Each nation possesses unique economic and legal characteristics, making it essential to craft a legal framework that aligns with Vietnam’s distinct needs while adhering to international best practices. A well-structured financial center is not just about attracting investments but also ensuring long-term sustainability, regulatory transparency, and economic integration with global markets.
Learning from Global Success Stories
When discussing the development of an international financial center in Vietnam, Minister of Finance Nguyen Van Thang emphasized that Vietnam must adopt a strategic approach—learning from global experiences while maintaining a sense of urgency without striving for unattainable perfection. The country has actively sought guidance from nations with well-established financial hubs, as well as from international organizations that specialize in financial sector development.
In March, Deputy Prime Minister Nguyen Hoa Binh led a high-level delegation to three European financial powerhouses: the United Kingdom, Luxembourg, and Germany. This diplomatic mission facilitated new opportunities for investment and cooperation, particularly in banking and finance. The visit underscored Vietnam’s commitment to leveraging global expertise in developing its own financial center. Learning from these leading financial centers will allow Vietnam to anticipate potential challenges and adopt best practices while tailoring them to local conditions.
Vietnam has also benefited from the counsel of leading financial institutions and multinational corporations that operate within top-tier financial hubs worldwide. According to Iain Frew, British Ambassador to Vietnam, TheCityUK has been working closely with both public and private sector stakeholders in Vietnam since 2022 to support the country’s financial center development. Meanwhile, Swiss Ambassador Thomas Gass highlighted Switzerland’s two financial hubs—Zurich and Geneva—which rank 13th and 17th globally in 2024. Switzerland’s long-standing partnership with Vietnam has played a crucial role in strengthening financial policies and stabilizing the banking sector. These collaborations not only provide technical expertise but also enhance Vietnam’s reputation as an emerging financial hub in Southeast Asia.
Dr. Kang Qu, Deputy General Director of Planning and Development at the People’s Bank of China (Hong Kong), provided valuable insights into Shanghai’s financial center model. He pointed out that Shanghai serves as a bridge between China and global markets by establishing a free trade zone that encourages international transactions while promoting domestic currency usage. He emphasized that while Shanghai operates under China’s legal framework, its free trade zones have more flexible mechanisms to accommodate global financial flows. The Shanghai model illustrates how a financial hub can serve national economic interests while maintaining strong international connections.
Similarly, Tyler McElhaney, Country Director of APEX Group (Dubai), shared lessons from Dubai’s financial evolution. Dubai’s remarkable economic growth stems from its ability to attract international capital, which was made possible through continuous innovation and regulatory adaptation. He noted that Vietnam’s current economic landscape mirrors Dubai’s position two decades ago, suggesting that Vietnam must harness its competitive advantages while maintaining a willingness to innovate. Dubai’s model of integrating tax incentives, investor-friendly regulations, and cutting-edge infrastructure could serve as an inspiration for Vietnam as it lays the groundwork for its financial center.
Crafting a Legal Framework Tailored to Vietnam
Deputy Governor of the State Bank of Vietnam Pham Tien Dung underscored the importance of developing a legal framework that reflects Vietnam’s specific economic environment. He cautioned that while international experiences are valuable, they may not always be directly applicable to Vietnam’s context. Vietnam must balance global best practices with its own economic and regulatory landscape to ensure sustainable development.
One of the key aspects of Vietnam’s financial center blueprint is clarifying the roles and regulations governing financial institutions. The resolution currently being drafted seeks to provide clear guidance to financial market participants, including banks, securities firms, insurance companies, investment funds, and asset management firms. The primary objective is to ensure these entities understand their rights and responsibilities in both domestic and international financial interactions. A well-defined regulatory framework will minimize uncertainties, reduce risks, and enhance investor confidence in Vietnam’s financial markets.
A notable distinction in Vietnam’s proposed framework is its treatment of market participants. Unlike financial centers in the UK, Luxembourg, and Germany, which allow capital mobilization from both legal entities and residents, Vietnam’s draft resolution restricts financial market participation to legal entities only. This means that financial institutions operating within Vietnam’s financial center will not be permitted to raise capital from individual residents. Consequently, key financial regulations—such as capital adequacy ratios and lending-to-deposit ratios—may not be directly applicable within the financial center.
Another crucial consideration is risk management. In cases where a bank faces insolvency or financial distress, authorities must determine whether intervention, such as capital injection or early regulatory control, is necessary. Establishing clear guidelines for financial stability will be critical in ensuring the resilience of Vietnam’s financial hub. Proactive risk management policies, including early warning mechanisms and contingency planning, will be vital to mitigating potential financial crises.
Vietnam’s foreign exchange regulations also require careful planning. Given that Vietnam’s capital market and overall economy are relatively smaller than those of major financial hubs, policymakers must introduce gradual reforms to align foreign exchange policies with global standards while maintaining financial stability. Currency convertibility, foreign exchange reserves, and capital flow management will all play crucial roles in the success of Vietnam’s financial center.
Experts stress that Vietnam’s legal framework must be internationally competitive to attract foreign investors. This includes adopting investor-friendly tax policies, transparent investment laws, and streamlined foreign exchange management regulations. Ensuring that legal provisions are clear, coherent, and consistently implemented will be essential in positioning Vietnam as a viable destination for global capital. Foreign investors often prioritize legal transparency and regulatory predictability, making these factors essential for Vietnam’s financial sector development.
Additionally, the investment process must be simplified to eliminate unnecessary bureaucratic hurdles. A financial center thrives on efficiency, and Vietnam must prioritize regulatory transparency and procedural simplicity to foster investor confidence. Digital transformation and technology-driven solutions can further enhance Vietnam’s appeal as a financial hub by reducing administrative complexities and expediting transaction processes.
Beyond legal and regulatory considerations, infrastructure and technological readiness will be key determinants of Vietnam’s success as a financial hub. Leading financial centers worldwide have invested heavily in cutting-edge infrastructure, fintech solutions, and cybersecurity frameworks to ensure seamless financial transactions. Vietnam must follow suit by developing world-class banking infrastructure, digital payment systems, and cybersecurity measures to protect financial transactions from cyber threats.
