Building a Financial Center in Vietnam: Foreign Exchange Transaction Policy Must Be Easy

Currency conversion should be easy

Recently, at the Conference on Building Financial Centers in Vietnam, Minister of Finance Nguyen Van Thang affirmed that building a Financial Center (TTTC) is not a new content in the world but for Vietnam it is a new and unprecedented issue. Vietnam will do it and learn from experience, not be hasty but also not be perfectionist, lest it miss the opportunity.

This is also the recommendation of Associate Professor, Doctor, economic expert Dinh Trong Thinh when talking to PLVN Newspaper. Mr. Thinh said that there are about 6-7 conditions when building an international financial market. In which, the first condition is free currency conversion; free trading of international stocks and bonds; state stocks and bonds; corporate bonds. This means that in the international financial market, investors must be free to trade with different currencies. The conversion of currency must be quick.

Other necessary conditions include having buyers, sellers, goods, a brokerage force, along with the buying and selling components of the market. The transaction language is not only English, French, German, but also Portuguese... "That means there must be a team of brokers who are extremely fluent in the language and very standard in international financial relations" - Associate Professor, Dr. Thinh affirmed.

In addition, the financial market must also ensure the conditions so that investors can easily switch from profits to buying derivative securities. According to Associate Professor Thinh, if all conditions for buying, selling, and converting are simple and easy, then goods will naturally come and attract investors, organizations, and financial institutions to operate.

In particular, Associate Professor Thinh emphasized the story of "must convert currency simply and easily" before considering the story of developing the financial market. "Specifically, we need to remember that building the financial market with the desire to attract all investors from countries around the world . We must consider the story of transferring money out, transferring money in, transferring money from Vietnamese Dong to USD, to Euro easily, then people will participate. Currently, we still have many conditions in transferring money, difficulties in converting currency, so how will international transactions be carried out at the financial market?" - Associate Professor, Dr. Thinh raised the question.

Therefore, according to this economic expert: “We cannot be hasty. In the matter of building a financial market, we must prepare all the most reasonable conditions and regulations. We should not raise the issue of offering incentives to attract investors, because the most important thing for all investors is profit. Only when the conditions for buying and selling are easy will profit be generated, and then we can think about paying taxes.”

There must be a clear legal framework for the Financial Center.

At the conference, Deputy Governor of the State Bank of Vietnam (SBV) Pham Tien Dung said that relevant ministries, sectors and localities are building a legal framework for international financial markets based on international experience and there will be differences in Vietnam's international financial markets compared to those of other countries, while financial markets in some other countries use a common law.

Accordingly, Vietnam’s legal framework must clarify what entities participating in the financial market “can and cannot do”. At the same time, how banks, securities companies, insurance companies, investment funds, asset managers… operate in the financial market and what their operations in Vietnam and internationally need to be clearly defined.

Deputy Governor of the State Bank of Vietnam Pham Tien Dung.

According to Deputy Governor Dung, this distinction is to distinguish a financial institution operating under current legal regulations from the superior policy of the Financial Market. Accordingly, in the first option, financial institutions operating in the Financial Market providing similar services to those outside will apply current legal regulations; In the second option, financial institutions in the Financial Market operate under a common regulatory framework of the National Assembly Resolution. In which, financial institutions can freely trade foreign currencies, while current law does not allow this to be done outside the Center.

Therefore, the State Bank will draft a Decree to submit to the Government to guide the National Assembly's Resolution on TTTC and will have specific and detailed circulars for investors; The direction of the Decree must set out very clear regulations, from the stage of licensing operations, organizing operations, safety ratios, inspection and supervision...

Currently, the draft Resolution of the National Assembly is expected to establish that foreign bank branches, 100% foreign-owned banks and subsidiary banks of Vietnamese credit institutions will be allowed to register to operate at international financial centers in Vietnam. The reason for this regulation, according to the representative of the State Bank of Vietnam, is that a domestic credit institution cannot apply two legal mechanisms.

This spirit will be included in the National Assembly Resolution by the Drafting Committee, along with the guiding Decree to be submitted to the National Assembly's May 2025 session. This Decree will be made public for foreign banks and entities participating in the financial market to comment so that the drafting agencies can listen and accept their opinions to ensure the stable operation of entities participating in Vietnam's financial market. Because the final legal framework must stipulate that "entities participating in the financial market must understand which legal provisions they are following".

Hoang Tu

Source: https://baophapluat.vn/xay-dung-trung-tam-tai-chinh-o-viet-nam-chinh-sach-giao-dich-ngoai-te-phai-de-dang-post544158.html