An international financial center could be a boost for Vietnam's capital market to raise standards, increase depth and integrate more strongly.
Shaping a Different Model
At the Government's special session on Decrees guiding the implementation of Resolution 222 of the National Assembly on the International Financial Center in Vietnam, Prime Minister Pham Minh Chinh emphasized the requirement that the International Financial Center (IFC) must be designed in the spirit of "closely following international practices but surpassing the level of competition". The Prime Minister requested ministries and branches "to be open in their methodological thinking and approach", because for a financial center model to attract global brainpower and capital, "mechanisms and policies must be open, transparent, accessible and easy to monitor".
Regarding the model, the Prime Minister directed to establish a joint Steering Committee, an executive board with two branches in Ho Chi Minh City and Da Nang, and joint agencies for monitoring and resolving disputes. The Decrees need to closely follow the situation in Vietnam to build appropriate and effective policies.
One of the breakthroughs of the International Financial Center in Vietnam is the legal corridor for dispute resolution, with two mechanisms. One is a specialized court at the Financial Center, currently being discussed by the National Assembly on a separate law, expected to be passed in this session. The second is a commercial arbitration center. Currently, Vietnam has an International Arbitration Center (VIAC). Statistics from 1993 to the end of 2023 show that VIAC handled a total of 2,940 disputes, 22% of which had foreign elements. Meanwhile, in Singapore or Hong Kong, the rate of cases with foreign elements reached 70-80%, although the cost of dispute resolution was 3-4 times higher. That said, a financial center needs a reputable dispute resolution mechanism, approaching international practice, which is also the direction of Vietnam today.
Deputy Prime Minister Nguyen Hoa Binh directed: "In specialized courts, it is allowed to use common law, use foreign judges, use English language, use online trials combined with direct trials. It is allowed to invite international arbitrators to participate in this center to resolve disputes, if they meet all the conditions. Our law restricts foreigners from participating in the resolution, but international arbitration alone without foreigners is not okay."
The unique incentives in the TTTC model are designed to create a breakthrough difference.
Special offers - the foundation for creating new competitive advantages
The specific incentives in the TTTC model are designed to create breakthrough differences: more open labor, more competitive taxes, easier capital inflow and freer foreign exchange circulation.
First, incentives for labor and high-quality human resources. Work permits for foreigners are regulated for a period of 10 years, linked to the visa period. Processing time is reduced to 3 days. Opinions suggest that the criteria for experts should be strictly regulated, but the Ministry of Public Security proposes to apply the same to all foreign workers at TTTC to "simplify procedures and attract global human resources".
Second, unprecedented tax incentives. The draft Decree of the Ministry of Finance stipulates that for newly arising projects in priority development industries, the corporate income tax rate of 10% will be applied for 30 years; exemption for the first 4 years and 50% reduction for the next 9 years. For projects not in the priority group, the tax rate is 15%, higher but still very preferential.
Personal income tax is also exempted until 2030 for experts, scientists, highly qualified people and individuals with income from transferring shares and capital contributions. Meanwhile, most other centers in the world do not exempt tax.
Third, promote foreign capital through global brokers. Last October, the Vietnamese stock market received good news when it officially qualified to be upgraded to emerging market status according to FTSE Russell standards. One of the recommendations in the FTSE Russell report is that Vietnam needs to continue to address the limitations in foreign investors' access to global brokers, while increasing quality goods for the market. The solution has also been mentioned in the Draft Decree on financial policy.
In the Draft, proposals on the establishment and operation of foreign securities trading organizations at the Vietnam International Finance Center have been specifically made. For example, the minimum equity capital is 190 million USD; continuous operating time or business results must be profitable in the previous two years. According to Dr. Tran Thang Long - Director of Analysis, BIDV Securities Company (BSC), when international organizations enter Vietnam, international capital flows will follow, helping the market to be transparent.
Fourth, preferential treatment on foreign exchange transactions - a step closer to capital account liberalization, approaching the practice in major financial centers when foreign exchange transactions and capital movements are completely uncontrolled, if not invested in Vietnam's territory. The State Bank affirmed that all foreign exchange barriers will be removed within the scope of the Financial Center. Deputy Governor of the State Bank of Vietnam Pham Tien Dung stated: "Within the Financial Center, transactions are almost unrestricted. Between members of the Financial Center and the rest of the world, transactions from the rest of Vietnam to the Financial Center still comply with current foreign exchange regulations."
These preferential policies are not intended to create an isolated “oasis”, but to encourage global capital, human resources and intelligence to choose Vietnam as a safe, transparent and attractive destination. As the experience of Abu Dhabi Global Market shows, an emerging financial center can take 10 years to establish its position, but with strong institutional determination and consistent direction, the gap can be shortened significantly.
Vietnam is entering a period where institutions are the key lever. The international financial center, with its breakthrough differences, can become a boost for the Vietnamese capital market to raise standards, increase depth and integrate more strongly.
The operation of the Vietnam International Financial Center this November is not a destination but a starting point for the journey to raise capital market standards - safer, more transparent and more deeply integrated.
Source: https://vtv.vn/trung-tam-tai-chinh-quoc-te-khac-biet-de-but-pha-100251128082400865.htm
Comment (0)