Vietnam does not necessarily have to choose rigidly between building a regional specialized financial center or a regional comprehensive financial center, but can flexibly coordinate to take advantage of opportunities.
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| Ho Chi Minh City is currently a regional financial center. (Source: Tuoitre) |
This is the opinion of Dr. Ho Quoc Tuan, Senior Lecturer in Finance and Accounting, University of Bristol (UK), ahead of the visit to the UK by Deputy Prime Minister Nguyen Hoa Binh from March 16-20. One of the focuses of the visit is to promote cooperation between the two countries in building and developing international financial centers.
Regarding the Project to Develop an International Financial Center in Ho Chi Minh City and Build a Regional Financial Center in Da Nang, Dr. Ho Quoc Tuan noted that it is necessary to first distinguish between “international” and “regional” financial centers.
Ho Chi Minh City is currently a regional financial center, ranked 105/121 international financial centers and belongs to the group of local specialist financial centers. This group includes centers such as Chengdu, Tianjin, Nanjing, Dalian (China), Tallinn (Finland), Lugano (Switzerland), mainly serving the domestic and regional financial markets, not globally competitive and only specializing in certain financial services, instead of developing comprehensively like New York or London.
Banks also mainly serve domestic enterprises, provide trade finance for exporting enterprises and attract foreign direct investment (FDI).
Dr. Ho Quoc Tuan said that this is the model of a “regional” financial center mentioned in the drafts on financial centers in Vietnam. This center includes capital markets, currencies, derivatives and testing sandbox mechanisms.
Meanwhile, a financial center that reaches the "international" rating is a center that has a more established and well-known name, with a long tradition of serving international transactions such as Sydney, Melbourne, Rome, Chicago, Toronto.
Finally, the top tier, the “global” group, includes prominent brands such as London, New York, Paris, Tokyo, Zurich, Amsterdam. Recently, emerging global financial centers (global contenders) such as Beijing, Shanghai and Istanbul have appeared in the rankings, challenging the traditional position of the group with a global footprint.
Currently, there are two traditional directions for developing financial centers, which are specialization and diversification. According to Dr. Ho Quoc Tuan, if developing in a specialized direction, Vietnam can develop into a specialized financial market group of the region, for example the Association of Southeast Asian Nations (ASEAN), such as Tel Aviv, Mumbai, focusing on certain financial services, or set a more ambitious goal of becoming a specialized financial market group of global stature such as Dubai, Hong Kong and Luxembourg.
Another option is to develop according to the product diversification model, which means providing a variety of financial services in a synchronized manner. Instead of focusing on specialization, it can develop into a local diversification center (such as Lisbon, Atlanta, Helsinki), then gradually move up to compete with regional centers (such as Bangkok, Madrid, Stockholm). Finally, there is the global diversification group such as London, New York, Paris, Tokyo.
However, Dr. Ho Quoc Tuan pointed out that Vietnam does not necessarily have to choose to develop only in depth or in breadth, which means it cannot rigidly determine whether it can only develop a regional specialized financial center or a regional comprehensive financial center. Instead, Vietnam can flexibly coordinate to take advantage of opportunities. Ho Chi Minh City is currently a regional specialized financial center.
According to Dr. Ho Quoc Tuan, even if Vietnam chooses to develop into a comprehensive financial center, it can still learn from Dubai's specialized center model to accelerate the development of fintech services, specifically in the two areas of AI/Machine Learning and digital assets. He believes that developing according to the specialized center model will take advantage of Vietnam's advantages such as the ability to train, access and apply AI/Machine Learning.
Therefore, depending on geographical conditions, local businesses, the ability to attract foreign businesses and financial institutions, and human resources, Ho Chi Minh City and Da Nang may have different options, Dr. Ho Quoc Tuan recommended.
He also noted that Ho Chi Minh City and Da Nang need to avoid "stepping on each other's toes" in choosing areas of intensive development. For example, only one of the two cities has chosen fintech as its area of expertise. The same is true when it comes to the direction of development in artificial intelligence (AI).
Quoting Mr. Axel Weber, Chairman of UBS and former Chairman of the Bundesbank at the 2020 Global Banking Summit, Dr. Tuan emphasized that the reason why Europe's leading international financial centers such as Frankfurt and Paris cannot develop as well as London is due to "regulatory fragmentation", causing all parties participating in the game to have a zero-sum, if one side wins, the other side will lose, this is a lesson to remember.
He also emphasized the importance of human capital, one of the five key input factors for the successful development of a financial center.
According to the Global Financial Center (GFC), these five input factors include the business environment (including political and macroeconomic stability and clear, highly enforceable laws); human capital; infrastructure; financial market development; and brand/reputation (including organizational culture and innovation).
However, Dr. Ho Quoc Tuan noted that while most discussions focus on legal, business models, institutions and infrastructure, human capital is always mentioned, but seems to be only in the form of an "attachment" despite the important role of human resources in operations, policy response and innovation.
Source: https://baoquocte.vn/chuyen-gia-tai-chinh-anh-tu-van-lua-chon-mo-hinh-trung-tam-tai-chinh-o-viet-nam-307676.html
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