What can Vietnam learn from the model of a financial center operating in two cities?

The most successful new international financial centers are no longer confined to a single location. Instead, they are evolving into multi-center ecosystems.

Speaking at a conference on the development of a National Assembly resolution on an international financial center in Vietnam on May 20, Mr. Richard McClellan, Global Ambassador of Terne Holdings and former Country Director of the Tony Blair Institute, focused on a specific question that he said has been raised many times in professional and policy discussions but has yet to be fully answered.

“It is not just the question of 'Why Da Nang ?' but also the more difficult and important question: 'How can Da Nang realize that role?", Mr. Richard McClellan raised the issue.

The question is: How are we building an international financial center (IFC) model?

Mr. Richard McClellan.

Over the past decade, the most successful new international financial centres have moved away from being confined to a single location, says Richard McClellan. Instead, they have evolved into multi-node ecosystems, with different cities taking on specialized, complementary roles based on their respective comparative advantages.

According to Mr. Richard McClellan, Vietnam has a great opportunity to develop a world-class international financial center, not following the traditional model of concentrating at one point but following the direction of a similar multi-center ecosystem.

In fact, many successful IFCs in the world have implemented this model.

For example, in the UAE, Dubai focuses on global finance, Abu Dhabi leads policy innovation.

In China, Shanghai is the capital center, Shenzhen leads financial technology, Hainan is the sandbox area.

In the UK, London focuses on finance, Edinburgh specializes in insurance and asset management.

“Vietnam can absolutely apply a multi-center ecosystem model, in which Ho Chi Minh City and Da Nang play separate but complementary roles. This is a direction that helps reduce systemic risks, allocate economic opportunities reasonably and increase national financial resilience,” Mr. Richard recommended.

In particular, the process of upgrading to the emerging market group will attract billions of dollars of investment capital from passive funds, managed by global financial institutions.

In that context, diversification beyond a single financial center is often seen as a prerequisite for emerging market reclassification by rating agencies such as MSCI.

Finally, the polycentric model also contributes to strengthening national financial resilience. Accordingly, the international financial center is not dependent on a certain geographic, population or infrastructure bottleneck.

Mr. Richard McClellan emphasized: "If Vietnam wants to have a global IFC, think of it as a unified ecosystem instead of a single location. In that ecosystem, Ho Chi Minh City and Da Nang do not compete but support each other."

Da Nang, with its existing infrastructure, quality workforce and proactive local government, could be a strategic piece in this model.

Da Nang has many advantages to build an administrative center.

"I hope policymakers and investors support the 'two centers, one vision' model: Ho Chi Minh City is the engine of growth, Da Nang is the place for experimentation and innovation," Mr. Richard recommended.

As a locality implementing policies and plans on building an international financial center, Secretary of the Da Nang City Party Committee Nguyen Van Quang said that opinions were expressed from different perspectives, but all agreed on the need to form an international financial center in Vietnam.

It could be two separate international financial centers, or one international financial center but operating in two separate locations, Da Nang and Ho Chi Minh City.

According to the Secretary of the Da Nang City Party Committee, this is of great significance in diversifying the investment attraction environment of financial institutions and investors; limiting and better controlling risks...

He also said that, along with consulting and proposing policy mechanisms, Da Nang has prepared conditions, ecosystems, and infrastructure, including both hard and soft infrastructure, to be ready to serve the operation of the international financial center.

Similar to Da Nang, Vice Chairman of Ho Chi Minh City People's Committee Nguyen Van Dung also affirmed that the city will continue to review and propose mechanisms and policies that are close to the actual conditions of the locality as well as resolutely direct and prepare technical infrastructure, and implement plans for training human resources to serve the operations of the international financial center when the center officially operates.

How can Vietnam build a world-class international financial center? The Ministry of Finance is finalizing a draft resolution on building an international financial center in Ho Chi Minh City and Da Nang, focusing on research on state management of crypto-asset transactions.

Source: https://vietnamnet.vn/viet-nam-hoc-gi-tu-mo-hinh-mot-trung-tam-tai-chinh-hoat-dong-o-hai-thanh-pho-2403014.html