Blockchain Applications in Trade Finance: International lessons and Recommendations for Vietnam

BANKING ACADEMY

INTERNATIONAL BUSINESS FACULTY

-----------------------

BACHELOR’S THESIS

Blockchain Applications in Trade Finance: International lessons and

Recommendations for Vietnam

Student Name: Tran Phuoc Dieu Anh

Class: K21KDQTG

Year: 2018-2022

Student Code: 21A4050054

Supervision: MSc. Do Phu Dong

Hanoi, May 2022

BANKING ACADEMY

INTERNATIONAL BUSINESS FACULTY

-------------------------

BACHELOR’S THESIS

Blockchain Applications in Trade Finance: International lessons and

Recommendations for Vietnam

Student Name: Tran Phuoc Dieu Anh

Class: K21KDQTG

Year: 2018-2022

Student Code: 21A4050054

Supervision: MSc. Do Phu Dong

Hanoi, May 2022

i

DECLARATION

I undersigned solemnly declare that my thesis is based on my work

conducted during my study under the supervision of MSc. Do Phu Dong.

I assert the statements made and conclusions are drawn are an outcome of

my research work. If accepted, I hereby consent for my thesis to be

available for photocopying and understand that any reference to or

quotation from my thesis will receive an acknowledgment.

Hanoi, 21 May 2022

Student

ii

ACKNOWLEDGEMENTS

Throughout the writing of this thesis, I have received a great deal of

support and assistance. I would first like to thank my supervisor, MSc.

Do Phu Dong, whose expertise was invaluable in formulating the research

questions and methodology. Your insightful feedback pushed me to

sharpen my thinking and brought my work to a higher level.

I would also like to thank my teammates, for their valuable guidance

throughout my studies. You provided me with the tools that I needed to

choose the right direction and complete my thesis.

In addition, I would like to thank my parents for their wise counsel

and sympathetic ear. You are always there for me. Finally, I could not

have completed this thesis without the support of my friend, Nguyen

Ngoc Cham, and Nguyen Huong Giang, who provided stimulating

discussions as well as happy distractions to rest my mind outside of my

research.

Student

Tran Phuoc Dieu Anh

v

TABLE OF CONTENTS

LIST OF ABBREVIATIONS................................................................................ 1

LIST OF TABLES................................................................................................. 2

INTRODUCTION ................................................................................................. 3

1. Rationale of thesis............................................................................................ 3

2. Literature review.............................................................................................. 5

3. Research objectives and research questions.................................................... 7

4. Research scope................................................................................................. 7

5. Research methods............................................................................................ 8

6. Structure of the thesis ...................................................................................... 8

Chapter 1: Overview of blockchain technology and international trade

finance .................................................................................................................... 9

1.1. Blockchain technology................................................................................... 9

1.1.1. Definition ..................................................................................................... 9

1.1.2. Classification of Blockchain ................................................................... 11

1.1.3. Advantages and disadvantages of blockchain......................................... 15

1.2. International trade financing ......................................................................... 19

1.2.1. Definition ................................................................................................... 19

1.2.2. Methods of international trade finance ..................................................... 20

1.3. Blockchain application in international trade finance .................................. 21

1.3.1. Blockchain application in international trade finance ............................... 21

1.3.2. Differences in characteristics of traditional trade finance methods and

trade finance in blockchain application ............................................................... 28

1.3.3. Influenced factors when applying blockchain in trade financing............. 30

Summary of chapter one ...................................................................................... 32

Chapter 2: Experiences in applying blockchain technology in international

trade finance worldwide and applicability in Vietnam........................................ 33

2.1. Experiences in applying blockchain technology in trade finance

activities worldwide ............................................................................................. 33

2.1.1. Platform of blockchain used in trade finance ............................................ 33

2.1.2. Application of blockchain of banks in executing international trade

finance transactions.............................................................................................. 36

v

2.2. The application of blockchain technology in the international trade

finance economy in Vietnam ............................................................................... 39

2.2.1. Legal framework for blockchain application activities in funding

international commerce........................................................................................ 39

2.2.2. Overview of blockchain technology in the international trade finance

economy in Vietnam............................................................................................ 40

2.2.3. Quantity and quality of projects operating in the field of blockchain

projects in Vietnam.............................................................................................. 41

2.2.4. A case of experience in applying blockchain technology in

international trade finance in Vietnam................................................................. 42

2.2.5. Assessment of the application of blockchain technology in

international trade finance in Vietnam................................................................. 43

Summary of chapter two...................................................................................... 47

Chapter 3: Solutions to promote the application of blockchain technology in

international trade financing in Vietnam ............................................................. 48

3.1. Blockchain development orientation ............................................................ 48

3.2. Solutions for establishing blockchain platforms in international trade

finance in Vietnam............................................................................................... 49

3.2.1. Finalization and application of the legal testing framework ..................... 50

3.2.2. Developing human resources to meet requirements.................................. 51

3.2.3. Establishing a management agency for blockchain application

activities ............................................................................................................... 53

3.2.4. Building a blockchain network with many participants............................ 54

3.2.5. Building an access management mechanism............................................. 55

3.2.6. Standardized data ....................................................................................... 56

3.2.7. Continue to improve business processes, and build products suitable

for market............................................................................................................. 57

Summary of chapter three.................................................................................... 61

CONCLUSION.................................................................................................... 62

REFERENCE....................................................................................................... 64

1

LIST OF ABBREVIATIONS

Abbreviations Meaning

AI Artificial Intelligence

AML Anti-Money Laundering

APAC Asia-Pacific

BL Bill of Lading

BPO Bank Payment Obligations

FTA Free trade agreement

IoT Internet of Things

KYC Know Your Customer

LC Letter of Credit

ML Machine Learning

SWIFT Society for Worldwide Interbank Financial Telecommunications