Controlling risks will make the International Financial Center successful.

The National Assembly listened to the Government present the Draft Resolution on the International Financial Center in Vietnam.

Need open and transparent mechanism

On the morning of June 11, in the first working session of the National Assembly in the second session, the ninth session, the Government officially submitted to the National Assembly the Draft Resolution on the International Financial Center in Vietnam (Draft). Before listening to the submission, the National Assembly spent time listening to Permanent Deputy Prime Minister Nguyen Hoa Binh introduce the role and significance of the International Financial Center (Center).

According to the Deputy Prime Minister, the necessary conditions for building the Center are political determination at the highest level, prestige, attractiveness to the international community, political and macroeconomic stability, transparent policy institutions. Along with that is a potential financial market, favorable business environment; large enough economic scale, stable growth, open legal framework, according to international standards; high connectivity.

Sufficient conditions include high-quality human resources, synchronous infrastructure, a developed and competitive financial ecosystem, and a full support service system. “These are the conditions that make the Center attractive, and we have all of these conditions,” Deputy Prime Minister Nguyen Hoa Binh emphasized.

The Government leader also set a specific goal of establishing the Center in 2025, located in two locations: Ho Chi Minh City and Da Nang City. By 2035, the Center strives to be in the top 75 financial centers in the world according to the GFCI rankings (including fintech criteria) and by 2045, to rise to the top 20 administrative centers in the world.

Before the National Assembly, Deputy Prime Minister Nguyen Hoa Binh asked delegates to actively contribute ideas and supplements to complete the Draft, so as to have open, transparent and innovative policies that are attractive enough to investors and businesses in accordance with the direction of the Politburo.

Authorized by the Prime Minister to present the draft, Minister of Finance Nguyen Van Thang stated that Vietnam is a bright spot in economic development and growth, and macroeconomic stability. Promoting competitive advantages to form a financial center will help Vietnam connect to the global financial market, attract foreign financial institutions, and take advantage of opportunities to shift international investment capital flows.

This also promotes the effective development of Vietnam's financial market, catching up with international standards; contributing to sustainable economic development, enhancing the role, position, prestige and influence of Vietnam in the international arena.

The purpose of building the Center, according to the Minister, is to attract international capital flows to serve three strategic breakthroughs, traditional growth drivers and new growth drivers, develop high-end financial services, test and manage new markets as a result of practice. Along with that, it is to form high-quality human resources, connect with the world economy and raise Vietnam's position in the global financial market, contributing to promoting the country's economic development.

Minister Nguyen Van Thang also said that many specific policies are applied in the Center, including policies on foreign exchange, banking activities, finance, capital market development, taxes, etc.

In order to attract investment and attract high-quality human resources to work at the Center, the Draft stipulates incentives for corporate income tax (tax rate of 10% for 30 years, tax exemption for the first 4 years and 50% reduction for the next 9 years). At the same time, corporate income tax is exempted for enterprises in priority development sectors, personal income tax is exempted for high-quality human resources, and tax incentives for many services and transactions at the Center.

Foresaw the risk

Discussing the Draft, many delegates expressed their approval of the need to establish the Center as proposed by the Government. However, with the very low success rate in previous countries, some delegates noted that attention should be paid to risk management.

According to delegate Le Minh Nam (Hau Giang), member of the National Assembly's Economic and Financial Committee, experience shows that international financial centers can face financial crises, money laundering, capital loss, and operational risks. However, if there is excessive control, it can cause "stiffness".

Mr. Nam believes that the proactive control mechanism will help the Center operate more securely. “The control system such as the car brake helps us feel confident when operating at high speed, avoiding unintended consequences and risks,” Mr. Nam said.

In the review report, the National Assembly's Economic and Financial Committee emphasized that there needs to be a reasonable and transparent state management, supervision and inspection mechanism, but must ensure risk management, maintain financial security, political stability, and social order and safety.

Speaking at the meeting, Minister Nguyen Van Thang agreed with the assessment that establishing the Center is not easy and has risks. Although this is a model that has existed in the world for hundreds of years, for Vietnam, this is still a very new and very difficult model.

Regarding dispute resolution, the Minister pointed out the difference is that the Center will use the Common Law system. Accordingly, it will allow the application of precedents of similar disputes handled in other international financial centers. Thus, when it becomes a financial center, all issues related to dispute resolution of financial centers will be similar and the language of resolution will be English.

“After a trial period until 2030, Vietnam will consider establishing a dispute settlement agency in accordance with common practice. For now, we are very cautious because this is a new issue,” Minister Nguyen Van Thang said.

Analyzing the advantages and risks of the Center in Vietnam, the Minister emphasized that the biggest purpose of establishing the Center is to mobilize international capital for domestic economic development needs. This is one of the important criteria to evaluate the success of the Center and is also what Vietnam urgently needs for its double-digit growth target.

Affirming this, the Minister of Finance acknowledged that the establishment of the Center also has many risks. The biggest risk is that if the foreign capital mobilized from the Center to serve the country is not strictly managed and there are no control tools, the capital flow can be withdrawn quickly and thus it will be very dangerous. If this happens, it will lead to market chaos, even a financial crisis like Thailand's experience in 2008.

The second risk is that when investors convert from foreign currency to Vietnamese currency to invest in bonds, or vice versa, convert from Vietnamese currency to foreign currency when making payments..., it can cause pressure on the exchange rate at different times.

However, the leaders of the Ministry of Finance affirmed that the two major issues above have been fully anticipated and well prepared by the Government. Along with the development of the Project to Establish a Financial Center, the Government has prepared 8 decrees to strictly control these risks. In particular, it is expected that there will be regulations and conditions on long-term investment, bond investment, etc. to be able to predict the conversion needs of funds and investors, etc.

The Minister acknowledged that if the above risks are controlled, the implementation of the Center will only have two possibilities: low efficiency and high efficiency. When there are good, outstanding policy mechanisms, in line with international practices, and protecting the legitimate rights of investors, the Center will attract many investors to participate, thereby mobilizing large capital sources for economic development.

If not, the mobilized capital will be less, or in other words, it is also a success, but a smaller success. As evidence for this statement, Minister Nguyen Van Thang pointed out that although Ho Chi Minh City has not established a financial center, the world still recognizes Ho Chi Minh City as a financial center and has a ranking.

Bold, wise decision

Participating in the discussion at the group, Permanent Deputy Prime Minister Nguyen Hoa Binh said that if two centers were established as originally planned, it would easily lead to the situation that experts warned, that two young centers established at the same time would compete and easily weaken each other. Therefore, the Government reported to the Politburo, and the Politburo agreed to have one center located in two places and the development orientation of these two places would be different.

Specifically, the Center in Ho Chi Minh City is a comprehensive center like other centers in the world, while the Center in Da Nang only focuses on green finance, digital finance, etc. For now, the two centers will be located in two places, but there will be coordination from the Government's Steering Committee to determine the directions of operation, ensuring that they do not step on each other's toes or conflict with each other. International experts assess that this is a wise and bold decision of Vietnam.

Source: https://baodautu.vn/kiem-soat-duoc-rui-ro-trung-tam-tai-chinh-quoc-te-se-thanh-cong-d303060.html