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Industrializing
blockchain in
ASEAN
Unlocking the potential of
blockchain across organizations
2 | Is it time to industrialize blockchain?
Databases are integral to all industries, and typically, organizations having their own
databases and associated systems, govern us. Whether it is banking, health care or
telecommunications, there are systems in place, governing our actions andresponses.
However,the only means of ensuring the veracity of the data in such databases, is
to have a trusted middleman who can act as the bridge. The reality is, while the idea
of middlemen may not be appealing, they are essential for seamless transactions to
happen. For instance, if we cast a casual eye at the global supply chain, we would see
that it is a set of extensive systems with several product components moving across
a network of connected and reliable intermediaries. However,the advent of bitcoin
blockchain has transformed the way businesses, specifically the financial services
(FS) sector,think about payment transactions. The initial FS success has proven that
blockchain technology can work at a global scale, to reduce the need of middlemen
in a whole range of business processes and transactions. Little wonder then, that
the level of interest, activity and investment now being seen across FS and other
industries is a clear indicator of belief in the technology’s potential.
What lies ahead for ASEAN?
ASEAN has a population of over 600 million and continues to thrive as one of the
fastest-growing regions globally. ASEAN countries are at different phases of their
economic development, which creates opportunities for local governments and
businesses to explore diverse use cases for blockchain. Industries that are exploring the
use of blockchain includes financial services, supply chain and health care to improve
transparency and efficiency. After providing an overview of blockchain applications all
over the world, the report will deep dive into the blockchain landscape in six ASEAN
countries, identifying the general trends and key local developments. We hope the
report will provide you a better understanding of the implications of blockchain and get
the conversation started on how this technology can solve issues and enhance lives.
Foreword
Paul Brody
Partner
EY GlobalBlockchain
InnovationLeader
paul.brody@ey.com
Jimmy Ong
Partner
Singapore IT Advisory Leader
EY Singapore
jimmy.ong@sg.ey.com
Is it time to industrialize blockchain? | 3
Contents
4
Blockchain implications
understood
15
Making it real
5
What next for blockchains
in the enterprise?
16
Are you ready?
8Making the choice to lead therace
4 | Is it time to industrialize blockchain?
Distributed ledger technology (DLT), most notably
blockchain — a type of database that records an ongoing list
of tamper-proof records, or “blocks,” has already caughtthe
imaginations of executives in almost all types of industries and
governments across the globe. Given the extraordinary amount
of attention the technology has received, it is not hype to say
that the value creation opportunity is huge and the possibilities
of future applications are many. Like 3D printing, the sharing
economy and the Internet of Things (IoT), blockchain holds
huge potential to disrupt any industry, creating a world where
people get to participate in the value they create. During 2017,
private blockchain and blockchain-related companies raised over
US$5.5b,¹ and approximately one-fifth of the capital was sourced
from venture capitalists. Blockchain has the potential to evolve
into a core, underlying element in the technology “stacks” of
various industries as diverse as FS, energy, agriculture, and the
government and public sector(GPS).
Promising developments
In less than a decade, the technology has quickly become
a fixation in many industries, for example, FS, as a result of
its potential to revolutionize and transform our thinking about
data sharing and security, partially inreaction to bitcoin (the
cryptocurrency that is an application running on the first public
blockchain). From a purely technological standpoint, bitcoin was
an attempt to completely disrupt peer-to-peer payments,without
the need for a trusted authority (i.e., a financial institution). As
the technology that supports bitcoin, blockchain has attracted a
much wider range of supporters, and the resulting knowledge is
being applied to many other proof-of-concept projects in a whole
range of business processes andtransactions.
For instance, in the energy sector, a start-up is developing an
ecosystem wherein customers can pay for electricity in real time,
directly from distributed energy providers. Another blockchain
start-up is currently developing a traceability protocol to track
the provenance of anything, from coffee beans to a roll of fabric.
Opportunities to drive efficiencies in public servicedelivery,
reduce costs and improve transparency have caught the attention
of governments too. A series of innovative pilot programs in
Sweden, Estonia and the United Arab Emirates (UAE) indicate the
potential for governments to leverage the power ofblockchain
in a way that redefines their role and their relationship to
businesses, citizens and even the rest of theworld.
“To date, blockchain has transformed only people’s
thinking. We don’t yet evenknow all the questions
blockchain technology will raise, much less the
answers. But waiting for the technology to take
hold is too late. Now is the time to start defining
the questions and influencing policy that will lead
to answers.”
Channing Flynn
EY Global Technology Sector Leader,
Tax Services
We are at a phase where blockchain is no more a novel technology, but is rather, seen as integral to digital
enterprises; this is a clear indication that enterprises are now focusing on research and development, but are still
a long way from adoption at scale. Therefore, the question remains as to where and when profound impacts will
be seen.
Blockchain implications understood1
Is it time to industrialize blockchain? | 5
Understanding blockchain technology — public, private andhybrid
Based on the participants, blockchains are categorized as public, private or hybrid. This is similar to comparing
the public internet and a company’sintranet.
• Public and permission-less: Public and permission-less blockchains resemble bitcoin, the original
blockchain. All transactions in these blockchains are public, and no permissions are required to join
these distributed entities (examples: ethereum, bitcoin).
• Private and permissioned: These blockchains are limited to designated members, transactions are
private, and permission from an owner or manager entity is required to join this network. These are
often used by private consortia to manage industry value chain opportunities (examples: Ripple, R3).
• Hybrid blockchains: An additional area is the emerging concept of sidechain, which allows for
different blockchains (public or private) to communicate with each other, enabling transactions
between participants across blockchain networks (example: ROOTblockchain).
Numerous surveys have given us indications about the industries
having the most number of blockchain applications. Undeniably,
FS (an industry where trust is a prime concern), in which cross-
border payments and settlements stand out, leads the way, as can
be seen in the graph from a recent International Data Corporation
(IDC) report on global blockchain spending in2017.
However,this hype on the FS side does not correspond to
similar interest from corporations, in realizing true value from
blockchains where decentralization and interoperability are the
key elements.
Enterprises are still conducting trials around blockchain
applications operating like distributed databases and notary
services, often with very specialized supply chain objectives, such
as verifying the origin and authenticity of a product as it moves
across the value chain, capturing information about all inputs of
a product, enabling accurate visibility and traceability into the
history of a product, and soon.
Global blockchain spend in 2017:US$945m
“This is a useful start, but if we are not careful, it could be a dead end — a fancy, hacker-proof database,
where the software company has replaced the central bank as the intermediary of choice. Todeliver
on the full promise of blockchain technology, we believe that enterprises must embrace the fullpower
of tokenization, and ultimately, the allure of the public network. And, 2018 is the year that this will come
into view as the future of thistechnology.”
Paul Brody
EY Global Blockchain Innovation Leader
Cross-border payments and
settlement
Lot lineage orprovenance
Trade finance and post-trade
or transaction settlements
Regulatorycompliance
Asset or goodsmanagement
Identitymanagement
$0 $60 $120
Note: Global blockchain spending 2017 (US$m) — top six use cases.
Source: IDC.2
What next for blockchains inthe
enterprise?2
6 | Is it time to industrialize blockchain?
The foundation of this high-value future is the concept of
tokenization: the process of embedding data related to a real-world
asset on a digital token stored on a blockchain — not merely as items
of information, but as carriers ofvalue.
Understanding smart contracts
Smart contracts are bits of executable code that are triggered when the conditions are right within a blockchain.
The advantage of blockchain-based contracts is that they bring down the level of manual intervention in creating,
executing and enforcing acontract, thereby lowering its cost, while raising the assurance of the execution
and enforcement processes. By automating a transaction in a fully verifiable framework (the blockchain),the
transactions can have legal validity even at high frequency — a key enabler for network balancing.
Valueforenterprise
Time
New normal: enterprisevision
Notarization
• Blockchains operating like
distributed databases and
notary services
• Not optimized for business
transactions — unstructured
data, against which it ishard
to deliver services
Blockchain implementations
are still about timestamping
and synchronizing
information:
Products provenance
Full-cycle economic blockchain
• Shift from notarization
and synchronization,to
tokenization
• Possible to execute full-cycle
economic contracts between
participants on a blockchain,
with tokenization
Products and services tokenized
and exchanged through digital
smart contracts for digital
currencytokens
A closed-loop, tokenized industrial
blockchain
Tokenized fiat currency
+
Tokenized products and services
“Purist” enterprise blockchain
• Moving toward a public
blockchain: future orlarge,
regional or sector-specific
networks that are public,is
more likely
• Decentralization,
interoperability and
independent securitybeing
the key for enterprises to
realize true value
Gradual emergence of
public blockchain tobe
the preferred ecosystem for
digital transactions
An open andtransparent
regional blockchain
Tokenized fiat currency
+
Tokenized productsand
services
The first stage will be the development of a full-cycle economic
blockchain, where products and services are tokenized and
exchanged through smart contracts, and value exchanged via
traditional fiat tokens.
See example below for tokenization of “mobile phoneassets,” as
they move across the valuechain.
In the example illustrated, when these mobile phones are
delivered, value in blockchain can change hands, but in tokenized
fiat currencies, say US dollar tokens, or Euros or Yen for that
matter.This means, traditional fiat currency is tokenizedin
the same way assets are tokenized.And central banks have
already started experimenting with tokenizing fiat currencies.
These discussions are centered in Northern Europe, and Sweden’s
Riksbank might be the first financial institution moving ahead to
substitute or complement cash with digital currency. But tests
and research are being done all over the world, from China
to Canada, and from Singapore to Saudi Arabia and the UAE.
There is no doubt that if we did see a major central bank issue a
digital currency, the impact could be vast. While such progress
is encouraging, the next step is to create a robust regulatory
infrastructure that enables the tokenization of fiat currency on
any closed-loop industrial blockchain.
Today’s enterprise blockchain applications Moving toward “realapplications”
This high-value future will have two clearstages:
Is it time to industrialize blockchain? | 7
The gradually increasing preference for public blockchain for
enterprise transactions represents Stage 2 of this high-value
future. This would enable secure trading of objects that can be
digitized, onto the blockchain. A look at the token history can
provide information such as customs declaration, tax calculations,
product provenance and all related spending. Besides, itis
not necessary to have different blockchains for trade finance,
payments or product provenance. Collaboration across industries
is the key to success here, because the technology becomes
exponentially more powerful as more organizations start using it,
resulting in networkeffects.
Historically, most industries have tended to dismiss open source
blockchains. This is unsustainable, as large companies seek to
build overlapping, parallel private networks that work in silos
and require a lot of integration. However,we are starting to see
a shift in attitude toward this, with the banking industry leading
the way forward. A recent survey reveals that 86% of the banking
executives believe that public blockchains will gain greater
prominence over the next five years.3
The shift in thinking can be
attributed to the increasing awareness of public blockchains such
as Ethereum,and the “big leap” innovations this could bring.
Raw materials Manufacture Transport Warehouse Sell Support
• Transferto
a retailer
• Transfer
ownershipfirst
to retailer and
then to end
customer
• Build true
end-to-end
traceability for
producthistory
The flow ofprodu
• Purchaseraw
materials to
build aphone
• Createdigital
tokens to
represent
those assets
ct across thenetwor
• Integrate items
together into
manufacturing
output
• New digital
token
incorporates
thematerials
k is represented in th
• Putfinished
goods into
anin-transit
status
e blockchain …
• Move into
warehouse
with
a distributor
• Unload
containerand
truck
… and it is matched by a similar flow of financial tokens in the other direction on the same blockchain.
Nonetheless, we believe public blockchain networks should not be dismissed as the longer-term solution for
applications requiring data privacy and scalability. As developers expand protocol and framework offerings on public
blockchains, we believe this would create a network effect, such as the interaction of various ecosystems, which will
ultimately lead enterprisesforward.
However,right now, there are a few obstacles standing in the way of this transformation.
Privacy
For enterprises to feel secure
that their strategic transactions
are secure, privacy tools needto
be matured (creation of privacy
options, such as zkSNARKs, or new
protocols, such as Enigma, are in
the works).
Legal challenges
Beyond privacy, there are legal
challenges that need to be addressed
as well, including know yourcustomer
(KYC) and anti-money laundering
(AML) rules for instance. KYC and
AML procedures will beautomated
as developed countries start using
digital identities. For example,
Estonia’s e-residency project is
already underway, and it willpositively
influence the opportunities for
tokenization.
Lack of a
standardized system
The third obstacle to tokenization is
the lack of a standardized system for
carrying out transactions — just like
every company is now using its own
accounting and reporting systems.We
believe these are challenges that can
be addressed with the development
of a global technical standard for
integration into business.
8 | Is it time to industrialize blockchain?
As public blockchains achieve enterprise-grade scalability and
privacy, we believe blockchain will be at the core of several viable
business models that extend well beyond today’s more narrow
understanding of cryptocurrency, including exchanges and
supply chain systems. Industries are waking up to the need to
“make the choice and lead the blockchain race” or be left behind.
This is evidenced by a recent IDC report on global spending on
blockchain, which forecasts a US$9.7b spending by2021.2
Early pilots are already under way in many industries, as
mentioned in our overview. FS Blockchain projects — whileperhaps
the most numerous — are notnecessarily
the most advanced in terms of development and production.
Their first pilots, such as transferring equities or other financial
instruments in blockchain environments, tend to focus on
exploring ways that drive cost out of business processes, by
making transactions more efficient. Also, this could be partly
because of the intense regulatory measures and high risk
involved in the FS industry, as one mistake can lead to major
consequences. While these may be highly valuable uses, there
is perhaps more room to experiment with real-world
applications, such as consumer products and manufacturing,
with finance embedded directly into the natural activities
occurring within those markets.
“The long-term blockchain vision is of
markets that run by themselves, with
finance embedded directly into the
natural activities occurring within those
markets. In such an environment, the
finance industry will look very different
than it does today.”
Angus Champion de Crespigny
FS Blockchain and Distributed Infrastructure
Strategy Leader,Ernst & Young LLP(US)
Global blockchain spend by sector,2016–21
Source:IDC.²
Note: Bubble size represents size of
opportunity in US$m in 2017
Share of spending
Legend: CAGR: compoundannual
growthrate
u
2016–21CAGR
75%
0% 10% 20% 30% 40% 50%
86%
85%
84%
83%
82%
81%
80%
79%
78%
77%
76%
Making the choice to lead therace3
Manufacturing
andreso rces Distributio
n
andservices
Financial
Publicsector
Infrastruct ure
Key developments
Blockchain for voting
• In April 2018, an Australian blockchain company partnered 96 million-member socio-religious organization
Nahdlatul Ulama to implement a community voter platform in Sumatra for the regional and national government
elections.
• Beyond voting, the platform also provides services including digital banking facilities.
Improving productivity in agriculture
• A blockchain-based data exchange platform provides data on geo-tagging, field activities, weather and land,
satellite and market information to farmers. Farmers receive reward points for data they provide, which can
be used to redeem a discount on agricultural necessities. There were 3,000 farmer participants by July 2018.
• In November 2018, the company announced cooperation with a global blockchain technology solutions
developer to jointly deploy blockchain-based point-of-sales devices to farmers to facilitate data collection and
financial inclusion.
Ensure transparency, sustainability in fishing
• Indonesia is a major tuna producer, ideal for using blockchain to increase transparency in supply chains and
mitigate overfishing.
• A blockchain startup conducted a 6-month pilot in 2016, where traditional fisherman sent text messages to
register a catch, creating a new asset on the blockchain. This allowed the tracking of audit information to prove
that fishes were caught legally and sustainably.
Is it time to industrialize blockchain? | 9
“Blockchain has the potential to help Indonesia, which has a large
and scattered population, to increase efficiency in record keeping
and transparency in government operations, as well as financial
inclusion, and productivity and sustainability in agriculture.”
Indonesia Indonesia is the third-largest island country, with over 14,000 islands across the
archipelago. It is also the largest economy in Southeast Asia, with a population of
262 million.
Given its vast population and geographic distribution, blockchain holds the potential
for Indonesia to keep accurate records and increase transparency in government
operations. This includes tax, voting and distribution of government subsidies.
Understandably, the Indonesia Government has shown willingness to explore
blockchain applications. The Financial Services Authority has a dedicated team to
study how blockchain can help the finance industry. In August 2018, the Indonesia
Blockchain Hub was launched from a partnership between the Indonesia Chamber of
Commerce (KADIN), the Indonesia Blockchain Association, Creative Economy Agency
(BEKRAF), and a blockchain-based agritech startup.
Blockchain can increase financial inclusion by providing cheaper and faster services
to consumers. Hence, private sector players, particularly those in financial services,
are experimenting with blockchain. In October 2017, five leading banks collaborated
on the development and deployment of a blockchain solution to reduce settlement
time and cost of completing global payments. In May 2018, Bank Negara Indonesia
signed a Memorandum of Understanding with a FinTech startup to use blockchain to
improve performance of trade finance and remittance products.
Besides cryptocurrency exchanges, blockchain startups in Indonesia are running
interesting activities, such as a point-of-sales solution supporting payments from
cryptocurrency wallets and traditional mobile wallets.
To meet the growing demand for blockchain talent, local FinTech players are working
with universities to nurture homegrown talent. Examples include joint studies
between a local FinTech firm with the Muhammadiyah University of Gresik on the
developments of blockchain in the agriculture sector, and speaking engagements to
raise awareness and interest.
For Indonesia, blockchain holds opportunities beyond economic growth and financial
inclusion, but job creation too.
Key developments
Cryptocurrency regulations
• Malaysia’s financial regulators have taken steps to bring more regulatory clarity regarding
cryptocurrencies, such as the issuance of the Anti-Money Laundering and Counter Financing of Terrorism
Policy for Digital Currencies in February 2018. This is a policy framework for crypto exchange providers
that wish to operate cryptocurrency exchanges in Malaysia. As of November 2018, more than 40
cryptocurrency firms had registered with BNM.
• As of November 2018, the SC was developing a framework to regulate initial coin offerings, set to be
issued in 2019.
Energy industry
• Tenaga National Berhad, the largest electricity utility in Malaysia, is exploring the use of blockchain in
the energy industry
Increase transparency in education certification
• In November 2018, the Ministry of Education Malaysia and six public universities formed a consortium to
create an e-Scroll system, based on NEM blockchain technology, to tackle the increasing number of fake
degrees.
“Blockchain has the potential to help Malaysia increase
transparency and efficiency in many industries including
financial services, energy, and agriculture.“
Malaysia Many Malaysianentities are researching the potentialof blockchainand testing its viability
to perform variousfunctions includingIslamic banking,supplychain,
and crowdfunding.
The Securities Commission(SC)has rolledout a blockchainpilotto increase transparency
and efficiency in regulatoryreporting,and for smart contracts in the unlisted and over-the-
counter markets. As of March 2018,banks are collaborating todevelopblockchain
applicationsfor trade finance. In October2018,a Malaysia-basedFinTech startup
conducted their firstcross-bordertransaction between Malaysia and Spain,based on Ripple
blockchain,which is a providerof enterpriseblockchainsolutionsfor payments. In
November2018,a Malaysia-basedbank joinedthe Ripplenetwork,RippleNet, toenable
instant and low-costcross-borderpayments.
Besides financial services, blockchaincan be appliedto improvetransparency in energy
and agriculture. Blockchaincan improvethe transparency in energy transactions, and thus
encourage the productionand usage of renewableenergy by enablingconsumers to buy
directlyfrom the source. Buyers can even connect with privatesolar panel owners to buy
their excess electricity.
Agriculturecontributedto 8.1%and palm oilcontributed43.1%to the country’sGDP in
2016.Placingcertificationsfor palm oil on blockchainallows sellers and consumers to track
the source and monitorall transactions along the palm oilsupplychain. This enables the
governmentto track whether the palm oilcomes from sustainablesources, and regulate
these practices to be more sustainable.
To nurture blockchaintalent, universitiesand the privatesector are cooperatingto develop
blockchaincourses. In July 2018,the NEM BlockchainCentre was set up in Malaysia as a
learning center, incubatorand accelerator for blockchain-relatedstartups.
10 | Is it time to industrialize blockchain?
Key developments
Crypto Valley of Asia
• In August 2018, the government announced their plans to build a new fintech and crypto hub at Philippines’
Cagayan Special Economic Zone and Freeport (CSEZFP) alongside private developers.
• Dubbed the Crypto Valley of Asia, the hub is expected to generate employment for business process outsourcing
service providers of the global FinTech and crypto currency sectors.
Encouraging blockchain innovation among students
• On October, 2018, a local university and health-tech startup started a lab to generate programs and studies
to find solutions in sectors such as health care, education, transportation, agriculture, disaster response,
governance and legal affairs.
Improving efficiency in domestic remittances
• A local bank has launched a pilot to introduce a domestic remittance network using tokens on a private
blockchain platform with the aim of helping rural institutions drive operational efficiencies and save costs in
accepting and processing domestic remittances.
• The pilot was launched with five rural bank participants in early June 2018, and there are plans to onboard
many more rural banks. The project is a stepping stone for the introduction of more sophisticated financial
services.
Is it time to industrialize blockchain? | 11
“Blockchain has the potential to help Philippines’ remittance
services to be faster and more efficient, increase financial
inclusion and transparency in business transactions.”
Philippines As an archipelago, the citizens’ access to financial services is fragmented.
Moreover, a large percentage of its population is working in a different state or
overseas. This naturally creates a very strong demand for remittance services,
where Blockchain could help make these transactions faster and more efficient.
Blockchain is also expected to increase transparency. In November 2018, Budget
Secretary Benjamin Diokno said the Philippines will use blockchain in its
procurement process, adding that such a system will be “secure and less
expensive compared to a big data system.”
The Blockchain Association of the Philippines (BAP) was established in May 2018.
Its purpose is to introduce, educate, connect businesses, government and
academia to the potential of distributed ledger technology (DLT) in order to build a
thriving digital future for the Philippines.
Regulators have become more open to cryptocurrency investments such as initial
coin offerings (ICO) over time. Earlier in January this year, the Philippines
Securities and Exchange Commission (SEC) filed a cease-and-desist order against
an ICO issuance, and in March, the BSP bank did not endorse privately-issued
cryptocurrencies as a currency or investment instrument. However, in August
2018, the SEC released the proposed rules to govern ICO registration.
Blockchain startups in the Philippines are active in many other sectors such as real
estate trading, customer loyalty, and gaming.
In order to better meet the demand for talent in blockchain, technology companies
and universities are collaborating to increase awareness and encourage students
to create innovations using blockchain.
12 | Is it time to industrialize blockchain?
“Blockchain holds much potential value for Singaporean
government and businesses, which are exploring the use of the
technology in many areas including shipping, supply chain, health
care, financial services and more.”
Singapore Singapore could benefit from using blockchain in shipping to maintain its
competitiveness as a global shipping hub. In addition, blockchain has the potential to
enhance the supply chain and financial services.
The government has shown support for the technology through multiple initiatives.
The Port Authority of Singapore, the Economic Development Board, and the Monetary
Authority of Singapore are working with a technology company to develop blockchain
applications and solutions. Another initiative is by the Infocomm Media Development
Authority, which announced that it would give seed funding for industry players to
implement engagement platforms to grow the blockchain ecosystem in Singapore
through community engagement initiatives.
Businesses across many sectors of the economy are exploring the use of blockchain. In
November 2018, a financial institution announced that it has developed a blockchain
platform in collaboration with blockchain provider, to improve the speed at which a
global agri-commodity trading company and its vendors can transact and finance their
cross-border trades.
In May 2017, an education institution ran a pilot blockchain program to award
academic certificates to students, in partnership with a digital certificate provider.
Blockchain distribution of academic certificates ensures that digital certificates cannot
be tampered with and enables potential employers and universities to spend less time
manually verifying a candidate’s credentials.
Blockchain startups in Singapore are involved in multiple areas such as financial
services, data storage, and retail. Demand for blockchain talent has been growing. To
better meet this demand, universities have started offering courses on blockchain.
Key developments
Clearance and settlement of payments and securities
• Monetary Authority of Singapore (MAS) is partnering with a distributed ledger technology (DLT) company to
explore the use of DLT for payments and securities clearance and settlement.
• As of November 2018, the second phase of the project has concluded, demonstrating that delivery versus payment
(DvP) settlement finality, inter-ledger interoperability and investor protection can be achieved through specific
solutions designed and built on blockchain technology.
• The next phase of the project will focus on new methods to conduct cross-border payments using central bank
digital currency.
Health database
• In July 2018, Singapore government-owned technology firm announced its investments in a decentralized
health data platform, which uses blockchain, artificial intelligence and database management system
technologies, to better manage patients’ data and enable better diagnoses.
Global Trade Connectivity Network
• In November 2017, MAS and the Hong Kong Monetary Authority exchanged a Memorandum of
Understanding in Singapore to jointly develop the Global Trade Connectivity Network.
• This is a cross-border infrastructure based on DLT, to digitalize trade and trade finance between
the two cities, with the potential to expand the network in the region or globally. The GTCN is
expected to go live by early 2019.
Photo credit: Singapore Tourism Board
Key developments
P2P energy trading
• Companies are using blockchain to help homeowners profit from their own rooftop solar systems
• Blockchain will enable energy trading to be easier and more transparent, which will in turn lower costs and a
smaller carbon footprint due to better management of renewable energy.
Central Bank Digital Currency
• In August 2018, a collaboration of 8 banks and a technology company announced the launch of Project
Inthanon, to design and develop a proof-of-concept prototype for wholesale funds transfer by issuing
wholesale Central Bank Digital Currency (Wholesale CBDC).
• The CBDC is develop by the central bank to enable quicker and cheaper settlements between banks on the
domestic interbanking system using the digital token.
Cryptocurrency regulations
• In June 2018, The Securities and Exchange Commission (SEC) announced supervision details for market
participants involved in the digital asset trade, and allows seven cryptocurrencies, used for initial coin offerings
(ICOs), to be traded as trading pairs.
• All market participants in a digital asset trade are required to register with the SEC and must also receive the
Finance Ministry's approval to conduct digital asset business.
Is it time to industrialize blockchain? | 13
“Blockchain has the potential to increase the accuracy and
efficiency of record keeping, increase transparency in
government operations in Thailand. It also enhances supply
chain operations, generates cost savings and speed up financial
services, especially for small and medium enterprises (SMEs).”
Thailand The Thailand government is exploring the use of blockchain in multiple areas.
Financial regulators have taken steps to bring more legal clarity regarding
cryptocurrencies.
Companies in multiple sectors are exploring the use of blockchain. In July 2018, one
of the largest operators of movie theaters in Thailand announced its cooperation
with a payment company to build a digital payment ecosystem for consumer
purchases using cryptocurrency.
In August 2018, a local bank and a cement producer are developing their supply
chain on the blockchain. Their aim is to use the technology to increase flow
efficiency, improve credibility and data transparency between businesses, and to
also help SME-sized suppliers gain better access to financing.
In October 2018, a fintech subsidiary of a local bank announced that it had produced
a procure-to-pay blockchain solution to streamline purchasing processes, payments,
and financing for Thai businesses. Blockchain technology will reduce invoice
financing time and provide security and traceability to combat fraud, while also
supporting Thailand’s e-tax invoice initiative.
Thai blockchain startups operate in diverse fields including investment, payment,
lending, identity management. The government has encouraged the growth of local
and foreign startups in blockchain, which has caused demand for talent to exceed
the supply. Some universities have started offering classes in blockchain and
carrying out blockchain research projects with the government or private sector.
Key developments
Agricultural produce traceability
• A blockchain company launched a fresh produce traceability solution that provides real-time information on
production, packaging, shipping, and consumption to customers. A pilot project was being conducted with
mangoes produced in the Dong Thap province in October 2018.
Settlement
• In July 2018, the National Payment Corporation of Vietnam, the country’s unified card switching center,
together with VietinBank, VIB and TPBank announced the successful completion of their pilot project for
money transfers using blockchain.
Encouraging blockchain innovation
• A 36-hour blockathon was held in Hanoi and Ho Chi Minh City in late 2017 and early 2018 as part of the FinTech
Challenge Vietnam. Co-organized by Mekong Business Initiative, and the Fintech Club Vietnam, the event
participants received mentoring, a week of intensive blockchain training, and a chance to win a cash prize and
incubation opportunities.
“In Vietnam, blockchain has the potential to ensure accurate
record keeping, significantly improve coverage of financial
services, and increase transparency in supply chain.”
Vietnam Vietnam is a big exporter of agricultural products. Vietnam’s Ministry of
Agriculture and Rural Development estimates that the total value of agricultural
products exported in the first four months of 2018 was about US$6.5b, up 11.9%
year-on-year.
A major problem that the sector faces is a lack of transparency and traceability in
the supply chain, which can have negative repercussions on the reputation of
Vietnamese brands. Traceability helps to verify product origins and allows brands
to regain consumer trust and increase loyalty.
In terms of financial inclusion, in 2017, only 31% of adults in Vietnam have bank
accounts. However, the population is young, with a median age of 30.9, and tech-
savvy. As of January 2018, 72% of the population were smartphone users and 64%
accessed the internet through their mobile phones. There are opportunities to
bring the underbanked into the fold through app-based blockchain financial
services.
As well, numerous industries, including finance and ecommerce, are exploring the
use of blockchain. In June 2018, the Vietnam E-Commerce Association launched
the Vietnam Blockchain Chapter (Vietblockchain), which aims at raising awareness
and conducting training for students, the business community and startups. It will
also work with regulators and policy-makers to create policies and legal norms that
support the R&D and application of blockchain technology in Vietnam. With a
populous tech talent pool, Vietnam is a popular destination of outsourcing,
producing blockchain applications for foreign investors.
As well, local blockchain startups are active in many areas including remittance,
cryptocurrency exchange, commodity trading and agriculture. An example is the
signing of a memorandum of understanding between a Vietnam startup and the
Laos Ministry of Science and Technology to deploy digital identity.
From finance and investment, health care data management, agricultural produce
supply chain through to e-government, there are opportunities to enhance the
economic growth and investment of Vietnam through blockchain.
14 | Is it time to industrialize blockchain?
proposed blockchain use cases. This clearly outlines the need
for having some conditions which need to be fulfilled in order to
move forward with a potential use case. These conditions can
act as a filter to sieve out apt projects from the irrelevant ones.
A five- point test that EY applies for assessing the fit of blockchain
for a particular process includes the followingquestions:
Are there multiple
parties in this
ecosystem?
Blockchains get
more securewith
more parties
in the network;
one participant
networks are not
especially secure.
Is establishing
trust between
all the partiesan
issue?
Blockchains
improve trust
between
participants by
havingmultiple
points of
verification.
Blockchains (both public ones and permissioned) carry great
promise for cross-sector applications —but before you jump into
the ‘blockchain circus,’ ask yourself: do you actually need a
blockchain?
A CEO of an open platform blockchain technology company
says: “The vast majority of the projects that his organization
received can be perfectly implemented in the traditional
relational database.” The age-old phrase “if it ain’t broke, don’t
fix it,” comes to mind when assessing the applicability of some
1 2
Is it critical to
have a tamper-
proof permanent
record of
transactions?
Blockchains create
permanentrecords
that cannot be
edited or deleted.
3
Are we securing
the ownership or
management of
a finiteresource?
Core logic in the
system isdesigned
to prevent double
counting ofassets,
record ownership,
and transfers.
4
Does this
ecosystem benefit
from improved
transparency?
Blockchains are
transparent by
design — where
ownership orcontrol
of assets is public
and transparent
by design.
5
Making it real4
Is it time to industrialize blockchain? | 15
Are you ready?
The time has come for blockchain to move from a niche sector
play to reshape how entire industries work. EY is a blockchain
technology leader. The EY teams understand the implications of a
distributed world, and have been helping EY clients strategically
plan and implement blockchain solutions across industries. More
than 50 EY clients in 15countries have already signed blockchain
agreements in industries ranging from logistics and consumer
packaged goods, to banking. EY teams are building and
designing a number of blockchain platforms to support
industry processes, and operations platforms with patent-
pending applications of blockchain technology.
EY blockchain solution platforms: keyofferings
Consulting
services
Assurance,
tax and
compliance
Product
development
Research
Four key
components
of service
strategy
8
7
Business
partner
onboarding
Securitization
and initialcoin
offering (ICO)
registration
Custom
blockchain
software
development
Help
implement
third-party
solutions
Implementing
EY-developed
services
Risk
management
and security
assessments
Blockchain
strategy
andoperations
consulting
Tax services
and strategyfor
securities
4
3
1 2
Service
offerings
6 5
Product
traceability
End-to-endsupply
chain platform
Fractional
ownership forcars
and heavy asset
Digital rights
and royalties
management
Automatedmarine
insurance
Continuousaudit
services
Governmentand
public sector
User and entityID
on thenetwork
Fractional
ownership
Royalties
management
Automated
recording
Bitcoinaudit
systems
Financial and
reporting
reconciliation
Production
Pilot
Development
Design
Directed buy
procurement
Smart
asset(IoT)
management
Rights
management
Automated
claims
Blockchain
controls
ERP
integration
ERP
integration
Cargo
integration
Blockchain
audits
Advanced
analytics
Inventory
management
Document and
legalcontracts
Vat, and
global trade
and Tax
Client
onboarding
OpsChain
Tesseract
Right and
royalties
managements
Maritime
insurance
Audit and
assurance
Public
financial
management
Identity
management
Blockchainsolutionplatforms
Supporting
Solutions
ERP — Enterprise
resource planning
16 | Is it time to industrialize blockchain?
Note: These thought leaderships are available forreference at ey.com
Sources
Further reading
1.
2.
3.
4.
5.
6.
7.
8.
Overview of
blockchainfor
energy and
commodity
trading
Blockchain
How this technology
could impact theCFO
Blockchain and
competitionlaw
piece provides an overviewof what
blockchain is and what the
stakeholdersina blockchaindo.
Let’sstartwithwhyblockchainexists. Fourtechnologiesarebehindblockchain.
Once,blockchain was considered
A transactionbetweenpartiescanonly First, encryptionisa technologythat
a niche technology, andit wastoo function— particularlyifthepartieshasbeenaroundfora longtimeandis early toconsidercompetition-law
repeatedlytransact— if thereistrustanddesignedtoaddresstrust. Forpublic- implications. Today,we knowthe proof of thetransaction. Sincea digital
keyencryption, forexample, which technology should be takenasassetcanbe replicatedmanytimes,a pairspublicandprivatekeys,a person
seriouslyasthe developmentof the transactionofa digitalassetmustensuremaysendanencryptedmessagetoa internetinthe 1990s. This
thought thatreplicationcannotoccurwhenitisrecipientusingtherecipient’spublickey
not intended. Blockchain is a technological (open-source software that scrambles the solution
delivering a concept called a information). Then, using her own unique, “distributed ledger,” which
essentiallyisa privatekey,therecipientcanunscramble
Once this is established,we willthen
way ofmakingsurechangestoanypiece themessage. Thesecondtechnologyis
briefly identifywhetherany actions of informationontheledgercanhappencalleda hash, whichtakesdigitalinput
takenby blockchain stakeholderscould
only by consensusfromtheblockchain andconvertsittoanencrypteddigital
stakeholders. Blockchaincanreplaceandoutput. Thefunctionofa hashistoensure
constitutea breachof competitionlaw. arguablyimproveonexistingmethodsof thatthedigitaloutput, initsjourney
creatingtrustandproof, suchaswhen fromsendertorecipient, hasnot been workingwith
lawyers, notaries,corporatetamperedwith. Thethirdtechnology seals, counterpartagreements,
officialisthechain. Thechaincomprises (government-organized)records, deedsof blocksof
informationthathavebeen saleandcertificatesof authenticity. cryptographicallyvalidated. There
isa
April2018
Law alert
EU competitionlaw
How blockchain is
revolutionizing
supply chain
management
Author:
Paul Brody
EY GlobalInnovationLeader,Blockchain
How blockchain revolutionizes
supply chain management
The power of a blockchain-
enabled supplychain
Integrating blockchain into your
supply chain doesn’t need to be
complex
1
2
3
Is it time to industrialize blockchain? | 17
Varun Mittal
EY Global Emerging
Markets FinTech Lead
varun.mittal@sg.ey.com
Paul Brody
EY Global Blockchain Innovation Leader
paul.brody@ey.com
Chris Lim
Partner, Financial Services Risk
Advisory Singapore
Ernst & Young Advisory Pte. Ltd
chris.lim@sg.ey.com
Desmond Teo
Partner, Financial Services Tax
Singapore
Ernst & Young Solutions LLP
desmond.teo@sg.ey.com
Contacts
Tan Boon Yow
EY Asean and Malaysia IT
Advisory Leader
boon-yow.tan@my.ey.com
Duc Minh Nguyen
Vietnam IT Advisory Leader
duc.minh.nguyen@vn.ey.com
Saravut Sarindu
Thailand IT Advisory Leader
saravut.sarindu@th.ey.com
Awang Arinda
Indonesia IT Advisory Leader
PT Ernst & Young Indonesia
awang.arinda@id.ey.com
Jimmy Ong
EY Asean Blockchain Leader
jimmy.ong@sg.ey.com
Sahil Gupta
Manager
EY Asean FinTech
Ernst & Young Solutions Pte. Ltd.
sahil.gupta@sg.ey.com
18 | Is it time to industrialize blockchain?
EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
deliver help build trust and confidence in the capital
markets and in economies the world over. We develop
outstanding leaders who team to deliver on our
promises to all of our stakeholders. In so doing,
we playa critical role in building a better working world
for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to
one or more, of the member firms of Ernst & Young
Global Limited, each of which is a separate legal entity.
Ernst & Young Global Limited, a UK company limited
by guarantee, does not provide services to clients.
For more information about our organization,
please visit ey.com.
© 2018 Ernst & Young Advisory Pte. Ltd..
All Rights Reserved.
EYG no. 012581-18Gbl
ED None
Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in
Singapore under the Limited Liability Partnerships Act (Chapter 163A).
This material has been prepared for general informational purposes only and is
not intended to be relied upon as accounting, tax or other professional advice. Please refer to
your advisors for specific advice
ey.com

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Industrializing Blockchain in ASEAN

  • 1. Industrializing blockchain in ASEAN Unlocking the potential of blockchain across organizations
  • 2. 2 | Is it time to industrialize blockchain? Databases are integral to all industries, and typically, organizations having their own databases and associated systems, govern us. Whether it is banking, health care or telecommunications, there are systems in place, governing our actions andresponses. However,the only means of ensuring the veracity of the data in such databases, is to have a trusted middleman who can act as the bridge. The reality is, while the idea of middlemen may not be appealing, they are essential for seamless transactions to happen. For instance, if we cast a casual eye at the global supply chain, we would see that it is a set of extensive systems with several product components moving across a network of connected and reliable intermediaries. However,the advent of bitcoin blockchain has transformed the way businesses, specifically the financial services (FS) sector,think about payment transactions. The initial FS success has proven that blockchain technology can work at a global scale, to reduce the need of middlemen in a whole range of business processes and transactions. Little wonder then, that the level of interest, activity and investment now being seen across FS and other industries is a clear indicator of belief in the technology’s potential. What lies ahead for ASEAN? ASEAN has a population of over 600 million and continues to thrive as one of the fastest-growing regions globally. ASEAN countries are at different phases of their economic development, which creates opportunities for local governments and businesses to explore diverse use cases for blockchain. Industries that are exploring the use of blockchain includes financial services, supply chain and health care to improve transparency and efficiency. After providing an overview of blockchain applications all over the world, the report will deep dive into the blockchain landscape in six ASEAN countries, identifying the general trends and key local developments. We hope the report will provide you a better understanding of the implications of blockchain and get the conversation started on how this technology can solve issues and enhance lives. Foreword Paul Brody Partner EY GlobalBlockchain InnovationLeader paul.brody@ey.com Jimmy Ong Partner Singapore IT Advisory Leader EY Singapore jimmy.ong@sg.ey.com
  • 3. Is it time to industrialize blockchain? | 3 Contents 4 Blockchain implications understood 15 Making it real 5 What next for blockchains in the enterprise? 16 Are you ready? 8Making the choice to lead therace
  • 4. 4 | Is it time to industrialize blockchain? Distributed ledger technology (DLT), most notably blockchain — a type of database that records an ongoing list of tamper-proof records, or “blocks,” has already caughtthe imaginations of executives in almost all types of industries and governments across the globe. Given the extraordinary amount of attention the technology has received, it is not hype to say that the value creation opportunity is huge and the possibilities of future applications are many. Like 3D printing, the sharing economy and the Internet of Things (IoT), blockchain holds huge potential to disrupt any industry, creating a world where people get to participate in the value they create. During 2017, private blockchain and blockchain-related companies raised over US$5.5b,¹ and approximately one-fifth of the capital was sourced from venture capitalists. Blockchain has the potential to evolve into a core, underlying element in the technology “stacks” of various industries as diverse as FS, energy, agriculture, and the government and public sector(GPS). Promising developments In less than a decade, the technology has quickly become a fixation in many industries, for example, FS, as a result of its potential to revolutionize and transform our thinking about data sharing and security, partially inreaction to bitcoin (the cryptocurrency that is an application running on the first public blockchain). From a purely technological standpoint, bitcoin was an attempt to completely disrupt peer-to-peer payments,without the need for a trusted authority (i.e., a financial institution). As the technology that supports bitcoin, blockchain has attracted a much wider range of supporters, and the resulting knowledge is being applied to many other proof-of-concept projects in a whole range of business processes andtransactions. For instance, in the energy sector, a start-up is developing an ecosystem wherein customers can pay for electricity in real time, directly from distributed energy providers. Another blockchain start-up is currently developing a traceability protocol to track the provenance of anything, from coffee beans to a roll of fabric. Opportunities to drive efficiencies in public servicedelivery, reduce costs and improve transparency have caught the attention of governments too. A series of innovative pilot programs in Sweden, Estonia and the United Arab Emirates (UAE) indicate the potential for governments to leverage the power ofblockchain in a way that redefines their role and their relationship to businesses, citizens and even the rest of theworld. “To date, blockchain has transformed only people’s thinking. We don’t yet evenknow all the questions blockchain technology will raise, much less the answers. But waiting for the technology to take hold is too late. Now is the time to start defining the questions and influencing policy that will lead to answers.” Channing Flynn EY Global Technology Sector Leader, Tax Services We are at a phase where blockchain is no more a novel technology, but is rather, seen as integral to digital enterprises; this is a clear indication that enterprises are now focusing on research and development, but are still a long way from adoption at scale. Therefore, the question remains as to where and when profound impacts will be seen. Blockchain implications understood1
  • 5. Is it time to industrialize blockchain? | 5 Understanding blockchain technology — public, private andhybrid Based on the participants, blockchains are categorized as public, private or hybrid. This is similar to comparing the public internet and a company’sintranet. • Public and permission-less: Public and permission-less blockchains resemble bitcoin, the original blockchain. All transactions in these blockchains are public, and no permissions are required to join these distributed entities (examples: ethereum, bitcoin). • Private and permissioned: These blockchains are limited to designated members, transactions are private, and permission from an owner or manager entity is required to join this network. These are often used by private consortia to manage industry value chain opportunities (examples: Ripple, R3). • Hybrid blockchains: An additional area is the emerging concept of sidechain, which allows for different blockchains (public or private) to communicate with each other, enabling transactions between participants across blockchain networks (example: ROOTblockchain). Numerous surveys have given us indications about the industries having the most number of blockchain applications. Undeniably, FS (an industry where trust is a prime concern), in which cross- border payments and settlements stand out, leads the way, as can be seen in the graph from a recent International Data Corporation (IDC) report on global blockchain spending in2017. However,this hype on the FS side does not correspond to similar interest from corporations, in realizing true value from blockchains where decentralization and interoperability are the key elements. Enterprises are still conducting trials around blockchain applications operating like distributed databases and notary services, often with very specialized supply chain objectives, such as verifying the origin and authenticity of a product as it moves across the value chain, capturing information about all inputs of a product, enabling accurate visibility and traceability into the history of a product, and soon. Global blockchain spend in 2017:US$945m “This is a useful start, but if we are not careful, it could be a dead end — a fancy, hacker-proof database, where the software company has replaced the central bank as the intermediary of choice. Todeliver on the full promise of blockchain technology, we believe that enterprises must embrace the fullpower of tokenization, and ultimately, the allure of the public network. And, 2018 is the year that this will come into view as the future of thistechnology.” Paul Brody EY Global Blockchain Innovation Leader Cross-border payments and settlement Lot lineage orprovenance Trade finance and post-trade or transaction settlements Regulatorycompliance Asset or goodsmanagement Identitymanagement $0 $60 $120 Note: Global blockchain spending 2017 (US$m) — top six use cases. Source: IDC.2 What next for blockchains inthe enterprise?2
  • 6. 6 | Is it time to industrialize blockchain? The foundation of this high-value future is the concept of tokenization: the process of embedding data related to a real-world asset on a digital token stored on a blockchain — not merely as items of information, but as carriers ofvalue. Understanding smart contracts Smart contracts are bits of executable code that are triggered when the conditions are right within a blockchain. The advantage of blockchain-based contracts is that they bring down the level of manual intervention in creating, executing and enforcing acontract, thereby lowering its cost, while raising the assurance of the execution and enforcement processes. By automating a transaction in a fully verifiable framework (the blockchain),the transactions can have legal validity even at high frequency — a key enabler for network balancing. Valueforenterprise Time New normal: enterprisevision Notarization • Blockchains operating like distributed databases and notary services • Not optimized for business transactions — unstructured data, against which it ishard to deliver services Blockchain implementations are still about timestamping and synchronizing information: Products provenance Full-cycle economic blockchain • Shift from notarization and synchronization,to tokenization • Possible to execute full-cycle economic contracts between participants on a blockchain, with tokenization Products and services tokenized and exchanged through digital smart contracts for digital currencytokens A closed-loop, tokenized industrial blockchain Tokenized fiat currency + Tokenized products and services “Purist” enterprise blockchain • Moving toward a public blockchain: future orlarge, regional or sector-specific networks that are public,is more likely • Decentralization, interoperability and independent securitybeing the key for enterprises to realize true value Gradual emergence of public blockchain tobe the preferred ecosystem for digital transactions An open andtransparent regional blockchain Tokenized fiat currency + Tokenized productsand services The first stage will be the development of a full-cycle economic blockchain, where products and services are tokenized and exchanged through smart contracts, and value exchanged via traditional fiat tokens. See example below for tokenization of “mobile phoneassets,” as they move across the valuechain. In the example illustrated, when these mobile phones are delivered, value in blockchain can change hands, but in tokenized fiat currencies, say US dollar tokens, or Euros or Yen for that matter.This means, traditional fiat currency is tokenizedin the same way assets are tokenized.And central banks have already started experimenting with tokenizing fiat currencies. These discussions are centered in Northern Europe, and Sweden’s Riksbank might be the first financial institution moving ahead to substitute or complement cash with digital currency. But tests and research are being done all over the world, from China to Canada, and from Singapore to Saudi Arabia and the UAE. There is no doubt that if we did see a major central bank issue a digital currency, the impact could be vast. While such progress is encouraging, the next step is to create a robust regulatory infrastructure that enables the tokenization of fiat currency on any closed-loop industrial blockchain. Today’s enterprise blockchain applications Moving toward “realapplications” This high-value future will have two clearstages:
  • 7. Is it time to industrialize blockchain? | 7 The gradually increasing preference for public blockchain for enterprise transactions represents Stage 2 of this high-value future. This would enable secure trading of objects that can be digitized, onto the blockchain. A look at the token history can provide information such as customs declaration, tax calculations, product provenance and all related spending. Besides, itis not necessary to have different blockchains for trade finance, payments or product provenance. Collaboration across industries is the key to success here, because the technology becomes exponentially more powerful as more organizations start using it, resulting in networkeffects. Historically, most industries have tended to dismiss open source blockchains. This is unsustainable, as large companies seek to build overlapping, parallel private networks that work in silos and require a lot of integration. However,we are starting to see a shift in attitude toward this, with the banking industry leading the way forward. A recent survey reveals that 86% of the banking executives believe that public blockchains will gain greater prominence over the next five years.3 The shift in thinking can be attributed to the increasing awareness of public blockchains such as Ethereum,and the “big leap” innovations this could bring. Raw materials Manufacture Transport Warehouse Sell Support • Transferto a retailer • Transfer ownershipfirst to retailer and then to end customer • Build true end-to-end traceability for producthistory The flow ofprodu • Purchaseraw materials to build aphone • Createdigital tokens to represent those assets ct across thenetwor • Integrate items together into manufacturing output • New digital token incorporates thematerials k is represented in th • Putfinished goods into anin-transit status e blockchain … • Move into warehouse with a distributor • Unload containerand truck … and it is matched by a similar flow of financial tokens in the other direction on the same blockchain. Nonetheless, we believe public blockchain networks should not be dismissed as the longer-term solution for applications requiring data privacy and scalability. As developers expand protocol and framework offerings on public blockchains, we believe this would create a network effect, such as the interaction of various ecosystems, which will ultimately lead enterprisesforward. However,right now, there are a few obstacles standing in the way of this transformation. Privacy For enterprises to feel secure that their strategic transactions are secure, privacy tools needto be matured (creation of privacy options, such as zkSNARKs, or new protocols, such as Enigma, are in the works). Legal challenges Beyond privacy, there are legal challenges that need to be addressed as well, including know yourcustomer (KYC) and anti-money laundering (AML) rules for instance. KYC and AML procedures will beautomated as developed countries start using digital identities. For example, Estonia’s e-residency project is already underway, and it willpositively influence the opportunities for tokenization. Lack of a standardized system The third obstacle to tokenization is the lack of a standardized system for carrying out transactions — just like every company is now using its own accounting and reporting systems.We believe these are challenges that can be addressed with the development of a global technical standard for integration into business.
  • 8. 8 | Is it time to industrialize blockchain? As public blockchains achieve enterprise-grade scalability and privacy, we believe blockchain will be at the core of several viable business models that extend well beyond today’s more narrow understanding of cryptocurrency, including exchanges and supply chain systems. Industries are waking up to the need to “make the choice and lead the blockchain race” or be left behind. This is evidenced by a recent IDC report on global spending on blockchain, which forecasts a US$9.7b spending by2021.2 Early pilots are already under way in many industries, as mentioned in our overview. FS Blockchain projects — whileperhaps the most numerous — are notnecessarily the most advanced in terms of development and production. Their first pilots, such as transferring equities or other financial instruments in blockchain environments, tend to focus on exploring ways that drive cost out of business processes, by making transactions more efficient. Also, this could be partly because of the intense regulatory measures and high risk involved in the FS industry, as one mistake can lead to major consequences. While these may be highly valuable uses, there is perhaps more room to experiment with real-world applications, such as consumer products and manufacturing, with finance embedded directly into the natural activities occurring within those markets. “The long-term blockchain vision is of markets that run by themselves, with finance embedded directly into the natural activities occurring within those markets. In such an environment, the finance industry will look very different than it does today.” Angus Champion de Crespigny FS Blockchain and Distributed Infrastructure Strategy Leader,Ernst & Young LLP(US) Global blockchain spend by sector,2016–21 Source:IDC.² Note: Bubble size represents size of opportunity in US$m in 2017 Share of spending Legend: CAGR: compoundannual growthrate u 2016–21CAGR 75% 0% 10% 20% 30% 40% 50% 86% 85% 84% 83% 82% 81% 80% 79% 78% 77% 76% Making the choice to lead therace3 Manufacturing andreso rces Distributio n andservices Financial Publicsector Infrastruct ure
  • 9. Key developments Blockchain for voting • In April 2018, an Australian blockchain company partnered 96 million-member socio-religious organization Nahdlatul Ulama to implement a community voter platform in Sumatra for the regional and national government elections. • Beyond voting, the platform also provides services including digital banking facilities. Improving productivity in agriculture • A blockchain-based data exchange platform provides data on geo-tagging, field activities, weather and land, satellite and market information to farmers. Farmers receive reward points for data they provide, which can be used to redeem a discount on agricultural necessities. There were 3,000 farmer participants by July 2018. • In November 2018, the company announced cooperation with a global blockchain technology solutions developer to jointly deploy blockchain-based point-of-sales devices to farmers to facilitate data collection and financial inclusion. Ensure transparency, sustainability in fishing • Indonesia is a major tuna producer, ideal for using blockchain to increase transparency in supply chains and mitigate overfishing. • A blockchain startup conducted a 6-month pilot in 2016, where traditional fisherman sent text messages to register a catch, creating a new asset on the blockchain. This allowed the tracking of audit information to prove that fishes were caught legally and sustainably. Is it time to industrialize blockchain? | 9 “Blockchain has the potential to help Indonesia, which has a large and scattered population, to increase efficiency in record keeping and transparency in government operations, as well as financial inclusion, and productivity and sustainability in agriculture.” Indonesia Indonesia is the third-largest island country, with over 14,000 islands across the archipelago. It is also the largest economy in Southeast Asia, with a population of 262 million. Given its vast population and geographic distribution, blockchain holds the potential for Indonesia to keep accurate records and increase transparency in government operations. This includes tax, voting and distribution of government subsidies. Understandably, the Indonesia Government has shown willingness to explore blockchain applications. The Financial Services Authority has a dedicated team to study how blockchain can help the finance industry. In August 2018, the Indonesia Blockchain Hub was launched from a partnership between the Indonesia Chamber of Commerce (KADIN), the Indonesia Blockchain Association, Creative Economy Agency (BEKRAF), and a blockchain-based agritech startup. Blockchain can increase financial inclusion by providing cheaper and faster services to consumers. Hence, private sector players, particularly those in financial services, are experimenting with blockchain. In October 2017, five leading banks collaborated on the development and deployment of a blockchain solution to reduce settlement time and cost of completing global payments. In May 2018, Bank Negara Indonesia signed a Memorandum of Understanding with a FinTech startup to use blockchain to improve performance of trade finance and remittance products. Besides cryptocurrency exchanges, blockchain startups in Indonesia are running interesting activities, such as a point-of-sales solution supporting payments from cryptocurrency wallets and traditional mobile wallets. To meet the growing demand for blockchain talent, local FinTech players are working with universities to nurture homegrown talent. Examples include joint studies between a local FinTech firm with the Muhammadiyah University of Gresik on the developments of blockchain in the agriculture sector, and speaking engagements to raise awareness and interest. For Indonesia, blockchain holds opportunities beyond economic growth and financial inclusion, but job creation too.
  • 10. Key developments Cryptocurrency regulations • Malaysia’s financial regulators have taken steps to bring more regulatory clarity regarding cryptocurrencies, such as the issuance of the Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies in February 2018. This is a policy framework for crypto exchange providers that wish to operate cryptocurrency exchanges in Malaysia. As of November 2018, more than 40 cryptocurrency firms had registered with BNM. • As of November 2018, the SC was developing a framework to regulate initial coin offerings, set to be issued in 2019. Energy industry • Tenaga National Berhad, the largest electricity utility in Malaysia, is exploring the use of blockchain in the energy industry Increase transparency in education certification • In November 2018, the Ministry of Education Malaysia and six public universities formed a consortium to create an e-Scroll system, based on NEM blockchain technology, to tackle the increasing number of fake degrees. “Blockchain has the potential to help Malaysia increase transparency and efficiency in many industries including financial services, energy, and agriculture.“ Malaysia Many Malaysianentities are researching the potentialof blockchainand testing its viability to perform variousfunctions includingIslamic banking,supplychain, and crowdfunding. The Securities Commission(SC)has rolledout a blockchainpilotto increase transparency and efficiency in regulatoryreporting,and for smart contracts in the unlisted and over-the- counter markets. As of March 2018,banks are collaborating todevelopblockchain applicationsfor trade finance. In October2018,a Malaysia-basedFinTech startup conducted their firstcross-bordertransaction between Malaysia and Spain,based on Ripple blockchain,which is a providerof enterpriseblockchainsolutionsfor payments. In November2018,a Malaysia-basedbank joinedthe Ripplenetwork,RippleNet, toenable instant and low-costcross-borderpayments. Besides financial services, blockchaincan be appliedto improvetransparency in energy and agriculture. Blockchaincan improvethe transparency in energy transactions, and thus encourage the productionand usage of renewableenergy by enablingconsumers to buy directlyfrom the source. Buyers can even connect with privatesolar panel owners to buy their excess electricity. Agriculturecontributedto 8.1%and palm oilcontributed43.1%to the country’sGDP in 2016.Placingcertificationsfor palm oil on blockchainallows sellers and consumers to track the source and monitorall transactions along the palm oilsupplychain. This enables the governmentto track whether the palm oilcomes from sustainablesources, and regulate these practices to be more sustainable. To nurture blockchaintalent, universitiesand the privatesector are cooperatingto develop blockchaincourses. In July 2018,the NEM BlockchainCentre was set up in Malaysia as a learning center, incubatorand accelerator for blockchain-relatedstartups. 10 | Is it time to industrialize blockchain?
  • 11. Key developments Crypto Valley of Asia • In August 2018, the government announced their plans to build a new fintech and crypto hub at Philippines’ Cagayan Special Economic Zone and Freeport (CSEZFP) alongside private developers. • Dubbed the Crypto Valley of Asia, the hub is expected to generate employment for business process outsourcing service providers of the global FinTech and crypto currency sectors. Encouraging blockchain innovation among students • On October, 2018, a local university and health-tech startup started a lab to generate programs and studies to find solutions in sectors such as health care, education, transportation, agriculture, disaster response, governance and legal affairs. Improving efficiency in domestic remittances • A local bank has launched a pilot to introduce a domestic remittance network using tokens on a private blockchain platform with the aim of helping rural institutions drive operational efficiencies and save costs in accepting and processing domestic remittances. • The pilot was launched with five rural bank participants in early June 2018, and there are plans to onboard many more rural banks. The project is a stepping stone for the introduction of more sophisticated financial services. Is it time to industrialize blockchain? | 11 “Blockchain has the potential to help Philippines’ remittance services to be faster and more efficient, increase financial inclusion and transparency in business transactions.” Philippines As an archipelago, the citizens’ access to financial services is fragmented. Moreover, a large percentage of its population is working in a different state or overseas. This naturally creates a very strong demand for remittance services, where Blockchain could help make these transactions faster and more efficient. Blockchain is also expected to increase transparency. In November 2018, Budget Secretary Benjamin Diokno said the Philippines will use blockchain in its procurement process, adding that such a system will be “secure and less expensive compared to a big data system.” The Blockchain Association of the Philippines (BAP) was established in May 2018. Its purpose is to introduce, educate, connect businesses, government and academia to the potential of distributed ledger technology (DLT) in order to build a thriving digital future for the Philippines. Regulators have become more open to cryptocurrency investments such as initial coin offerings (ICO) over time. Earlier in January this year, the Philippines Securities and Exchange Commission (SEC) filed a cease-and-desist order against an ICO issuance, and in March, the BSP bank did not endorse privately-issued cryptocurrencies as a currency or investment instrument. However, in August 2018, the SEC released the proposed rules to govern ICO registration. Blockchain startups in the Philippines are active in many other sectors such as real estate trading, customer loyalty, and gaming. In order to better meet the demand for talent in blockchain, technology companies and universities are collaborating to increase awareness and encourage students to create innovations using blockchain.
  • 12. 12 | Is it time to industrialize blockchain? “Blockchain holds much potential value for Singaporean government and businesses, which are exploring the use of the technology in many areas including shipping, supply chain, health care, financial services and more.” Singapore Singapore could benefit from using blockchain in shipping to maintain its competitiveness as a global shipping hub. In addition, blockchain has the potential to enhance the supply chain and financial services. The government has shown support for the technology through multiple initiatives. The Port Authority of Singapore, the Economic Development Board, and the Monetary Authority of Singapore are working with a technology company to develop blockchain applications and solutions. Another initiative is by the Infocomm Media Development Authority, which announced that it would give seed funding for industry players to implement engagement platforms to grow the blockchain ecosystem in Singapore through community engagement initiatives. Businesses across many sectors of the economy are exploring the use of blockchain. In November 2018, a financial institution announced that it has developed a blockchain platform in collaboration with blockchain provider, to improve the speed at which a global agri-commodity trading company and its vendors can transact and finance their cross-border trades. In May 2017, an education institution ran a pilot blockchain program to award academic certificates to students, in partnership with a digital certificate provider. Blockchain distribution of academic certificates ensures that digital certificates cannot be tampered with and enables potential employers and universities to spend less time manually verifying a candidate’s credentials. Blockchain startups in Singapore are involved in multiple areas such as financial services, data storage, and retail. Demand for blockchain talent has been growing. To better meet this demand, universities have started offering courses on blockchain. Key developments Clearance and settlement of payments and securities • Monetary Authority of Singapore (MAS) is partnering with a distributed ledger technology (DLT) company to explore the use of DLT for payments and securities clearance and settlement. • As of November 2018, the second phase of the project has concluded, demonstrating that delivery versus payment (DvP) settlement finality, inter-ledger interoperability and investor protection can be achieved through specific solutions designed and built on blockchain technology. • The next phase of the project will focus on new methods to conduct cross-border payments using central bank digital currency. Health database • In July 2018, Singapore government-owned technology firm announced its investments in a decentralized health data platform, which uses blockchain, artificial intelligence and database management system technologies, to better manage patients’ data and enable better diagnoses. Global Trade Connectivity Network • In November 2017, MAS and the Hong Kong Monetary Authority exchanged a Memorandum of Understanding in Singapore to jointly develop the Global Trade Connectivity Network. • This is a cross-border infrastructure based on DLT, to digitalize trade and trade finance between the two cities, with the potential to expand the network in the region or globally. The GTCN is expected to go live by early 2019. Photo credit: Singapore Tourism Board
  • 13. Key developments P2P energy trading • Companies are using blockchain to help homeowners profit from their own rooftop solar systems • Blockchain will enable energy trading to be easier and more transparent, which will in turn lower costs and a smaller carbon footprint due to better management of renewable energy. Central Bank Digital Currency • In August 2018, a collaboration of 8 banks and a technology company announced the launch of Project Inthanon, to design and develop a proof-of-concept prototype for wholesale funds transfer by issuing wholesale Central Bank Digital Currency (Wholesale CBDC). • The CBDC is develop by the central bank to enable quicker and cheaper settlements between banks on the domestic interbanking system using the digital token. Cryptocurrency regulations • In June 2018, The Securities and Exchange Commission (SEC) announced supervision details for market participants involved in the digital asset trade, and allows seven cryptocurrencies, used for initial coin offerings (ICOs), to be traded as trading pairs. • All market participants in a digital asset trade are required to register with the SEC and must also receive the Finance Ministry's approval to conduct digital asset business. Is it time to industrialize blockchain? | 13 “Blockchain has the potential to increase the accuracy and efficiency of record keeping, increase transparency in government operations in Thailand. It also enhances supply chain operations, generates cost savings and speed up financial services, especially for small and medium enterprises (SMEs).” Thailand The Thailand government is exploring the use of blockchain in multiple areas. Financial regulators have taken steps to bring more legal clarity regarding cryptocurrencies. Companies in multiple sectors are exploring the use of blockchain. In July 2018, one of the largest operators of movie theaters in Thailand announced its cooperation with a payment company to build a digital payment ecosystem for consumer purchases using cryptocurrency. In August 2018, a local bank and a cement producer are developing their supply chain on the blockchain. Their aim is to use the technology to increase flow efficiency, improve credibility and data transparency between businesses, and to also help SME-sized suppliers gain better access to financing. In October 2018, a fintech subsidiary of a local bank announced that it had produced a procure-to-pay blockchain solution to streamline purchasing processes, payments, and financing for Thai businesses. Blockchain technology will reduce invoice financing time and provide security and traceability to combat fraud, while also supporting Thailand’s e-tax invoice initiative. Thai blockchain startups operate in diverse fields including investment, payment, lending, identity management. The government has encouraged the growth of local and foreign startups in blockchain, which has caused demand for talent to exceed the supply. Some universities have started offering classes in blockchain and carrying out blockchain research projects with the government or private sector.
  • 14. Key developments Agricultural produce traceability • A blockchain company launched a fresh produce traceability solution that provides real-time information on production, packaging, shipping, and consumption to customers. A pilot project was being conducted with mangoes produced in the Dong Thap province in October 2018. Settlement • In July 2018, the National Payment Corporation of Vietnam, the country’s unified card switching center, together with VietinBank, VIB and TPBank announced the successful completion of their pilot project for money transfers using blockchain. Encouraging blockchain innovation • A 36-hour blockathon was held in Hanoi and Ho Chi Minh City in late 2017 and early 2018 as part of the FinTech Challenge Vietnam. Co-organized by Mekong Business Initiative, and the Fintech Club Vietnam, the event participants received mentoring, a week of intensive blockchain training, and a chance to win a cash prize and incubation opportunities. “In Vietnam, blockchain has the potential to ensure accurate record keeping, significantly improve coverage of financial services, and increase transparency in supply chain.” Vietnam Vietnam is a big exporter of agricultural products. Vietnam’s Ministry of Agriculture and Rural Development estimates that the total value of agricultural products exported in the first four months of 2018 was about US$6.5b, up 11.9% year-on-year. A major problem that the sector faces is a lack of transparency and traceability in the supply chain, which can have negative repercussions on the reputation of Vietnamese brands. Traceability helps to verify product origins and allows brands to regain consumer trust and increase loyalty. In terms of financial inclusion, in 2017, only 31% of adults in Vietnam have bank accounts. However, the population is young, with a median age of 30.9, and tech- savvy. As of January 2018, 72% of the population were smartphone users and 64% accessed the internet through their mobile phones. There are opportunities to bring the underbanked into the fold through app-based blockchain financial services. As well, numerous industries, including finance and ecommerce, are exploring the use of blockchain. In June 2018, the Vietnam E-Commerce Association launched the Vietnam Blockchain Chapter (Vietblockchain), which aims at raising awareness and conducting training for students, the business community and startups. It will also work with regulators and policy-makers to create policies and legal norms that support the R&D and application of blockchain technology in Vietnam. With a populous tech talent pool, Vietnam is a popular destination of outsourcing, producing blockchain applications for foreign investors. As well, local blockchain startups are active in many areas including remittance, cryptocurrency exchange, commodity trading and agriculture. An example is the signing of a memorandum of understanding between a Vietnam startup and the Laos Ministry of Science and Technology to deploy digital identity. From finance and investment, health care data management, agricultural produce supply chain through to e-government, there are opportunities to enhance the economic growth and investment of Vietnam through blockchain. 14 | Is it time to industrialize blockchain?
  • 15. proposed blockchain use cases. This clearly outlines the need for having some conditions which need to be fulfilled in order to move forward with a potential use case. These conditions can act as a filter to sieve out apt projects from the irrelevant ones. A five- point test that EY applies for assessing the fit of blockchain for a particular process includes the followingquestions: Are there multiple parties in this ecosystem? Blockchains get more securewith more parties in the network; one participant networks are not especially secure. Is establishing trust between all the partiesan issue? Blockchains improve trust between participants by havingmultiple points of verification. Blockchains (both public ones and permissioned) carry great promise for cross-sector applications —but before you jump into the ‘blockchain circus,’ ask yourself: do you actually need a blockchain? A CEO of an open platform blockchain technology company says: “The vast majority of the projects that his organization received can be perfectly implemented in the traditional relational database.” The age-old phrase “if it ain’t broke, don’t fix it,” comes to mind when assessing the applicability of some 1 2 Is it critical to have a tamper- proof permanent record of transactions? Blockchains create permanentrecords that cannot be edited or deleted. 3 Are we securing the ownership or management of a finiteresource? Core logic in the system isdesigned to prevent double counting ofassets, record ownership, and transfers. 4 Does this ecosystem benefit from improved transparency? Blockchains are transparent by design — where ownership orcontrol of assets is public and transparent by design. 5 Making it real4 Is it time to industrialize blockchain? | 15
  • 16. Are you ready? The time has come for blockchain to move from a niche sector play to reshape how entire industries work. EY is a blockchain technology leader. The EY teams understand the implications of a distributed world, and have been helping EY clients strategically plan and implement blockchain solutions across industries. More than 50 EY clients in 15countries have already signed blockchain agreements in industries ranging from logistics and consumer packaged goods, to banking. EY teams are building and designing a number of blockchain platforms to support industry processes, and operations platforms with patent- pending applications of blockchain technology. EY blockchain solution platforms: keyofferings Consulting services Assurance, tax and compliance Product development Research Four key components of service strategy 8 7 Business partner onboarding Securitization and initialcoin offering (ICO) registration Custom blockchain software development Help implement third-party solutions Implementing EY-developed services Risk management and security assessments Blockchain strategy andoperations consulting Tax services and strategyfor securities 4 3 1 2 Service offerings 6 5 Product traceability End-to-endsupply chain platform Fractional ownership forcars and heavy asset Digital rights and royalties management Automatedmarine insurance Continuousaudit services Governmentand public sector User and entityID on thenetwork Fractional ownership Royalties management Automated recording Bitcoinaudit systems Financial and reporting reconciliation Production Pilot Development Design Directed buy procurement Smart asset(IoT) management Rights management Automated claims Blockchain controls ERP integration ERP integration Cargo integration Blockchain audits Advanced analytics Inventory management Document and legalcontracts Vat, and global trade and Tax Client onboarding OpsChain Tesseract Right and royalties managements Maritime insurance Audit and assurance Public financial management Identity management Blockchainsolutionplatforms Supporting Solutions ERP — Enterprise resource planning 16 | Is it time to industrialize blockchain?
  • 17. Note: These thought leaderships are available forreference at ey.com Sources Further reading 1. 2. 3. 4. 5. 6. 7. 8. Overview of blockchainfor energy and commodity trading Blockchain How this technology could impact theCFO Blockchain and competitionlaw piece provides an overviewof what blockchain is and what the stakeholdersina blockchaindo. Let’sstartwithwhyblockchainexists. Fourtechnologiesarebehindblockchain. Once,blockchain was considered A transactionbetweenpartiescanonly First, encryptionisa technologythat a niche technology, andit wastoo function— particularlyifthepartieshasbeenaroundfora longtimeandis early toconsidercompetition-law repeatedlytransact— if thereistrustanddesignedtoaddresstrust. Forpublic- implications. Today,we knowthe proof of thetransaction. Sincea digital keyencryption, forexample, which technology should be takenasassetcanbe replicatedmanytimes,a pairspublicandprivatekeys,a person seriouslyasthe developmentof the transactionofa digitalassetmustensuremaysendanencryptedmessagetoa internetinthe 1990s. This thought thatreplicationcannotoccurwhenitisrecipientusingtherecipient’spublickey not intended. Blockchain is a technological (open-source software that scrambles the solution delivering a concept called a information). Then, using her own unique, “distributed ledger,” which essentiallyisa privatekey,therecipientcanunscramble Once this is established,we willthen way ofmakingsurechangestoanypiece themessage. Thesecondtechnologyis briefly identifywhetherany actions of informationontheledgercanhappencalleda hash, whichtakesdigitalinput takenby blockchain stakeholderscould only by consensusfromtheblockchain andconvertsittoanencrypteddigital stakeholders. Blockchaincanreplaceandoutput. Thefunctionofa hashistoensure constitutea breachof competitionlaw. arguablyimproveonexistingmethodsof thatthedigitaloutput, initsjourney creatingtrustandproof, suchaswhen fromsendertorecipient, hasnot been workingwith lawyers, notaries,corporatetamperedwith. Thethirdtechnology seals, counterpartagreements, officialisthechain. Thechaincomprises (government-organized)records, deedsof blocksof informationthathavebeen saleandcertificatesof authenticity. cryptographicallyvalidated. There isa April2018 Law alert EU competitionlaw How blockchain is revolutionizing supply chain management Author: Paul Brody EY GlobalInnovationLeader,Blockchain How blockchain revolutionizes supply chain management The power of a blockchain- enabled supplychain Integrating blockchain into your supply chain doesn’t need to be complex 1 2 3 Is it time to industrialize blockchain? | 17
  • 18. Varun Mittal EY Global Emerging Markets FinTech Lead varun.mittal@sg.ey.com Paul Brody EY Global Blockchain Innovation Leader paul.brody@ey.com Chris Lim Partner, Financial Services Risk Advisory Singapore Ernst & Young Advisory Pte. Ltd chris.lim@sg.ey.com Desmond Teo Partner, Financial Services Tax Singapore Ernst & Young Solutions LLP desmond.teo@sg.ey.com Contacts Tan Boon Yow EY Asean and Malaysia IT Advisory Leader boon-yow.tan@my.ey.com Duc Minh Nguyen Vietnam IT Advisory Leader duc.minh.nguyen@vn.ey.com Saravut Sarindu Thailand IT Advisory Leader saravut.sarindu@th.ey.com Awang Arinda Indonesia IT Advisory Leader PT Ernst & Young Indonesia awang.arinda@id.ey.com Jimmy Ong EY Asean Blockchain Leader jimmy.ong@sg.ey.com Sahil Gupta Manager EY Asean FinTech Ernst & Young Solutions Pte. Ltd. sahil.gupta@sg.ey.com 18 | Is it time to industrialize blockchain?
  • 19. EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we playa critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. © 2018 Ernst & Young Advisory Pte. Ltd.. All Rights Reserved. EYG no. 012581-18Gbl ED None Ernst & Young Solutions LLP (UEN T08LL0784H) is a limited liability partnership registered in Singapore under the Limited Liability Partnerships Act (Chapter 163A). This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice ey.com