Connecting to global financial markets, enhancing Vietnam's reputation

An international financial center in Ho Chi Minh City helps Vietnam strengthen its connection with the global financial market, attract foreign financial institutions, and create new resources.

Ho Chi Minh City has the potential and determination to become an international financial center. (Photo: Van Trung)

After 20 years of "gestation", at the end of 2024, the Politburo agreed to the policy of establishing an international financial center in Ho Chi Minh City. Resolution No. 259/NQ-CP approving the Action Plan to implement the construction of a regional and international financial center in Vietnam was also announced by the Government on the last day of 2024 (December 31).

Accordingly, the International Financial Center in Ho Chi Minh City will make Vietnam an important financial destination in the world . The Center will be established and operational in 2025.

Five elements, necessary conditions

Earlier this year, Prime Minister Pham Minh Chinh affirmed at the Conference announcing the above Resolution that: “In response to the question of whether Vietnam is qualified to establish an international financial center, I affirm that it is qualified.” According to the head of the Government, Vietnam possesses five necessary factors and conditions to develop a modern financial market, aiming to form an international financial center.

Firstly, in recent years, Vietnam's economic growth rate has been stable, inflation has been controlled, and major balances have been ensured. Vietnam's Gross Domestic Product (GDP) in 2024 is about 470 billion USD, the size of the economy ranks 33-34 in the world. Average GDP per capita is about 4,600 - 4,700 USD.

Second, the country's strategic breakthroughs are achieving very positive results in the direction of open institutions, smooth infrastructure, and smart governance.

Third, the stock market capitalization in 2024 will reach nearly VND 7.2 million billion, an increase of 21.2% compared to the end of 2023.

Fourth, Vietnam has an integrated economy with great openness, having signed 17 Free Trade Agreements (FTAs) with over 65 leading economies in the world. The scale of import and export is about 800 billion USD, about 1.7 times the GDP.

Fifth, political stability, social order and security are guaranteed, life is peaceful, there is a peaceful environment, cooperation and development. The country also has an important strategic and geopolitical position, located in the world's leading dynamic and creative development region, with a different time zone from the 21 largest financial centers in the world.

With the favorable conditions as mentioned by Prime Minister Pham Minh Chinh, speaking with reporters of The World and Vietnam Newspaper, Prof. Dr. Andreas Stoffers at the University of Applied Sciences in Economics and Management (FOM) said that having a separate international financial center will help Vietnam strengthen its connection with the global financial market; attract foreign financial institutions, and create new resources. At the same time, the country will take advantage of opportunities from the shift of international investment capital flows to accelerate socio-economic development.

Not stopping there, according to Prof. Dr. Andreas Stoffers, Vietnam enjoys many obvious benefits, specifically:

First, professionalize the Vietnamese banking system. In the long process of preparing for the formation of an international financial center, the Vietnamese banking industry, which is still facing many difficulties, will have to face great pressure to reform. These activities require a concerted effort to improve professionalism, resolve the still serious bad debt ratio, clean up the market, professionalize the equity and bond markets, and introduce a reliable rating system. This will greatly increase the competitiveness of Vietnamese banks.

Second, the establishment of an international financial center in Vietnam will have a positive impact on many different fields and industries.

Third, enhance Vietnam’s reputation. The S-shaped country has proven to be an attractive destination for foreign direct investment (FDI). The presence of an international financial center will further help Vietnam attract investors, reinforcing a clear message about the country’s attractive business environment.

The presence of an international financial centre will continue to help Vietnam attract investors, reinforcing a clear message about the country's attractive business environment.

Full of potential and determination

From a local perspective, Dr. Truong Minh Huy Vu, Director of the Ho Chi Minh City Institute for Development Studies, affirmed that the country's economic "locomotive" has enough potential and determination to become an international financial center. Developing an international financial center is not only the city's goal but also a national mission, assigned to promote the economic development of the whole country.

Ho Chi Minh City has many similarities with Shanghai (China) - a successful international financial center - with its favorable geographical location, being a logistics gateway and being assigned the pioneering task. The large capital demand for infrastructure projects such as Long Thanh airport, metro lines, Ring Road 4, North-South high-speed railway... also raises the importance of Ho Chi Minh City Financial Center in capital mobilization.

“This is the right time for Ho Chi Minh City to develop an international financial center. The promotion from central and city leaders shows the determination and consensus in realizing this goal,” Mr. Huy Vu emphasized.

Meanwhile, Ho Chi Minh City Party Secretary Nguyen Van Nen revealed that the city has made thorough preparations through many projects, research and learning from the experiences of major financial centers in the world. Currently, the city is completing the dossier on the International Financial Center to report to the Government and submit to the National Assembly in the May 2025 session.

"No matter how difficult it is, we must do it"

Thus, the benefits and determination are there, to realize the goal of building an international financial center in Ho Chi Minh City, Prof. Dr. Andreas Stoffers realized that there is no other way than digital transformation. This is not only related to the field of green finance, green transformation but also related to essential things such as the birth of a digital currency issued by the Central Bank. This model has been very developed in neighboring China and Vietnam cannot be ignored.

In parallel, Prof. Dr. Andreas Stoffers recommended that Vietnam in general and Ho Chi Minh City in particular should focus on five issues: Strengthening activities to create an international financial center in Ho Chi Minh City by providing abundant financial resources and decision-making power; establishing national regulations on green classification in line with existing industry standards and global practices; developing policies to promote the carbon market and accelerate the official implementation of a carbon credit trading platform in Vietnam; developing and implementing environmental criteria in granting green credit; maintaining the State Bank's commitment to credit policies supporting green growth in the banking sector.

“Vietnam must take a step forward in the field of green finance and green technology. In this context, the application of environmental, social, and governance (ESG) is very important for Vietnamese banks to access international green capital for businesses. In addition, the country must make great efforts and determination in the process of preparing the foundational conditions for the construction and development of an international financial center with a suitable roadmap,” said Prof. Dr. Andreas Stoffers.

The journey of the International Financial Center in Ho Chi Minh City still has many difficulties and challenges ahead. However, Prime Minister Pham Minh Chinh has directed that: "No matter how difficult it is, it must be done". Resolution No. 259/NQ-CP is a testament to Vietnam's aspiration and determination to create breakthroughs to successfully build an International Financial Center in the city named after Uncle Ho.

Source: https://baoquocte.vn/ket-noi-thi-truong-tai-chinh-toan-cau-nang-cao-danh-tieng-cua-viet-nam-304321.html