Promoting cross-border digital trust infrastructure in ASEAN

Against this backdrop, technology companies from Viet Nam and Singapore are jointly piloting a model that applies verifiable digital credentials to the authentication of letters of credit between the banking systems of the two countries. This is an initial step towards establishing a digital trust mechanism that could be scaled up to a wide range of commercial activities across ASEAN.

Adding secure authentication layer to letter-of-credit transactions

Letters of credit are an important payment method in international trade and are governed by the international rules and practices of the International Chamber of Commerce. In practice, however, verifying letters of credit issued by foreign banks still requires multiple rounds of communication and manual cross-checking. As the scale of cross-border transactions grows rapidly, the need to shorten processing times and minimise the risks of forgery and inaccurate information has become increasingly urgent.

The pilot model between Viet Nam and Singapore introduces digital credentials as an additional authentication layer. It does not replace letters of credit and fully preserves the existing business processes and legal responsibilities of the parties involved.

Under the model, the issuing bank continues to carry out procedures in accordance with regulations while also issuing a digital credential confirming the relevant information. Upon receipt of the credential, the partner bank can immediately verify it on a trusted infrastructure to establish its source, check data integrity, and confirm the validity status of the document.

This approach enables the receiving party to cross-check information based on digital evidence without necessarily having to contact the issuing bank directly. The model is expected to reduce manual processing, shorten verification times, and minimise risks in cross-border transactions.

Building key infrastructure layer for ASEAN’s digital economy

The value of the pilot project extends beyond banking operations, opening the possibility of establishing a mechanism through which organisations in different countries can verify information held by one another based on interoperable standards and technical infrastructure.

Assessing this trend from a professional perspective, Chan Wei Jie, a senior executive at Singapore-based technology group TOTM Technologies, said: “As the global economy enters a period of restructuring, with fragmentation becoming increasingly pronounced, it is more important than ever for Southeast Asian countries to strengthen their connectivity and form a unified economic space. To realise this goal, digital trust infrastructure based on self-sovereign digital identities and verifiable credentials will be a core foundation, creating the trust needed for sustainable cross-border trade models to develop.”

As documents, licences and commercial data become increasingly digitalised, the challenge is not simply transmission speed but, more importantly, the ability to verify the origin of information and ensure that it has not been tampered with. Digital credentials cryptographically signed by their issuers enable third parties to conduct independent and immediate verification. Once standardised and widely recognised, they will become a core component of digital trust infrastructure.

Building on the financial pilot, the scope of cooperation is being expanded to areas with high demand for data reconciliation, including digital product passports to support the traceability of imported and exported goods and supply chain transparency as well as research into mechanisms to support cross-border payments between Viet Nam, Singapore, and Indonesia, with a view to eventually expanding them across ASEAN.

While telecommunications infrastructure ensures connectivity and data infrastructure supports storage and utilisation, digital trust infrastructure plays a role in ensuring the authenticity and security of data. For ASEAN, this is a key condition for promoting digital integration, e-commerce, and cross-border data flows, in line with the process of developing the ASEAN Digital Economy Framework Agreement.

Sharing this vision, Nguyen Phu Dung, Chief Executive Officer of Viet Nam-based PILA Technology Company, stressed: “The digital economy of the future will not be built solely on connectivity infrastructure; it must also operate on trusted infrastructure. When digital identities, electronic documents, and data can be securely and reliably verified and recognised, cross-border transactions will become faster, more transparent, and more efficient.”

However, building cross-border digital trust infrastructure is not purely a technological challenge. It requires alignment in technical standards, legal recognition, data governance, and mechanisms for coordination among countries.

The pilot programme for authenticating letters of credit between Viet Nam and Singapore is an important practical test. Once the model proves effective and is scaled up, digital trust infrastructure could become a key driver enabling ASEAN to establish an interconnected, secure, and transparent digital economic space.