Why can Vietnam build an international financial center?

“Answering the question of whether Vietnam is qualified to establish an international financial center? I affirm that it is enough,” Prime Minister Pham Minh Chinh said at the conference announcing the Government’s Resolution on building the Center. Regional and international finance in Vietnam on the morning of January 4.

This Resolution was issued to implement Conclusion 47 of the Politburo, agreeing to the policy of establishing a comprehensive international financial center in Ho Chi Minh City and a regional financial center in Da Nang city. The construction of these centers aims to develop Vietnam into an important financial destination in the region and the world.

The Head of the Government listed 5 necessary factors and conditions to develop a modern financial market, aiming to form an international and regional financial center.

First, Vietnam’s GDP scale in 2024 is about 470 billion USD, the scale of the economy ranks 33-34 in the world. Average GDP per capita is about 4,600 – 4,700 USD. In recent years, Vietnam’s economic growth rate has been stable, inflation has been controlled, and major balances have been ensured. This year, Vietnam targets GDP growth of at least 8% and strives to reach double digits in the coming years.

Second, according to the Prime Minister, strategic breakthroughs are achieving very positive results in the direction of open institutions, smooth infrastructure, and smart governance. Third, the stock market capitalization reached nearly 7.2 million billion VND, an increase of 21.2% compared to the end of 2023, equivalent to 70.4% of the estimated GDP in 2023, the growth rate of the stock market. Securities reached double digits, the highest in the region.

Besides, Vietnam has an integrated and highly open economy, having signed 17 FTAs ​​with over 65 leading economies in the world. The scale of import and export is about 800 billion USD, about 1.7 times greater than GDP. Next, according to the Prime Minister, is the political factor of stability, guaranteed social order and safety, peaceful life, and an environment of peace, cooperation and development.

In addition, the head of the Government affirmed that Vietnam has a strategic and important geopolitical position, located in the world’s leading dynamic and creative development region, with a time zone different from 21 central regions. largest financial center in the world.

At the conference, Ms. Alexandra Smith, British Consul General in Ho Chi Minh City, also said that this is the right time for Vietnam to establish an international financial center in Ho Chi Minh City and a regional financial center in Da Nang. She added that the financial pillar is extremely important in the country’s economic development. In 2023, Vietnam’s financial services contributed to GDP by 4.9%.

The early development of a regional and international financial center is assessed by Prime Minister Pham Minh Chinh as having many positive implications. This will help Vietnam connect the global financial market; attract foreign financial institutions, create new resources, and promote existing resources; take advantage of opportunities to shift international investment capital flows for economic and social development; promote the development of Vietnam’s financial market effectively, according to international standards; creating new motivation, creating a breakthrough in development.

However, Prime Minister Pham Minh Chinh also acknowledged that building a financial center is a difficult, new and complicated task. Therefore, this requires all ministries and central branches to agree and determine that this is not a private matter of Ho Chi Minh City or Da Nang.

“No matter how difficult it is, we have to do it,” the Prime Minister said.

Governor of the State Bank Nguyen Thi Hong said that experience in developing financial centers in the world and the region shows that the development of the capital market along with the monetary market and banking activities are components. fundamental and important.

However, developing capital markets and currency markets in emerging financial centers is a difficult and complicated task due to high competition with developed financial centers. Therefore, Vietnam must grasp opportunities and identify challenges such as competition from other financial centers.

According to Ms. Hong, the in-depth research process of financial centers shows that there is no common model for financial agencies, each country chooses policies based on the conditions and characteristics of each country.

After a period of in-depth research on currency and banking development in the financial center, the State Bank has clearly identified the subjects participating in the financial center, the scope of product and service transactions, and identified the mechanisms and policies for appropriate application. The financial center will establish management, supervision and dispute resolution agencies. The State Bank will coordinate with agencies to analyze and evaluate the impact of breakthrough preferential policies and appropriate management and administration methods.

As the locality where the International Financial Center is located, Secretary of Ho Chi Minh City Party Committee Nguyen Van Nen said the city will plan the space to develop the financial center in a synchronous way, including the central area and expansion areas. Ho Chi Minh City focuses on developing high-quality human resources, especially in the field of financial technology. In addition, the city also researches and proposes specific mechanisms and policies to encourage and attract investment.

The head of Ho Chi Minh City Party Committee said the locality has the highest determination to implement the proposed plans and programs, and hopes for close coordination from central ministries.

Similarly, Mr. Nguyen Van Quang, Secretary of the Da Nang City Party Committee, said that the locality has established a steering committee and a working group to build and develop a regional financial center in Da Nang. In addition, Da Nang will build and develop the management and operation apparatus of the financial center as well as call for investment, prepare infrastructure, prepare human resources…

According to Mr. Quang, Da Nang Financial Center will develop towards innovation, green finance, financial technology and trade finance with the goal of creating a difference between traditional financial services.

Minister of Planning and Investment Nguyen Chi Dung, representative of the agency assigned to preside over the study of building a financial center, proposed that this year, ministries, branches, central agencies and two localities should coordinate to soon complete the draft Resolution of the National Assembly on developing a regional and international financial center in Vietnam. In particular, he said that we should focus on perfecting the policy groups in the Project approved by the Politburo; proactively propose necessary policies to ensure the competitiveness of financial centers in Vietnam

This morning’s conference also had the participation of consuls from the UK, Australia, Singapore… and many foreign investors. In particular, the British consulate representative pledged that the country would support, contribute techniques, and connect British experts and banks to jointly build an international center in Vietnam. In addition, the UK will provide capacity building programs for state officials, as well as experts in Vietnam, to learn about global trends, international laws, and development mechanisms. Ask and apply to build an international financial center in Vietnam.