VIR’s roundtable on deploying sandboxes in Vietnam’s sharing economy was joined by experts and businesses

Fintech, considered a fairly new economic model, is facilitating the sharing economy which has been developing in Singapore and other regional countries in recent time. In Vietnam, fintech is beginning to take root, but without a lack of regulatory sandboxes for fintech advancement in the country.

Nguyen Hoa Binh - Chairman, NextTech Group

A lack of regulatory sandbox models may bring negative consequences. First of all, innovation would be hindered when traditional regulatory frameworks are applied to new business models. Second, it causes unnecessary social inefficiencies in the absence of specific mechanisms that help activities to be carried out quickly and conveniently through electronic models.

There will also be social instability. If there is no mechanism encouraging genuine businesses to develop, they will have to struggle in an unequal battlefield. For example, without a pilot mechanism to create favourable conditions for Vietnamese businesses to innovate, they will look to other channels such as underground contraband or illegal payments.

Finally, investment activities will face enormous obstacles. One matter that both domestic and international investors pay attention to is legal risk. Not creating a pilot mechanism directly obstructs the flow of capital, pulling the cash flow to other countries where there is a clear regulatory system.

By thinking outside the box, it is impossible using traditional legal frameworks to manage new creative business models.

Nguyen Hoa Cuong - Deputy director-general Enterprise Development Agency

Industry 4.0 brings fundamental technical changes to people’s lives and enterprise performance. Thus, it is essential for Vietnam to catch up with the revolution by establishing programmes and projects which can apply disruptive technologies. The National Innovation Centre (NIC) is one example.

The NIC will connect and co-operate with other centres from different countries in a bid to create an integrated universal system. Specifically, enterprises and startups operating in the NIC would enjoy the most preferential policies.

Furthermore, it will provide a regulatory sandbox model with the best incentives which are expected to transform Vietnam into a regional attractive destination.

Many people ask whether new technology would eliminate traditional businesses. However, everything at this digital age is about speed and convenience. Customers would not be patient to deal with lengthy and phased out business practices.

So, a ­traditional business model cannot avoid the shift to digital integration in a bid to avoid missing out on business opportunities.

Ngo Van Duc - Deputy head, Payment Systems Oversight Division State Bank of Vietnam

While new technologies are rarely fully-formed when first introduced to a marketplace, it can be an exceptional time for new entrants to the industry to secure approval from relevant regulators. This issue occurs not only in Vietnam.

The challenge for fintech firms is that, given the innovative technologies being employed in a sector that has been built on a stagnant, aged infrastructure, financial service regulators can be unfamiliar with many of the new underlying technologies that are being introduced.

Within a maximum three-year period, businesses operating in the NIC could gain benefits from exemption of import tax for input goods and services used for their research and development activities.

At first, only Vietnamese businesses can participate in the early stages to test out business hypotheses in a safe ­environment and in a ­controlled manner.

This will help clarify questions and hopefully allay startups’ concerns. It is also a great opportunity for businesses to get inputs on their products thanks to insightful ­suggestions.

Bui Viet Dung - CEO, Financial Deep Mind

The pilot sandbox model allows enterprises with new technologies and new business models, who have yet to find a proper management system, to test their model in a limited space and time under the supervision of managers while having appropriate risk prevention planned out.

As a fintech company which has worked with dynamic leading financial institutions, we have always wished to enter such a sandbox. We believe that the fintech community in Vietnam also shares the same desire. In more than 30 countries and territories, regulatory sandboxes and innovation offices are being implemented at an unprecedented pace. Of course, we are fully aware that it is not a piece of cake for a nation to set up regulatory sandboxes right away.

Especially as the main task of ministries and agencies is to control social stability, being entrusted to participate in operating sandboxes may sound conflicting to them. Hopefully, the government will take more concrete steps for Vietnam to appear on the innovation map, so that our passion and innovative thinking can be unleashed.

Nguyen Xuan Viet Binh - Moca representative

E-payments play an important role in developing a shared economy. The recent strategic co-operation between Grab and Moca is a typical example, in which efficiency is increasingly rising.

Specifically, the number of Moca users has already increased six-fold on-year, with the number of banks directly linking to Moca being doubled this year. In the first half of 2019 only, transactions within Grab via the Moca e-wallet rose by 150 per cent, and as of September, non-cash transactions via Moca made up 42 per cent of all transactions on Grab.

For fintech, the sandbox model is expected to strengthen innovation of businesses and boost the approach to banking and financial services.

To build mechanisms for the sandbox model, we propose to clarify new methods and concepts which will focus on efficiency and reliability. The trial period could be short, and these new methods could be applied right then.

For completely new concepts like peer-to-peer lending, the trial period should be longer, and more regulations should be promulgated to ensure both state management and economic efficiency for the long term.

Mai Duy Quang - Vice chairman Vietnam Software and IT Services Association

In a sharing economy, no matter where in the world you are, all the available resources will be utilised across relevant sectors. In addition, business profits will be shared across most of the parties, services providers, users, consumers, and platform providers.

The sharing economy has been gathering speed over recent years and is developing significantly, based on the application of advanced technology.

This enables countries just like Vietnam to catch up with the Fourth Industrial Revolution. Thereby, the sharing economy will be developed in every sector, including in sectors such as logistics, retail, and banking and finance, among others.

It is necessary for the country to formulate a sandbox mechanism which will allow businesses all shapes and sizes to test, to fail, and to fix, without penalties or under-the-table costs or fees. However, we should make sure that the regulatory sandbox model will not be open to abuse from any business, institution, or individual. VIR