International financial center about to come into operation

One center - two destinations

At the recent Conference on the establishment of the International Financial Center (IFC), Prime Minister Pham Minh Chinh said that in the spirit of "one center - two destinations", two executive agencies will be established in two localities (Ho Chi Minh City and Da Nang City) but there will be a common supervisory agency, a common court to resolve disputes if any. The Prime Minister requested relevant agencies to urgently submit to the Government for promulgation of a decree in the coming days so that the center can go into operation in November. Specifically, the Government has established a Joint Steering Committee headed by the Prime Minister, with the participation of relevant Government members. The center will operate on the basis of digitalization, artificial intelligence (AI), be highly competitive and attract development resources. People must be professional, including domestic and foreign experts to absorb the quintessence and international wisdom.

Along with Da Nang, Ho Chi Minh City will have an international financial center.

PHOTO: NHAT THINH

In order for the center to attract leading experts, it is necessary to have the most favorable and competitive mechanisms and policies, creating a harmonious ecosystem between people, society and nature; Da Nang and Ho Chi Minh City need to maximize and create favorable living conditions in terms of transportation, living, education , health, culture, sports, etc. The Prime Minister noted that favorable and competitive mechanisms and policies must also be predictable, familiar, and blend tradition and innovation, between the quintessence of humanity and Vietnamese culture. Financial and non-financial service agencies need to grant flexible licenses, mainly post-audit and reduce pre-audit; the legal framework must be transparent, autonomous, and have certain preferential mechanisms and policies. In the process of forming and developing the center, technology transfer must be transferred, and people must be considered the decisive factor. The center operates not only in finance but also in production, business, trade and investment, but ensures that these activities are smoothly combined and competitive with other financial centers...

According to Associate Professor Dr. Nguyen Huu Huan (University of Economics , Ho Chi Minh City), it is entirely possible to put the International Financial Center into operation from November because the preparation work has been deployed in advance. The process of putting the center into operation and continuing to work and complete issues related to technology and engineering will take 3-5 years as the roadmap has been previously outlined. This time is quite fast compared to other places in the world, some countries take 20-30 years to complete. Some prominent strategic pillars have been mentioned such as opening a controlled experiment (sandbox) for fintech innovation; attracting financial "eagles" with outstanding incentives from strong tax exemptions and reductions to open visa policies for foreign experts and their families. In particular, administrative procedures will be simplified to the maximum under the "one-stop" mechanism, the application for membership of the center can be submitted online and will be assessed extremely quickly within just 1 working day for temporary approval, and no more than 7 days for official recognition. Even corporations on the Fortune 500 list will be automatically recognized as members without assessment. All other specific procedures (such as fintech testing licensing) will also be handled on the spot by the center's operating agency, avoiding hassles through many levels...

Issue a complete legal framework and superior institutions

National Assembly delegate, Dr. Tran Hoang Ngan, commented that the Prime Minister's desire to put the International Financial Center into operation this month is understandable because Resolution No. 222 of the National Assembly on the International Financial Center has officially taken effect since September 1. In which, the Government is assigned to develop detailed regulations for implementation. Recently, ministries and branches have widely consulted to develop regulations such as the Decree guiding financial policies in the International Financial Center in Vietnam; Decree regulating international arbitration centers... The Government needs to soon issue these decrees and on that basis, Ho Chi Minh City and Da Nang will develop and issue decisions on the establishment of the International Financial Center, appoint executive personnel as well as develop regulations and grant operating licenses to members participating in the center... Dr. Tran Hoang Ngan emphasized that with the National Assembly's resolution and the Government's decrees, Ho Chi Minh City and Da Nang will have enough basis to put the International Financial Center into official operation. Ho Chi Minh City alone has services such as international banking and international finance, so when there are specific operating regulations, it will attract the participation of many international units.

According to Dr. Do Thien Anh Tuan (Fulbright University Vietnam), the core of a successful international financial market in the world starts from a special institution. Therefore, Vietnam first needs to build a separate, transparent, consistent and innovation-friendly legal framework. Specifically, it is necessary to liberalize capital within a controlled framework such as allowing foreign currency transactions, profit transfers, and cross-border investments. A separate legal system, applying international standards or applying "legal exclusive zones", similar to those in the UAE or Kazakhstan. At the same time, an independent dispute resolution mechanism, which can combine international commercial arbitration and specialized financial courts. To attract international financial institutions, it is necessary to establish a "one-stop" licensing mechanism, which is quick with an electronic process and centralized legal support. Vietnam also needs preferential tax policies with conditions such as exemption and reduction of corporate income tax for 5-10 years; applying flexible tax rates linked to investment efficiency and technology transfer; Building a smart financial urban governance model to create trust for investors and policy effectiveness. Mr. Anh Tuan emphasized: It is necessary to build a special, outstanding and flexible financial institution because this is the core of every successful financial center in the world. What needs to be done immediately is to issue a specific legal framework for the center, experiment with policies on capital, foreign exchange, fintech; build details on the model of a multi-asset exchange, a payment center and a national financial data.

Sharing the same view, Mr. Nguyen Quang Huy, Director of the Faculty of Finance and Banking (Nguyen Trai University), said that if the center is to operate this month, it is necessary to immediately complete the temporary institutional framework, with a legal corridor that is clear enough to allow operation, but also flexible enough to adjust to reality. This framework needs to stipulate the scope of operations, management mechanism, licensing process, monitoring mechanism, and some initial incentives on taxes, fees and human resources. At the same time, it is necessary to establish a streamlined executive apparatus with capacity and quick decision-making power, ensuring close coordination between central and local agencies. Below that is a specialized executive board responsible for organizing operations, licensing, monitoring, and handling arising situations. A "connected action" mechanism will be the decisive factor for the International Financial Center to be able to start up promptly. The next practical step is to choose financial services that can be deployed immediately, in accordance with current capacity and available infrastructure. It can be started with highly liquid activities such as foreign currency bond market, foreign exchange trading, international securities custody, or cross-border payments for large financial institutions. Choosing the right testing area will help create a confidence effect while avoiding systemic risks when the scale is still small.

Work as you go

After the initial stage, Dr. Do Thien Anh Tuan said that Vietnam needs to continue to perfect the independent legal mechanism for the International Financial Center; develop financial products such as establishing a multi-asset integrated financial exchange, including stocks, derivative bonds, digital assets; integrate a cross-border, real-time payment system, capable of using VND, USD and digital assets; develop digital infrastructure and national financial data, operated by modern technology such as AI, Blockchain and cloud computing applications in risk management and transaction processing. At the same time, connect the center in Vietnam with global centers such as Dubai, Singapore, London... Towards establishing an investment fund for the International Financial Center and a funding model for financial infrastructure - technology - human resources, upgrading the quality of human resource training according to international standards as well as supporting start-up activities, venture capital funds, and incubators.

According to banking and finance expert, Dr. Nguyen Tri Hieu, Vietnam has the advantage of being a latecomer, so it will learn a lot from countries that have successfully built an international financial center. Nowadays, many countries have strongly applied new technologies such as AI in the management and operation of financial systems and financial centers. Vietnam also has the advantage of using many new technological solutions and operating more effectively. "Vietnam's successful operation of the international financial center will contribute to bringing the country's image one step further to a higher position in the international market. At the same time, it will contribute to increasing the ability to attract foreign investment capital into Vietnam. Notably, the national financial system will develop stronger, more modern and thereby contribute to promoting the economy to be able to complete the double-digit growth target in the next period," Dr. Nguyen Tri Hieu added.

Mr. Nguyen Quang Huy noted that along with the initial operation, the International Financial Center should be deployed according to the "doing - perfecting" roadmap, which means starting at a pilot scale, periodically evaluating, and then gradually expanding. The first phase focuses on building a governance framework, monitoring processes, and technology systems. The next phase will complete tax incentive policies, legal mechanisms for international capital flows, and anti-money laundering regulations. However, for the center to truly develop, the decisive factor lies in human quality. An International Financial Center needs a team of people with global thinking capacity, in-depth understanding of finance, law, technology, and risk management. Vietnam needs to invest systematically in training international financial human resources, from professional skills to professional ethics, along with policies to attract foreign talent to work, research, and teach. At a strategic level, the center is not only a place for financial transactions, but also an ecosystem that promotes innovation, creativity, and transformation of the growth model. This is also the foundation for Vietnam to form an export financial services industry, where value is created not only from capital, but also from knowledge and technology, contributing to upgrading the stock market, improving the national credit score and increasing Vietnam's position on the global financial map.

Need a comprehensive action plan

Building a legal framework is only a necessary condition. To put the International Financial Center into operation, a general action plan must be issued, similar to how a business must have a business plan. The overall plan must also include detailed legal issues, technical infrastructure, operational policies, finance and human resources. In particular, there must be a team of experts, specialists, and capable business people participating in the operation of the center. In terms of technology, it must be connected with the most modern technologies, such as AI...

Banking and finance expert, Dr. Nguyen Tri Hieu

Promoting foreign capital mobilization

With the current high domestic economic growth rate, capital for growth is not guaranteed if only relying on credit. Currently, credit accounts for 134% of GDP, this is a high and worrying number, which can pose risks to the economy. Therefore, other channels are needed to mobilize capital. Therefore, putting the International Financial Center into operation will help the economy mobilize capital from abroad. The center will attract "eagles" and foreign corporations to Vietnam with open policies. In fact, in Hong Kong in 1997, this model mobilized 80% of capital for China. Not only that, Vietnam also plays the role of a capital mobilization hub for the entire Southeast Asia and Asia region in the future. In the next phase, Vietnam needs to build innovative and technological models, attract international capital and talent, as well as deeply integrate modern technology into all financial activities.

Associate Professor, Dr. Nguyen Huu Huan , University of Economics, Ho Chi Minh City

Source: https://thanhnien.vn/trung-tam-tai-chinh-quoc-te-sap-di-vao-hoat-dong-185251102210038234.htm