Realizing the aspiration of building a new financial center

Vietnam is stepping onto the international stage with the aspiration to build a new financial center to contribute to the country's economic development.

Vietnam's determination

Prime Minister Pham Minh Chinh emphasized that Vietnam has the key conditions necessary to develop an international financial center, including strong economic growth, a young and skilled workforce, improving infrastructure, a favorable geographical location and a commitment to legal reform.

Regarding financial centers, Prime Minister Pham Minh Chinh said that Vietnam must seize this opportunity to integrate more deeply into the global financial system. The Prime Minister used Dubai as a benchmark, highlighting Dubai's success in creating an independent legal framework and promoting innovation, while calling for strategic cooperation with international partners, especially the UAE, to support Vietnam's efforts in developing similar financial centers.

Thu Duc City is hailed as an innovative urban hub comparable to Shanghai’s Pudong (China). With the new Metro Line 1 in operation, Thu Duc, especially Thu Thiem area, is easily connected to high-tech zones and a growing innovation ecosystem.

In Can Gio, the vision extends to a sprawling new city developed by Vingroup, with a metro line connecting the centre of Ho Chi Minh City, anchored by a modern deep-sea port. The Can Gio Mega Port aims to compete with the largest ports in Southeast Asia, positioning Vietnam as a central node in global trade and logistics.

These locations, with their distinct advantages, reflect Vietnam's determination to chart its own path as a financial and commercial hub.

General legal framework

For Ho Chi Minh City to develop as an international financial centre, Vietnam needs to implement a series of breakthrough reforms, mirroring the success of centres such as Dubai. Essential changes include:

The first is legal reform. Establish a separate legal framework for the international financial center, separate from Vietnam's current regulatory system, similar to Dubai's approach. This will create a predictable legal environment for international investors, ensuring effective contract enforcement and dispute resolution.

Second is tax policy. To attract multinational corporations and top financial professionals, Vietnam could consider a personal income tax rate and tax-free threshold similar to Singapore or Hong Kong; a corporate income tax rate of 15%, similar to Hong Kong; and exemptions from withholding tax on dividends, royalties and interest. These measures, combined with simplified regulatory processes, would create a competitive advantage over regional rivals.

Third is capital flows. To build a financial center as a regional financial center, Vietnam needs to facilitate free capital flows into and out of the center, allowing unrestricted currency conversion and smooth capital returns. This will simplify cross-border transactions and strengthen the financial center’s role as an important connecting node for trade and investment.

Fourth is a regulatory sandbox for fintech. Fostering innovation is another important factor. Although the Law on Credit Institutions has a provision for a regulatory sandbox for fintech, no specific decree has been issued. A dedicated fintech sandbox in the financial center would allow start-ups to experiment with emerging technologies such as blockchain and artificial intelligence, thereby creating a dynamic financial ecosystem.

Fifth is the balance between innovation and stability. These reforms need to be integrated into Vietnam’s broader legal framework, addressing issues such as transfer pricing and foreign exchange controls. The establishment of a dedicated regulatory body, similar to Dubai’s Financial Services Authority, would ensure effective supervision, maintain stability and build investor confidence.

By granting regulatory autonomy to the financial center, while remaining consistent with national policies, Vietnam can create a globally competitive financial center.

Source: https://baodautu.vn/thuc-hien-khat-vong-xay-dung-mot-trung-tam-tai-chinh-moi-d246157.html