Vietnam to Develop Two Financial Centers
Vietnam is aiming to develop two new financial centers: an international financial center in Ho Chi Minh City (HCMC) and a regional financial center in Da Nang. The government hopes that these financial centers will help to boost investment, attract new financial institutions, and stimulate economic growth.
Background
Last November, the Politburo published Notice 47-TB/TW outlining plans to establish an international financial center in HCMC and a regional financial center in central Da Nang. Since then, 49 individual tasks have been delegated to 12 ministries, branches, and localities to establish the legal framework and prepare the ground for these new financial centers.
Speaking earlier this month at an event to announce a government resolution on developing these regional and international financial centers, Prime Minister Pham Minh Chinh set out the positive financial trends and economic conditions which underpin this decision. These include:
- A gross domestic product (GDP) growth rate of around seven per cent.
- Total import-export turnover of USD 810 billion with a trade surplus of USD 24 billion.
- State budget revenue of almost USD 80 billion in 2024, an almost 20 per cent increase compared to 2023.
- Foreign direct investment (FDI) of around USD 40 billion, ranking in the top 15 for developing countries.
- The fastest-growing stock market in the region with a 21.2 per cent annual increase in stock market capitalisation, reaching USD 283 billion in 2024.
- Seventeen free trade agreements with 65 leading global economies.
Why Ho Chi Minh City and Da Nang?
HCMC has long been a center of trade, finance, and commerce in Vietnam. Earning a gross regional domestic product (GRDP) of USD 73.8 billion, the southern metropolis accounted for 15.5 per cent of national GDP in 2024 and is also home to half of Vietnam’s fintech start-ups.
However, compared to its regional competitors, it has some ground to make up. HCMC ranked 108th in the 2024 Global Financial Centers Index (GFCI), up an impressive 12 places since 2023. Even so, that places HCMC below cities such as Singapore (3rd), Kuala Lumpur (77th), Bangkok (93rd), and Jakarta (102nd).
The international financial center is expected to focus on capital markets. It is proposed for HCMC’s District 1 and the Thu Thiem new urban area, where special policies such as simplified and streamlined registration procedures, tax incentives, as well as visa and work permit exemptions will be introduced to entice foreign banks, investment funds, and financial service providers. The financial center will also include an international arbitration center to resolve disputes and strengthen confidence in the market.
Meanwhile, Da Nang has introduced incentive policies to incubate and encourage artificial intelligence (AI), cloud computing, and blockchain companies. The city has set aside over six hectares for the financial center, as well as almost 10 hectares for the development of 33 fintech services and 62 hectares to develop supporting infrastructure to attract investors.
The Da Nang regional financial center is envisioned to be focused on three financial services: (i) foreign exchange (FOREX), international trade, and green finance; (ii) fintech and AI, and; (iii) support services such as accounting, audit, customs, and tax.
What’s next?
The financial centers will prioritise the development of emerging sectors, such as fintech, and feature trading platforms for securities, currencies, and commodities. Meanwhile, Vietnam’s financial sector will be further aligned with international standards. The government hopes that these new financial centers will help to better connect Vietnam with global financial markets while also providing financial services to meet demand from domestic and international enterprises.
The Prime Minister has outlined five tasks for the development of new financial centers in Vietnam:
- Modernising financial infrastructure.
- Attracting top financial talent from around the world.
- Enhancing innovation and developing new financial products, such as green financing.
- Increasing international integration and partnerships.
- Improving risk management and the robustness of the financial sector.
The next steps include a draft Resolution from the Ministry of Planning and Investment (MPI) to go before the National Assembly in the Spring. Meanwhile, the government is also looking for international partners to share their experience and expertise in developing financial centers.
It is expected that the regional financial center will be inaugurated in 2035, when Vietnam aims to rank in the top 75 financial centers in the world and the top 25 in the region, with the international financial center following a decade later, when Vietnam hopes to achieve a top 20 global rank for financial centers and a top-10 spot in Asia.
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