Viet Nam has met the conditions and opportunities to establish and develop IFCs. However, experts also recognise that there is no one-size-fits-all model for IFCs in every country, as the choice of model depends on the specific economic and social conditions. Therefore, Viet Nam aims to build IFCs that aligns with its current policies and its unique economic and social circumstances, with the goal of ensuring both the IFCs’ effectiveness and maintaining macroeconomic stability and financial system safety.
Building strong infrastructure foundation
On December 31, 2024, the Government issued Resolution No. 259/NQ-CP approving the action plan for establishing regional and international financial centres in Viet Nam. According to State Bank Governor Nguyen Thi Hong, the establishment of international and regional FCs in Ho Chi Minh City and Da Nang plays a crucial role in the process of development, connecting Viet Nam to the global financial market, attracting foreign financial institutions, creating new investment resources, and enhancing Viet Nam's role, stature, and prestige on the international stage.
Recognising that the development of capital markets and money-banking markets is a crucial foundational element for establishing IFCs, the State Bank of Viet Nam has been researching the implementation of policies and roadmaps for foreign exchange operations, the development of the money market, and banking... within the IFC framework to attract foreign investment; with a view to developing the IFCs in accordance with international standards while being suitable for Viet Nam’s practical realities.
Nguyen Duc Long, Director of the Credit Institutions Safety Department (State Bank of Viet Nam), noted that the establishment of IFCs is a major and complex undertaking for Viet Nam. There are various ways and conditions for establishing IFCs in other countries, but for Viet Nam, the establishment of the IFCs is more challenging and unique due to factors such as population size, geography, and especially the legal framework.
According to Long, the IFCs in developed countries operate within a transparent legal framework. In Viet Nam, there are strict regulations to ensure macroeconomic safety. For instance, foreign exchange transactions and the liberalisation of capital flows are crucial conditions for establishing the IFCs, yet Viet Nam currently has stringent regulations on these matters. Furthermore, Viet Nam’s international commitments with trade partners still require market protection.
“If there are additional incentives for establishing financial institutions, it becomes another challenge. How to create a legal framework that ensures the financial centres operate effectively while maintaining macroeconomic safety”, Long shared.
Regarding the banking sector, Mr. Long also mentioned that traditional banking operations within the IFC will not be significant, as the focus will shift toward new banking activities in line with international practices. Additionally, there will be a focus on ensuring operational safety. The State Bank of Viet Nam will review and amend the capital adequacy ratio regulations to comply with Basel II standards and collaborate with relevant agencies to develop policies that ensure the effective operation of the financial centres while maintaining macroeconomic stability.
From the perspective of the policy advisory unit for establishing the international financial centre, Luu Anh Nguyet, Deputy Head of the Financial Market Development Department at the National Institute for Economics and Finance (under the Ministry of Finance), stressed the favourable factors for building the IFCs in Viet Nam, such as strategic geographical location and deep economic integration.
In addition, Viet Nam has been actively improving its institutional framework, legal environment, and investment climate, while maintaining macroeconomic stability. "Ho Chi Minh City and Da Nang are two localities chosen to establish Viet Nam’s IFCs. Ho Chi Minh City fits the classic model, integrating trade, technology, capital markets, and financial services, while Da Nang is suitable for the newer model, integrating a free trade zone, green financial services, risk management, and foreign exchange," Nguyet stated.
Legal framework that meets international standards needed
Nguyet further explained that there are several IFCs near Viet Nam, such as Singapore, Hong Kong (China), and Shanghai (China). To fully leverage the benefits that the IFCs can bring, it is crucial to have specialised regulations and a connection between domestic and international financial centres. This presents a significant challenge for regulatory authorities.
“Therefore, the first step in building the IFCs is to develop a flexible and modern institutional framework. Specifically, this involves creating a transparent legal structure that aligns with international practices and allows for the trial of innovative models such as fintech and digital platforms. At the same time, Viet Nam should adopt a sandbox model similar to that of Singapore, with fast licensing procedures and strong investor protections. In parallel, risk supervision should be enhanced to meet international standards, ensuring market stability and transparency,” a representative from the National Institute for Economics and Finance suggested.
In addition, drawing from global experience, Richard D. McClellan, who is an economist and independent advisor on economic policy, financial sector development, and investment strategy, emphasised that the IFCs play a strategically vital role for any country. They are not merely about geographic locations or infrastructures, but rather a convergence of various critical factors that lay the groundwork for comprehensive economic growth.
McClellan said each IFC is designed to attract specific types of capital, reflected in its unique model and policy framework. Singapore focuses on foreign exchange trading and asset management through open-market policies. Dubai attracts private wealth and investment funds by offering tax incentives and a legal system based on English law. Astana positions itself toward sustainable finance (ESG) with low entry costs and green finance incentives. Meanwhile, London, with its long-standing financial markets, serves as a global hub for banking and complex derivatives trading, he added.
He further suggested that in order to become a modern and competitive IFC, it is essential to not only establish such a centre but also shape it around the core characteristics shared by leading global financial hubs.
As the agency responsible for drafting regulations governing banking operations within the financial centre, the State Bank of Viet Nam must take the lead in setting a roadmap for compliance with recommendations from the Financial Action Task Force (FATF). This includes ensuring that sandbox regulations are aligned with anti-money laundering (AML) and counter-terrorism financing (CFT) standards from the outset. It is crucial for the State Bank of Viet Nam to clearly communicate its compliance roadmap to the international market in order to build trust and attract investment.
Assoc. Prof. Dr. Hoang Cong Gia Khanh, President of the University of Economics and Law (under the Viet Nam National University – Ho Chi Minh City), recommended that in order to develop an influential international financial centre, a combination of policies focused on technological innovation and sustainable development, a flexible and effective legal framework, high-quality human resource development, promotion of both competition and cooperation, and the establishment of a strong economic and legal foundation.
