Building an International Financial Center: The driving force to elevate Vietnam's economy

An international financial center can only be successful if it has a financial infrastructure system and legal framework that meet international standards. As a "newcomer" in this field, Vietnam needs to learn from the experiences of the world's leading financial centers and listen to experts' opinions to shorten the development roadmap. The important thing is that Vietnam will build a financial center with a strong Vietnamese identity, in line with the country's economic , cultural and development orientation.

Vietnam aims for global trade finance network

Discussing the policy of building and operating an international financial center in Vietnam during a recent working trip, Deputy Prime Minister Nguyen Hoa Binh affirmed that building and developing international financial centers in Vietnam is an important decision to create new resources for the country's socio-economic development, bringing Vietnam's GDP growth to double digits, towards the goal of becoming an industrialized country by 2045.

Vietnam is determined to build a financial center that meets international standards, is transparent, efficient, has a solid legal foundation, highly qualified human resources, applies advanced technology, has a safe and sustainable investment environment, and contributes to connecting ASEAN with world financial centers.

Accordingly, the construction and operation of an international financial center is associated with creating a favorable, open, attractive and prestigious environment for foreign investors; at the same time, there are solutions such as drastically cutting administrative procedures, especially administrative procedures for enterprises; perfecting the legal system, creating a transparent, clear, predictable legal corridor in accordance with international standards; perfecting infrastructure such as transport infrastructure, energy infrastructure, digital infrastructure, etc.

In fact, in recent meetings and contacts with representatives of the Vietnamese Government, international partners and businesses also affirmed that building a Financial Center in Vietnam is a very important, correct and wise decision, helping to ensure a strong financial future.

The Deputy Minister of Finance of the United Kingdom (the country where London is considered by Z/Yen - a leading trade consultancy based in London, UK - as a comprehensively developed financial center with special strengths in financial products) Lord Livermore highly appreciated the aspirations and progress of the Vietnamese Government in building and developing an international financial center. The British representative shared experiences from the London financial center model, emphasizing the three key factors that contributed to the success of this center: effective management mechanism; high-quality human resources; and a dispute resolution system in line with international practices.

The UK affirmed that perfecting the legal framework will be a decisive factor in helping Vietnam become a more attractive destination for international financial investors. At the same time, the UK is willing to share its experience in the fields of green finance and financial center management, contributing to promoting bilateral cooperation between the two countries in the coming time.

Recognizing that the development of the capital market and the monetary and banking market are important fundamental components for the establishment of financial centers, Governor of the State Bank of Vietnam Nguyen Thi Hong once shared that in recent times, the State Bank of Vietnam has been researching and implementing policies and roadmaps for foreign exchange activities, developing the monetary and banking markets... in financial centers to attract foreign investment; aiming to develop financial centers that both meet international standards and are suitable for Vietnamese reality.

Regarding the mechanism for monitoring and ensuring national financial security and safety, the financial center will establish management, supervision and dispute resolution agencies. The State Bank will proactively coordinate with agencies, ministries and sectors to analyze and assess the impact of breakthrough incentive policies and propose appropriate management and operation methods. In any case, ensuring national financial and monetary security is always the top priority. Attracting foreign investment must go hand in hand with ensuring national financial security and safety, the Governor emphasized.

Sharing more about the role of the banking sector in developing international financial centers, Deputy Governor of the State Bank of Vietnam Pham Tien Dung said that, implementing the policies of the Party and the Government, the State Bank of Vietnam is carefully studying specific legal and policy changes with the aim of creating a favorable business environment, attracting reputable financial institutions and international investors, and building an attractive and healthy financial ecosystem. In particular, the State Bank of Vietnam will play a key role in supervising and regulating the activities of financial institutions in the center, ensuring that financial activities are not only legal but also safe for the national financial system.

The SBV will also work closely with other authorities to implement strong supervisory measures, including regular inspections, risk assessments and management of financial institutions’ operations in the international financial centre. This will not only help to enhance the confidence of domestic and foreign investors, but also ensure that Vietnam complies with international standards in the financial sector.

Actively listen and learn from international experiences

Deputy Prime Minister Nguyen Hoa Binh shared that building and developing international financial centers is a big ambition with many challenges and complexities, while Vietnam has no experience. Therefore, to overcome these difficulties, there is no other way but to rely on the experience of financial centers with many years of successful operation.

To build a strong legal mechanism and monitoring system, Deputy Governor Pham Tien Dung also affirmed that Vietnam needs to learn from successful financial models in the world to build an international financial center.

Countries such as Singapore, Hong Kong, London, Dubai, etc. have built strong international financial centers and have a great influence on the global economy. These models not only attract international investment capital but also help countries strengthen their position in the international arena.

This is also the reason why during the recent working trip to the UK, Luxembourg and the Federal Republic of Germany, together with Deputy Prime Minister Nguyen Hoa Binh, Deputy Governor Pham Tien Dung led the SBV delegation to have consecutive bilateral working sessions with partners to learn more about the experience of building specific policies in the banking sector in the financial center.

In response to the call from the beloved Fatherland, Ms. Pham Thi Huong Ly - Master of Accounting and Auditing, Head of Financial Reporting Group at Aztec Luxembourg Group specializing in investment fund financial services shared a lot of knowledge and experience in the process of participating in the financial center. According to Ms. Pham Thi Huong Ly, to successfully establish an international financial center, the prerequisite is to build a transparent institutional system and protect the rights of investors.

Investors are always looking for a stable investment environment where transparency and financial security are top priorities. At the same time, high-quality human resources are also indispensable. The leadership team and staff of the financial center need to be equipped with extensive international knowledge to meet all the requirements of the global financial market. This not only helps the center operate effectively but also creates strong confidence for investors.

In addition, the importance of a solid legal infrastructure, especially in the context of cyber security becoming an increasingly serious threat, needs to be built tightly, ensuring the use of advanced technologies such as artificial intelligence (AI) and financial technology (FinTech) to minimize the risk of cyber attacks - an issue of particular concern to Luxembourg with new regulations expected to be issued in 2025.

In addition, it is necessary to promote the image of Vietnam as a financial center through international forums. According to Ms. Pham Thi Huong Ly, organizing conferences and forums will attract the attention of domestic and foreign investors, creating opportunities for exchange, learning and promoting international cooperation.

Building a financial center with its own identity

Speaking at the Conference on Building a Financial Center in Vietnam on March 28, 2025, Deputy Governor of the State Bank of Vietnam Pham Tien Dung highly appreciated the role of international consulting organizations and experts in providing recommendations and sharing international practices so that Vietnam can build a developed and sustainable financial system, but requested that the suggestions must be related to Vietnam's conditions, contributing to Vietnam's development.

By taking advantage of the wisdom and experience of Vietnamese experts around the world, combined with a methodical development strategy, Vietnam can completely rise to become an attractive destination for global capital flows, affirming its position on the international financial map.

However, Deputy Governor Pham Tien Dung also said that Vietnam will not mechanically apply the international financial center models of other countries. Instead, Vietnam will select factors that are suitable to its actual conditions to develop an international financial center. This will not only help Vietnam's financial center develop sustainably but also enhance its competitiveness with major international financial centers.

Taking the banking sector as an example, Deputy Governor Pham Tien Dung said that the financial center model in London (UK) cannot be directly applied to Vietnam because the UK has a very separate legal system, with an independent financial supervisory agency and very clear regulations for all financial activities inside and outside the financial center.

However, financial centers in developed countries such as the UK or Luxembourg are not allowed to mobilize capital from residents, so in the financial center in Vietnam, financial institutions will not be allowed to mobilize capital from residents in Vietnam. This means that the safety ratios prescribed by the State Bank such as the capital mobilization ratio compared to the lending ratio will not apply to banks in this financial center.

Also related to capital mobilization, the Deputy Governor cited that financial institutions in the financial center can freely open up to capital mobilization transactions from international financial organizations thanks to technology, but it is necessary to consider whether these capital sources have an impact on Vietnam's foreign debt or not.

Regarding foreign exchange, the Deputy Governor said that although Vietnam has regulations on this issue, through working with a number of central banks in Europe, they believe that the scale of Vietnam's economy is different from other countries, so there needs to be a roadmap for applying appropriate policies.

The representative of the SBV leadership also pointed out that, in the financial center, foreign currency transactions will be liberalized between financial institutions, but for the rest of the Vietnamese and world economy, regulations will have to be stricter.

“We must carefully consider those stories and they must be detailed in the regulations to ensure that the parties involved in the financial center clearly understand and must comply with the legal regulations, thereby ensuring the stable and reliable operation of the financial center,” the Deputy Governor of the State Bank emphasized.

Design clear, transparent and stable mechanisms and policies

The Deputy Governor emphasized that the construction of an international financial center in Vietnam not only requires investment in financial infrastructure, but also a strong legal mechanism to monitor and operate the activities in the center. This is one of the important factors that helps the center develop stably and sustainably in the long term. Therefore, the legal mechanism needs to be clearly designed, ensuring transparency and stability for the activities of financial institutions in the international financial center.

"We expect the operations of this financial center to include branches of foreign banks, 100% foreign-owned banks and subsidiaries of Vietnamese credit institutions. Why are there only these three entities and no branches of domestic credit institutions? Because for domestic credit institutions, it is impossible to apply two mechanisms and two laws in this financial center and it is clearly very difficult to distinguish. We are drafting a decree to clarify the operational framework for implementation," Deputy Governor Pham Tien Dung informed.

According to Deputy Governor Pham Tien Dung, the National Assembly's Resolution on financial centers in Vietnam will be a framework Resolution, so the State Bank will draft a Decree to submit to the Government to guide the implementation of the National Assembly's Resolution on superior mechanisms in financial centers and there will be specific and detailed circulars for investors. The direction of the Decree must set out regulations on all banking activities from licensing, organizing activities, providing services, safety ratios, to inspection and supervision...

Accordingly, the legal framework must clarify the entities participating in the financial center, what they can and cannot do. At the same time, how banks, securities companies, insurance companies, investment funds, asset managers, etc. operate in the financial center must be clarified. This distinction is to distinguish a financial institution operating under current legal regulations, from doing business in the superior policy environment of the financial center.

Along with the application of superior mechanisms, are commercial banks operating in the financial center allowed to mobilize deposits from residents, apply the loan-to-deposit ratio as applied to banks, have operators intervene early when encountering sudden withdrawals of deposits, have a recapitalization mechanism... these are issues that need to be raised. For financial and non-financial institutions registered to operate in the financial center, the factors of residents, non-residents... also need to be specified.

There are currently two options for banks and financial institutions operating in the financial center. In the first option, financial institutions operating in the financial center provide services similar to those outside, applying current legal regulations. In the second option, financial institutions in the financial center operate under a common regulatory framework of the National Assembly Resolution. In which, these financial institutions can freely trade foreign currencies, while current law does not allow this.

In any case, the Deputy Governor stressed the need to protect international investors and businesses in the financial center. This can be achieved through the creation of a clear legal system and international dispute resolution mechanisms. Transparency in regulations and processes will help ensure that all financial transactions are conducted fairly, while protecting the interests of all parties involved.

However, the process of developing decrees and regulations related to financial centers is a transparent, fair process with criticism from relevant parties, including domestic and foreign banks. Therefore, coordination between international and domestic experts is very important to find the most suitable development plan for an international financial center in Vietnam. Therefore, Deputy Governor Pham Tien Dung invited experienced international organizations to help Vietnam build a financial center with practical content, to ensure the stable operation of entities participating in Vietnam's financial center.