex customs and regulatory barriers.
 Vietnam’s customs procedures, although improved in recent years, can still be time-
consuming and complex, involving extensive paperwork and inconsistent regulatory
enforcement.
 Differences in regulations between Vietnam and neighboring countries can
complicate cross-border trade, leading to delays and increased compliance costs.
- High logistics costs
 Vietnam has one of the highest logistics costs in the region, accounting for a
significant percentage of GDP. These costs stem from inefficiencies in the supply
chain, including delays at ports, underdeveloped transport infrastructure, and the
reliance on manual processes.
 High logistics costs reduce the competitiveness of Vietnamese goods in the
international market.
- Cross – Border payment and Financial barriers
 Traditionally, cross-border payments are costly due to intermediaries, currency
conversion and transaction fees.
 Handling cross-border payments remains a challenge for many Vietnamese
businesses, especially smaller exporters, due to the complexities of currency
exchange, fluctuating exchange rates, and financial regulations.
- Since cross – border payment and financial barrier remain huge challenges for many
Vietnamese exporters.
 Our team propose utilize the functions of Blockchain Technology to support the
financial sector of cross – border trade.

1.3.1. Purpose of study

 In this report, we will go through the advantages of Blockchain and how it
addresses transaction inefficiencies in Vietnam’s trade and assess the potential
impact of blockchain on reducing cross – border transaction costs.

1.3.2. Research objective

 Highlight how blockchain technology functions in international trade.

 Evaluate how blockchain could be applied to optimize cross-border trade in
Vietnam.
 Investigate the potential cost savings through blockchain adoption in Vietnam’s
trade sector.

1.3.3. Research questions

 What are the key factors contributing to high transaction costs in Vietnam’s cross-
border trade?
 How can blockchain be integrated into Vietnam’s trade infrastructure?
 What are the expected outcomes in terms of cost reduction and process efficiency?

II. Literature review:

1. Overview of blockchain technology:
1.1. What is “Blockchain” ?
 Blockchain is an technology that create distributed database and shared across
the computer network’s nodes. It is best known for their crucial role in
cryptocurrency systems, maintaining a secure and decentralized record of
transactions. But they are not limited to cryptocurrency uses. (A. Hayes, 2024)

1.2. Blockchain structure.

 Blockchain consist of a programs called scripts that conduct the tasks you
usually would in a database: entering and accessing information, and saving
and storing it somewhere. When a blockchain is distributed, it means that your
data has been copied and saved in various devices and they must all matched to
be valid. (A. Hayes, 2024)

1.3. How Blockchain Works and Transactional process

- Blockchain is somehow similar to spreadsheets and database, which has been
widely known before. What different is how the data was structured and
 accessed. Take international trade transaction as an example, after the transaction
has been recorded, it will be stored in a file called Block (the size of the block can
be flexible). Once the block is full, it will run through a process that create
hexadecimal number called “Hash”. “Hash” is created after one block was full and
then encrypted with the next block header’s data, also known as the “chain” that is
connect the two block. Hence, this Technology called Blockchain.

 Transactional process

- First, the transaction entered the memory pools

- Next, the transaction will be transmitted to peer-to-peer computer network, which

scattered all across the world.

- Then, this network of computer will solve the equation to guaranteed if this transaction is
valid or not

- Once the transaction was legitimate, it will be transferred into a block.

- These blocks will be chain together by the Hexadecimal number called “Hash” Code.

- Then the transaction will be completed.

 (Source:[Link])

1.4. Core features of blockchain

- Decentralization: While most of other types of transaction will store their original data in
one server and try their best to protect it. Blockchain allow the transaction/contract to be
stored in many servers and connect with each other with the “Hash” number, create a
sustainable and strong network that protect the data from being stolen or changed. If
someone trying to steal the data from one node in the network, other nodes will prevent it
by comparing the block hashes. So consequently, no single nodes can be altered within
the chain and the data remain irreversible in blockchain.

- Transparency: Due to the decentralization of blockchain, the data could be viewed by

everyone (Everyone can see the live transaction). As a result, if new Blocks are created,
everyone will get updated and informed, which prevent the data from being altered in the
dark.

- Security: Due to transparency and decentralization, even though hackers may be

anonymous, but their wallet address will be stored on blockchain, thus, will provide the
police with more data and allow them to track the lost currency easier. Additionally,
 although blockchain can guarantee the transparency, however, users can remain
anonymous when making transactions (Only us can reveal our identity).

2. Blockchain in International trade

- Not only being used in Cryptocurrencies and financial sectors, Blockchain can also be
used in international trade. According to World Bank’s recent report (2023): “to create
momentum for the growth of marginal or developing countries like Vietnam, from now
on to 2030, it is necessary to focus on international trade and Blockchain technology is
considered to be the "key" to promoting this commercial activity...”

 Case of blockchain in international trade

- On the one hand, we all know that the time and cost of clearing goods for import or
export add a significant financial burden on trade due to the copious layers of
authorizations to import or export goods, for instance like permits, licenses, phytosanitary
certificates, and others. The final arbiter in a border transaction is Customs, whose role is
to ensure that all such permits have been obtained and that they are valid and that the
goods have been lawfully declared and all regulatory requirements have been met.
- The Holy Grail for Customs and other border agencies would be a set of trustworthy
documents (invoices, bills of lading, packing lists, etc.) that accurately describe the nature
of the goods, their conformity to the required standards, the inspections and
authorizations that they have undergone, any transformations through processing, and any
changes of hands along the entire supply chain for the purpose of conveyancing or re-
packaging. (“Can Blockchain Revolutionize Int. Trade?,” 2018)
- In fact, not all the above information is available to authorize. Thus, goods are often
subjected to a high level of scrutinize. Consequently, his results in high costs for the
traders, delays in clearing the goods, and a high degree of resourcing for the government
authorities.

What if all of these steps of a supply chain, from the start to

destinations, are being captured in blockchain?
- First, it could provide higher degree of assurance that the information is correct as the
information of everything in the supply chain are being saved in the Blockchain and
cannot be manipulated or altered all along the chain. Furthermore, Blockchain can cut
down on the process in verification due to its transparency – which can be viewed by
everyone, guarantee that Customs and all Agencies are met and Valid. Consequently, the
goods will be clear without further intervention from human.
 Case that successfully applied BlockChain in international trade: Singapore.

- Singapore has corporated and developed “TradeTrust” – a platform that based on

Blockchain technology. TradeTrust is used to digitalize and standardize cross – border
trade process. It not only help cut down on the transaction cost, but also improve the
transparency and and trust, at the same time, boost the transaction speed.
- Additionally, Singapore Port, which has been known to be one of the busiest port in the
world. Due to Singapore’s geographical location advantage, Singapore Port has become
one of the world’s biggest freight transfer station and the main entrance for West’s
exporter to enter South-East Asia market. With the assistance from Blockchain, port’s
manage and tracking process become more and more effective, from storing the data to
control the transport process.
- Singapore also incorporate with other countries such as: Japan and Korea to apply and
develop blockchain in cross – border trade, put up the foundation for transparent and
save trades between each parties who take part in the trade.

(Benefits et al., 2024)

2.1. How can Blockchain reduce transactional costs?

- Traditionally, cross – border payments are often done via the traditional SWIFT network
(the World Wire network was able to strip out intermediary fees and dramatically reduce
the time a wire transfer might take, which result cost are relatively high due to the advent
of intermediaries in the trade – who appear to be the middlemen to operate various stages,
mainly is currencies conversion. Because of this appearance, Parties who take part in
cross – border trade usually have to pay an additional fee, known as “transaction fees”.
- Beside manage the operation of currencies conversion process, every parties that take
part in cross – border trade also concern about the intransparency risk, for instance, alter
the trade data, contracts to deprive benefits. Consequently, finding an legit intermediaries
will be the most suitable and safe choice for every Firms to slash the risk when operating
cross – border trade. Thus, this will cost them more.
- However, with Blockchain, these fees are minimized as transactions occur directly
between parties on a decentralized ledger by creating “Smart Contract”. Additionally,
Blockchain can still guarantee the supply
chain transparency as it can be viewed and
tracked clearly by everyone who take part in
the trade (transparency). Therefore,
BlockChain can also enhance the trust of a
party’s portfolios by ensure traceability of
 origin of goods from origin to destination, which traditionally, will take them a colossal
amount of cash and time to examine.
- Moreover, by applying BlockChain, the transaction time can be reduced as the
BlockChain’s transaction processing speed (Usually measured in minutes) is much faster
than third-parties (usually measured in days).
- In other words, Blockchain can eliminate intermediaries without making the trade
process’s efficiencies reduced.
- Mr. Quyết Vũ, CEO of LocaMOS, said that: “Blockchain technology plays an
increasingly important role in cross-border e-commerce activities, creating trust
expectations for customers. Because before, to have faith in commercial activities
International trade often requires the help of a third party, the government or public sector
related legal entity. However, since Blockchain, operations International trade, especially
cross-border, has gained confidence customer place". (Diệu, 2023)
- According to SheHar Yar, CEO of Software House, blockchain can eliminate the need for
multiple intermediaries, reduce transaction times to minutes, and lower costs by up to
40%. (Mcdermott, 2024)

2.2. Challenges of blockchain adoption

- Notwithstanding this widespread interest and the opportunities for digital
transformation that blockchain technology presents, the actual implementation of
blockchain technology in the public sector has remained limited.
- Previous studies have highlighted several adoption barriers such as lack of
regulation, security, and privacy concerns, insufficient and lack of interoperable
infrastructure, lack of information about operational costs, inefficient and energy-
costly transactions, the need for value-driven transitions in administrative
processes, and the absence of effective governance models.
- A key challenge for blockchain and distributed ledger systems adoption in public
sector digital transformation projects is think about the application and adoption of
blockchain and DLT holistically to avoid misalignment among the social,
information and technical aspects of blockchains and DLTs. ([Link])

Particularly, in Viet Nam, “BlockChain” has not been widely applied

due to several reasons
 Regulatory Uncertainty
- Vietnam's legal and regulatory framework for blockchain technology is still
underdeveloped. There is no comprehensive legal framework specifically governing
blockchain applications, making it difficult for businesses to adopt the technology
without clear guidelines.
- Regulatory uncertainty also discourages investment in blockchain-related projects, as
businesses are unsure about potential legal implications.

 Lack of Awareness and Understanding

- Blockchain is still a relatively new and complex technology, and many businesses,
particularly small and medium-sized enterprises (SMEs), lack sufficient understanding of
its benefits and applications.
- Limited awareness leads to hesitancy in adoption, as many businesses are unsure how
blockchain can be applied to their operations or how it can reduce costs in trade logistics.

 High Implementation Costs

- Implementing blockchain solutions can be expensive, particularly for smaller businesses.

Initial setup costs, infrastructure upgrades, and the need for skilled personnel can be
prohibitive.
- The high cost of adoption, coupled with the uncertain return on investment in the short
term, makes businesses hesitant to transition from traditional systems to blockchain-
based solutions.

 Skilled Workforce Shortage

- Blockchain development and maintenance require a workforce with specialized skills,

including expertise in cryptography, software development, and cybersecurity. However,
Vietnam currently faces a shortage of trained professionals in these areas.
- The lack of blockchain talent forces companies to either outsource to foreign experts,
increasing costs, or delay blockchain projects.
- And some others could be mentioned such as: Data Privacy and Security Concerns,
Interoperability Issues, Cultural Resistance to Change, etc.

[Link] Nam’s cross-border trade: Current Status

1. Analysis of Vietnam’s exports and imports
From the aforementioned details in Vietnam’s cross – border trade background sector,
we can see the trade indicators of Viet Nam:
- Vietnam total value of export is 453,693,565 (thousand USD)
- Vietnam total value of import is 335,129,154 (thousand USD)

Vietnam’s import statistics (2023)

([Link], 2000)

So that, Viet Nam is a Trade Surplus country.

In present trade context, Vietnam still relies on several conventional trade payment
methods, includes:

 Letter of Credit (L/C)

- One of the most widely used payment methods in Vietnam for international trade, the
letter of credit is issued by a bank guaranteeing that a buyer’s payment to a seller will
be received on time and for the correct amount.
- It provides security to both parties, especially when trading with new partners. L/Cs
are often used in trade between Vietnam and markets such as the EU, the U.S., and
Japan. (Diệu, 2023)

 Open Account

- In an open account transaction, goods are shipped and delivered before payment is
due, typically within 30, 60, or 90 days. While this method increases risk for the
exporter, it is becoming more common due to competitive pressures.
- Exporters in Vietnam may prefer this method with trusted trading partners, especially
within ASEAN and neighboured countries like China.

 Cash in Advance
 - This is the least risky method for exporters, but the most risk for importers.
Vietnamese exporters request cash payment before shipping goods, ensuring they
receive payment before the trade is completed.
- This method is typically used when dealing with small orders or customers from
countries with high currency risk.

 Documentary Collection

- In this process, banks act as intermediaries but do not guarantee payment. A

documentary collection is less secure than a letter of credit but is less costly.
- It is commonly used when there is some level of trust between the importer and
exporter but not enough for an open account.

2. Inefficiencies in current System

Although Viet Nam’s Trade has been operated efficiently, there are still some
remarkable inefficiencies:

 Banking Infrastructure

- Although Vietnam's banking system has developed significantly, delays in cross-border

payments can occur due to limited international banking partnerships and outdated
infrastructure.
- The processing times for cross-border payments through traditional banking channels can
still be slow, often resulting in delays in shipments or financial settlements.

 Foreign Exchange Risks

- Vietnamese businesses trading internationally are often exposed to foreign exchange risk,
particularly due to the volatility of the Vietnamese Dong (VND) against major currencies
like the U.S. dollar (USD) and the Euro (EUR).
- Managing exchange rate fluctuations and currency conversions can lead to higher costs or
potential losses, making international trade payments more complex and risk for
Vietnamese businesses.

 Fraud and Lack of Transparency

- There are concerns about fraud in trade payments, including false invoicing and
document fraud, which make traditional payment systems less secure. This is especially
critical for SMEs in Vietnam that may not have robust systems for verifying trade
partners’ legitimacy.
3. Relevant Stakeholders
The most common stakeholders in financial section in Vietnam’s International trade is
Bank, sometimes are Fintech Companies.

In Viet Nam, banks such as Vietcombank, BIDV, and Techcombank play essential roles in
trade finance, offering letters of credit (L/C), payment processing, and foreign exchange
services to facilitate international trade. These banks are increasingly adopting digital
banking solutions to support faster and more secure cross-border transactions.

Additionally, with the rise of fintech in Vietnam, companies offering digital payment
solutions, trade finance platforms, and blockchain-based services are becoming important
players in the trade payment ecosystem. These entities help reduce transaction costs and
enhance payment transparency, providing alternatives to traditional banking systems.

Besides, Government bodies, include Ministry of Industry and Trade (MOIT), General
Department of Vietnam Customs, State Bank of Vietnam (SBV) are also take part in the
trade.

Apart from that, there are also some other stakeholders that can be cited:

 Private Sector Enterprises

- Exporters and Importers

- Small and Medium-Sized Enterprises

 Logistics and Shipping Providers

- Freight Forwarders and Logistics Companies

- Port Authorities

 Trade Associations and Chambers of Commerce

- Vietnam Chamber of Commerce and Industry (VCCI)

- Sector-Specific Trade Associations

 International Organizations

- World Trade Organization (WTO)

- Regional Trade Agreements (RTA) Stakeholders
 IV. Blockchain’s Potential to reduce transaction costs.
1. Application of blockchain in Vietnam’s trade and Cost-benefit
analysis
Base on the existed form of Vietnamese Cross – border payment methods. We assume
that BlockChain can replace and perform a more effective role than traditional one.

 Raw Material Sourcing

Specifically, since Vietnam often imports raw materials from foreign nations for domestical
production, Blockchain can be used to verify the origin of raw materials by recording every
transaction in a tamper-proof ledger. Especially in some industries like agriculture, mining, and
manufacturing, blockchain ensures that raw materials are sourced ethically and sustainably,
meeting both regulatory and consumer demands. For example, a Food & Beverage exporter and
importer can track the raw meats, fish and ingredients from farm, supplier to their warehouse, so
the exporter can guarantee the quality of products, at the same time, the importer can verify
whether the foods meet their domestical hygienic standard or not, ensuring fair trade compliance.

This appliance of BlockChain in Vietnamese international trade supply chain not only
improve the trackability and minimized the risk of intransparency, but also can help both
Stakeholders to save more times and money when bad scenarios occurs, for instance, if a
widespread disease cause by foods occurs, suppose that the trade data were to operate by
BlockChain, Scientists can easily tracked where the disease-causing Food Originated from.
Consequently, these foods can be promptly destroyed and the diseased could be addressed in
time.

 Supplier Management

According to our details about Smart Contract in How can Blockchain reduce
transactional costs?, so that payment terms, delivery schedules, and penalties for delays can be
written into self-executing contracts. This ensures that both parties meet their obligations without
relying on intermediaries, reducing administrative overhead and mitigating the risk of disputes.
In Viet Nam cross – border trade, Vietnamese textile manufacturer enters into a smart contract
with fabric suppliers in China, triggering automatic payments once deliveries are confirmed via
blockchain.

 Production and Manufacturing

Similar to Raw material sourcing, BlockChain can also be used for quality control and
compliance, during manufacturing, each step of production can be recorded via BlockChain to
ensure the quality of goods that meet the standard of importers, by the way, guarantee the
manufacturing’s safety regulation. This can be applied to Vinfast – Vietnamese biggest
automobile manufacturer, BlockChain can record each components added when producing
automobiles, making it easier to identify defective parts if a recall is needed. Thus, this can help
cut down on the recall cost if the products have errors.

 Inventory management

BlockChain can help businesses check inventory in real – time across multiple
warehouses in different locations, which can reduce the likelihood of stock shortages or
overproduction. Additionally, BlockChain system will also allows companies to predict demand
more accurately, optimizing supply chain operations and reducing excess inventory costs.

For instance, A seafood exporter in Vietnam can monitor inventory at various cold
storage facilities and track real-time shipment status to foreign buyers by using blockchain.

 Logistics and Transportation

Logistics providers can use blockchain to track goods across borders, recording every
step from the warehouse to the final destination. Since traditional logistic service can sometimes
perform inefficiently, for example, often result in lost of Freights, however, with the assistance of
BlockChain, the lost goods can be tracked and found far easier than traditional one. This not only
increases visibility for all stakeholders, including suppliers, buyers, and customs authorities, but
also perform a cost – reduction in trade. Additionally, Blockchain can also help eliminate fraud
by ensuring that documents, such as bills of lading and customs clearances, are securely stored
and verified.

Example: A Vietnamese rice exporter can use blockchain to track shipments from Vietnamese
ports to buyers in Europe, where every checkpoint (e.g., customs clearance) is recorded for transparency.

 Customs Clearance

Blockchain can automate customs clearance by storing shipping documents in a tamper-

proof system that customs authorities in multiple countries can access securely. This reduces
paperwork, eliminate intermediaries, speeds up the clearance process, and helps prevent delays
caused by incorrect or missing documents.

For example, a Vietnamese electronics company exporting goods to the US can submit
export documentation via a blockchain network accessible to both Vietnamese and US customs,
reducing processing time.
  Payments and Settlements

From aforementioned details, there is no doubt that Blockchain enables faster, more
secure cross-border payments by eliminating the need for intermediaries such as banks.
Payments can be processed directly between buyer and seller using cryptocurrencies or
blockchain-based fiat settlements. As consequent, this reduces transaction fees, exchange rate
risks, and settlement times, which are often barriers in cross-border trade.

Applied to Vietnam’s Cross – border payment, for example, Vietnamese exporter of

agricultural goods can receive payments from international buyers within minutes using
blockchain-based payment systems rather than waiting days for traditional bank transfers.
Moreover, this could reduce the cost of hiring intermediaries but the efficiency, transparency
remain unchanged.

 Sustainability and Waste Reduction

Last but not least, Blockchain can help companies track their carbon footprint and waste
throughout the supply chain. It records energy usage, emissions, and waste at every stage of
production and transportation, helping businesses meet sustainability goals and comply with
environmental regulations.

For example, Vietnamese seafood exporter uses blockchain to monitor its carbon
emissions and ensure sustainable fishing practices are adhered to, providing this information to
eco-conscious buyers.

2. Expected Impact on trade Efficiency

From the above analysis of How BlockChain can be applied in practical context of
Vietnam’s Cross – border trade. As an Unknown expert has said “We must take advantage and
use Blockchain as a foundation in reducing costs, because if we don't focus on import and
export, the economy will suffer and may face difficulties because Vietnam's economy currently
depends heavily on exports” (Diệu, 2023), so we expect that trade efficiency will improved with
the advent of BlockChain. With BlockChain, Vietnam’s cross – border trade is not only become
more transparent, but also has the potential in reducing cost, transaction times and far more is
reducing carbon foot print – which often appear when international trade occurs and is
considered to be one of the main factors that damage our environment day by day.

Additionally, due to the transparency and can not be altered features of BlockChain,
Exporters and importers who take part in cross – border trade can generate trust with their trade’s
partners without intervention of intermediaries.
V. Challenges and barriers to blockchain adoption in
Vietnam
1. Technology barriers
 Infrastructure limitations the need for technical expertise

- Vietnam's digital infrastructure, while improving, is not yet fully equipped to support
widespread blockchain adoption. Inconsistent internet connectivity in rural areas, limited
access to advanced computing resources, and a lack of blockchain-specific infrastructure
can slow the technology’s uptake.
- The technology requires a robust and secure infrastructure, including cybersecurity
measures, to ensure data integrity and privacy, which many businesses in Vietnam may
lack.
- Blockchain development and maintenance require a workforce with specialized skills,
including expertise in cryptography, software development, and cybersecurity. However,
Vietnam currently faces a shortage of trained professionals in these areas.
- The lack of blockchain talent forces companies to either outsource to foreign experts,
increasing costs, or delay blockchain projects.

2. Regulatory and legal barriers

 The status of blockchain regulations in Viet Nam

- Vietnam's legal and regulatory framework for blockchain technology is still

underdeveloped. There is no comprehensive legal framework specifically governing
blockchain applications, making it difficult for businesses to adopt the technology
without clear guidelines.
- Regulatory uncertainty also discourages investment in blockchain-related projects, as
businesses are unsure about potential legal implications.

 Regulatory challenges in integrating blockchain with existing trade laws.

- According to Article 17 of Vietnamese law of Cybersecurity: “Prevention of and

combatting cyberespionage; and protection of information classified as State secret, work
secrets, business secrets, personal secrets, family secrets and private life in cyberspace”,
it can be seen that Vietnamese’s Law on Cybersecurity impose strict requirements on data
protection and privacy. However, blockchain's decentralized and transparent nature may
conflict with these regulations, as the technology often involves data sharing across
multiple nodes.
- Thus, companies adopting blockchain for cross-border trade must ensure that their use of
blockchain complies with Vietnam's data protection laws, which can be a significant
challenge given the difficulty of anonymizing data on public blockchains.

3. Cultural and industry resistance.

 Resistance from traditional stakeholders (Banks, customs agents,..)

- Since BlockChain is capable of replace the role traditional stakeholders, therefore, this
will directly pose a threat to their benefits. Consequently, banks, customs agents and
other traditional stakeholders definitely will resist and retaliate against BlockChain.
- Thus, before BlockChain could be launched in Viet Nam, convince traditional
stakeholders will a more vital task.

 Need stakeholder education and training

- Being able to develop and maintain BlockChain will be extremely crucial if BlockChain
is being applied in Vietnam’s cross – border trade.
- Thus, Vietnamese stakeholders, included Government Agencies, Businesses and
Corporations have to be trained intensively about BlockChain to be able to manage it.

VI. Recommendations
1. Policy Recommendations
Firstly, Vietnamese government should create comprehensive regulations for blockchain
technology, addressing legal definitions, smart contracts, and digital signatures. This
framework will provide legal certainty for businesses and investors.

Moreover, integrate blockchain standards with existing international trade and

Cybersecurity laws, making it easier for Vietnamese businesses to adopt blockchain for
cross-border transactions.

2. Strategic steps for adoption

Support, promote invest in pilot programs in sectors like logistics, agriculture, and finance
to test, report and refine blockchain applications before wide-scale deployment.

Additionally, government should encourage collaborations between the government and

Vietnamese private companies to develop blockchain solutions tailored for Vietnam’s
industries, especially in logistics and trade. Some large Logistic corporation in Viet Nam that
are potential to take part in BlockChain’s development project namely: Giang Huy Logistics,
Thuongdo Logistics, Gold Trans, etc.
 3. Training and capacity building
3.1. Educating key stakeholders on blockchain technology.
 Raise awareness Among Government Agencies

- Government agencies, including the Ministry of Industry and Trade, the State Bank of
Vietnam, and customs authorities, play a crucial role in regulating and overseeing
cross-border trade. To effectively implement blockchain, it is essential that these
agencies are educated about the technology’s benefits and how it can integrate with
existing trade processes.
- Training programs should focus on building a deep understanding of how blockchain
can improve transparency, security, and efficiency in trade logistics and reduce
transaction costs. Additionally, government officials must be educated on how to
adapt regulatory frameworks to accommodate blockchain without compromising
oversight.

 Education for Businesses and Corporations

- Many businesses in Vietnam, especially those in key export industries such as

agriculture, textiles, and manufacturing, may not yet fully understand the potential of
blockchain for optimizing supply chain management and reducing trade friction.
There is a need for widespread education campaigns and workshops to introduce
blockchain’s applications in supply chain transparency, payments, and trade finance.
- Large enterprises and SMEs need specific training to learn how to integrate
blockchain platforms into their operations, ensuring smoother cross-border
transactions, better traceability, and compliance with international standards. Practical
training on the use of blockchain systems, such as smart contracts, digital identities,
and decentralized ledgers, will help companies transition to blockchain-based trade
processes

 Academic and Vocational Education

- Universities and technical colleges in Vietnam can play a major role in building the
next generation of blockchain professionals. Offering specialized courses in
blockchain development, cryptography, and decentralized technologies will equip
future technologists with the skills needed to build and maintain blockchain systems.

3.2. Encouraging innovation in blockchain solutions for trade.

- Collaborating with international blockchain experts and technology companies to
research and develop Vietnamese Blockchain model, like “TradeTrust” of Singapore.
 - Launching Blockchain competitions, initiatives at the university level, catalyze students
to come up with breakthrough ideas about BlockChain, utilize those ideas and invest for
long – term development.

VII. Conclusion
1. Summary of findings
 Blockchain’s potential to reduce transaction costs and improve trade
efficiency in Vietnam.

Overall, BlockChain is an ideal technology for Viet Nam to develop cross – border trade, not
only by it ability in replacement for intermediaries, but also for it improvement in security for
international trade by creating Smart contract that help firms to ensure the Customs and
Compliance when trading. Thus, BlockChain can reduce the cost for cross – border trade as the
exporter and importer can directly make transactions, but remain the transparency and generate
trust between parties in trade. More to say, BlockChain also can play an vital role in Vietnamese
supply chain management, help Vietnamese enterprises ,who included in the supply chain make
it easier to manage and tracking the raw material sources, recording each steps in production,
which ensure the quality of the goods.

Although BlockChain is supremely potential in reduce transaction costs and improve

efficiency in Viet Nam. However, the appliance of BlockChain in Vietnam’s supply Chain are
still in limitation. Once due to the high price of Research & Development of BlockChain, other
are due to the limitations in technological infrastructures and the absence of framework in law to
take BlockChain into management.

2. Long-term benefits
As Viet Nam is considered to be a country that heavily depends on Export, We believe
that BlockChain is absolutely crucial to surge Vietnamese’s export Volume, bring Viet Nam to a
new position in global Trade market. BlockChain can generate the competitive ability of Viet
Nam in worldwide trade by minimized the cost in various management stages, increase
transparency and reduce the transaction time to minimum.

3. Future research directions

Apart from international trade, BlockChain can also be performed at various industries:

 Food industry

- As health crisis has always been controversial topic of debate, disease caused by eating
food is no longer a strange issue. In the past, it has taken weeks to find out the source of
 these outbreak or the cause of sickness from what people are eating. Blockchain assist
expert to track the food delivery from each process more easily in order to find out the
source of disease that caused by food.

- Moreover, when food tracking become easier, it will provide expert with hastier
information to prevent the outbreak of an disease. Specifically, due to the transparency of
blockchain, everyone can see the delivery of the food and wherever is suspicious, the
observator can see immediately and report it to the Food safety inspection department to
address the issue.

 Banking & Financial

- Generally speaking, Banking is one of the sector that gain benefit the most from
Blockchain

- Financial institution only operates during business hours (usually are 5 days from
Monday → Friday). So if you make a transaction on Friday at 6:00 PM, only until
Monday morning that your account receive the money. Apart, Blockchain, works
24/7

- Blockchain can also increase the speed of transaction as it only take about few
minutes to generate a new block and add it to the chain.

VIII. References
 Citing all relevant literature, case studies, articles, and sources used throughout
the research.

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