Assignments set for global financial centre aspirations
Assignments set for global financial centre aspirations
By building an international financial centre, Vietnam could become the world’s capital mobilisation hub. However, there are still many issues regarding resources, infrastructure, and personnel that will need to be resolved.
Danang could see a regional-scale financial centre, but Ho Chi Minh City will strive for one on a global scale, photo Le Toan |
At a January 4 conference in Ho Chi Minh City on the action plan to build a regional and international financial centre in Vietnam, Prime Minister Pham Minh Chinh stated that building such a centre was challenging, but any challenge that must be overcome.
“No matter how difficult it is, it must be done, especially in the context that Vietnam has all the necessary conditions to establish an international financial centre,” he said, listing factors such as a high GDP growth rate, international integration, and a large export and import scale.
Stock market capitalisation reached about $294 billion in 2024, up 21.2 per cent compared to the end of 2023, equivalent to 70.4 per cent of the estimated GDP in 2023. The stock market growth rate also reached double digits, the highest in the region, the PM said.
Additionally, Vietnam has an important strategic and geopolitical position, with a time zone different from the 20 largest financial centres globally, PM Chinh added.
The action plan to implement the vision points out around 50 specific tasks and solutions assigned to 12 authorities at all levels, focusing on building a legal framework and essential conditions for creating an international financial centre. An inter-sectoral steering committee for centres of both regional and global scale, chaired by the PM and six deputy heads, has also been founded.
Alexandra Smith, British consul general in Ho Chi Minh City, said that this is the right time for Vietnam to establish an international financial centre in Ho Chi Minh City and a regional financial centre in the central city of Danang.
“Finance is crucial in the country’s economic development. In 2023, Vietnam’s financial services contributed 4.9 per cent to GDP,” Smith said.
In November 2024, the Politburo issued a notice on construction of an international financial centre in Ho Chi Minh City and a regional one in Danang. The goal is to establish a financial centre this year on a small scale, focused on a collection of buildings, followed by a regional financial centre by 2035 of medium scale, and a full-fledged global centre by 2045.
“Financial centres should have certain geographical boundaries and objects are determined clearly criteria but not isolated. These centres are applied with specific management mechanisms, superior to current regulations, competitive,” the notice highlighted.
Service domination
Ho Chi Minh City proposed to develop a financial centre in District 1 and the Thu Thiem new urban area. Danang proposed a multi-component ecosystem in the core area on Vo Van Kiet and Vo Nguyen Giap streets with an area of over six hectares, which can be expanded into a financial district, a geographical area located in Danang Industrial Park with an area of about 62ha, as well as a financial technology centre in the northwest area leading to Thuan Phuoc Bridge with an area of 9.7ha.
Le Quoc Phuong, former deputy director of the Centre for Industry and Trade Information under the Ministry of Industry and Trade, commended the determination to build international financial centres. In December, he said Vietnam could attract numerous leading financial institutions and become a capital mobilisation hub for the world.
“Financial centres not only host major banks but also foreign exchange, securities, insurance, brokerage, and supporting services such as tourism, resorts, commercial centres, free trade zones, restaurants, hotels, and even casinos,” Phuong said. “If we successfully build an international financial centre, we will not only develop the currency market and banking system but also the capital market, derivatives market, and supporting services.”
In Asia, Singapore, Hong Kong, and Shanghai are known for their financial hubs. Among them, Singapore is dominant in many services related to finance and international investment, often used by Vietnamese enterprises and international corporations.
Economist Huynh The Du said building such centres means that Vietnam aims to become a regional provider of financial services and activities. “The ambition is for finance to be a crucial driver of economic development, making Vietnam a hub for capital transactions and financial services for the region and beyond,” Du said.
He highlighted two significant benefits of major financial centres: direct added value from financial activities and services – such as banking transactions, securities trading, investment funds, insurance, and payment services – and the ability to mobilise diverse capital sources easily. Vietnam would also showcase a modern, dynamic, and globally integrated economy.
Du noted that, with the completion of Long Thanh International Airport, Ho Chi Minh City and its neighbouring areas could become a regional logistics hub. “In Ho Chi Minh City, the added value of the finance, banking, and insurance sectors to GDP per employee significantly exceeds that of all other sectors. These are clear advantages,” Du said.
However, Vietnam’s infrastructure lags behind regional financial centres such as Bangkok and Kuala Lumpur, both in terms of physical and digital infrastructure.
“To successfully establish an international financial centre, Vietnam must substantially improve its transportation infrastructure, logistics, and digital platforms to reach a much higher standard,” Du said.
He also noted the need for greater openness in financial services, such as digital assets, peer-to-peer lending, and international capital flow management. Improvements in Vietnam’s living environment and high-quality workers are also essential.
Professionalism needed
Phuong expressed concerns about the feasibility of building two financial centres simultaneously. “In the short term, we should focus all resources on establishing a financial centre in Ho Chi Minh City first. When resources are sufficient, along with more experience and capacity, Vietnam can proceed with other financial centres,” he said.
Truong Minh Huy Vu, president of the Ho Chi Minh City Institute for Development Studies, raised concerns about human resources. He said high-quality personnel should be nurtured by the market, with universities providing guidance to train professionals such as auditors, accountants, lawyers, and fintech specialists.
“It is crucial to pull in experienced individuals, especially Vietnamese professionals working in investment funds and investment banks abroad, to create a wave of talent,” Vu said. “Attracting talent requires not only professional expertise, but also creativity and a willingness to contribute to the centres’ development. An attractive working environment with supportive policies and a high-quality living environment is also necessary.”
According to the Ministry of Planning and Investment, there are currently over 120 financial centres in the world. Ho Chi Minh City was included in the latest Global Financial Centres Index in September 2024, ranking 105th.
In 2023, Vietnam was list in the top three innovative economies among low-middle income countries by the World Intellectual Property Organization; one of the seven countries with the most progress in innovation over the past decade. Last year, the country was recognised as one of eight middle-income countries with the most improved rankings since 2013, and one of three countries with outstanding achievements compared to their development level for 14 consecutive years.
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Nguyen Chi Dung, Minister of Planning and Investment
The development of a regional and international financial centre has been identified by the Party, the National Assembly, and the government as one of the institutional breakthroughs. It is a policy decision to unlock all resources, strengthen the transformation of the growth model associated with economic restructuring, enhance productivity and competitiveness, and develop the country in a new era. Vietnam is struggling with numerous challenges in the construction, consolidation, and promotion of competitive advantages to form a regional or international financial centres. However, if this plan is successful, it will enable Vietnam to connect to the global financial market, attract foreign financial institutions, create new resources, and boost existing investment resources. We will be able to take advantage of opportunities to shift international investment flows, and boost Vietnam’s financial market. Ho Chi Minh City and Danang should mobilise and allocate resources, preparing basic conditions and creating improvements for the development of the financial centres, especially in infrastructure, including digital infrastructure, human resources, legal framework, business investment, and living environment. It is necessary to mobilise and attract strategic groups as well as financial institutions to invest in these financial centres. |
