Building an international financial center: A policy to elevate the nation in the global economic value chain

Solid foundation for comprehensive economic development

Speaking at the opening ceremony, Ms. Le Thi Thuy Sen, Editor-in-Chief of Banking Times, said that the establishment of IFC has been identified by the Party, State, National Assembly and Government as one of the institutional breakthroughs, a policy decision to liberate resources, promote the transformation of the growth model associated with economic restructuring, to improve productivity, efficiency and competitiveness, bringing Vietnam to a higher level in the global economic value chain.

Implementing the orientation of the Party and the State, management agencies, financial and banking organizations and the expert community are joining hands to build a strategic vision for an international financial center in Vietnam. In that process, the banking system - as the lifeblood of the economy - is identified as a pioneering force, both creating a stable foundation and promoting innovation in the national financial ecosystem.

Event Overview

From the perspective of a policy advisory unit for the construction of an international financial center, MSc. Luu Anh Nguyet, Deputy Head of the Financial Market Development Department, Institute of Strategy and Economic - Financial Policy, Ministry of Finance, said that the role of an international financial center for Vietnam has been clearly demonstrated, which is to connect the global financial market, attract international financial institutions and investment capital flows; increase the mobilization and effective allocation of resources, create institutional breakthroughs, and enhance national competitiveness.

The favorable factors for building an international financial center in Vietnam are its strategic geographical location and deep economic integration. In addition, Vietnam is also actively improving its institutions, legal system, and investment environment; and its macro-economy is stable. Da Nang and Ho Chi Minh City are the two localities chosen to build Vietnam's IFC. According to Ms. Nguyet, Ho Chi Minh City is suitable for the semi-classical model, linking trade, technology, capital markets, and financial services, while Da Nang is suitable for the new generation model, integrating free trade zones, green financial services, risk management, and foreign exchange.

From international experience, Mr. Richard D. McClellan, an economist and independent consultant specializing in economic policy, financial sector development and investment strategy, also agrees with this view. He believes that IFC plays a key strategic role for a country, because it is not just a matter of geographical location or infrastructure, but a convergence of many important factors, creating a solid foundation for comprehensive economic development.

Mr. Richard D. McClellan, an economist and independent consultant specializing in economic policy, financial sector development and investment strategy, said that IFC plays a key strategic role for a country.

According to Mr. Richard D. McClellan, Vietnam has a great opportunity to develop IFC, with strong political determination demonstrated through high-level decisions and resolutions.

“The delay in establishing the IFC will cause Vietnam to lose a valuable opportunity. Fierce competition from regional rivals such as Jakarta, Kuala Lumpur and Bangkok, along with the risk of falling into the middle-income trap, requires Vietnam to act quickly. Increasingly stringent global standards from FATF/OECD, along with the time required for the reform process, emphasize the urgency of immediate implementation. The delay will not only affect the ability to attract future investment but also threaten Vietnam's long-term growth foundation,” the expert emphasized.

Opportunities go hand in hand with problems that need to be solved.

The role of the banking system in the international financial center is very important. Ms. Truong Thi Thu Ba, Deputy Director of the Financial Institutions Department, BIDV also identified this as an opportunity for Vietnamese banks when they have the conditions to attract international capital flows and access low-cost capital sources. At the same time, expanding the market and upgrading the financial services ecosystem; standardizing according to international practices, enhancing credibility and capital mobilization capacity. In addition, banks can also accelerate digital transformation and shape the platform banking model.

However, there are also some challenges such as multi-level competitive pressure with international financial institutions; gaps in data infrastructure, technology and digital integration. Therefore, Vietnamese banks face great competition, and are likely to lose at home. Besides, there is the risk of "internationalization pressure" but not enough "internationalization of capacity". Finally, there is the challenge of building market trust and policy consistency.

As a unit that is working together to build policies on international financial centers in Vietnam, Mr. Nguyen Duc Long - Director of the Department of Credit Institutions Safety (SBV) said that the policy of establishing IFC is a big and important policy and it is also a difficult and complicated issue for Vietnam. It is possible to identify many different ways and conditions to establish an international financial center in countries, but for Vietnam, establishing IFC is more difficult and different than other countries not only in terms of population size, geography... but also in terms of legal framework.

Mr. Nguyen Duc Long - Director of the Department of Credit Institutions Safety (SBV) said that the policy of establishing IFC is a big and important policy and it is also a difficult and complicated issue for Vietnam.

In a more specific analysis, Mr. Long said that long-standing international financial centers in developed countries have open legal corridors. In Vietnam, there are currently strict regulations to ensure macroeconomic safety. For example, regarding capital transaction regulations, capital flow liberalization is a major condition for establishing IFC, but Vietnam currently has strict regulations on this issue. In addition, international commitments with Vietnam's trading partners still have requirements on market protection. In addition, if there are more incentives on conditions for opening financial institutions, it is also a problem. "How to create a legal framework to ensure that financial centers operate effectively, but still ensure macroeconomic safety," Mr. Long shared.

On the banks' side, according to Mr. Long, traditional banking activities in IFC will not be much but will be oriented towards new banking activities, following international practices. Along with that is the issue of operational safety management. The representative of the Department of Credit Institutions Safety said that the State Bank will review and amend the circular on capital safety ratio, complying with advanced Basel II. From the perspective of a management agency, Mr. Long said that the State Bank will coordinate with parties to develop policies to ensure that financial centers operate effectively while also maintaining macroeconomic stability.

Before this sharing, Associate Professor, Dr. Dang Ngoc Duc - Director of the Institute of Financial Technology, Dai Nam University said that he was very assured because the State Bank had really prepared and clearly proposed solutions that were aimed at international standards and practices to ensure the safety, transparency and overall operational efficiency of financial institutions. At the same time, the State Bank also affirmed that it would coordinate effectively with relevant parties in ensuring the operation of the financial center.

Editor-in-Chief of Banking Times Le Thi Thuy Sen delivered a concluding speech at the event.

At the event, bank representatives also shared solutions such as utilizing human resources, diversifying financial products and gradually approaching major financial centers in the region and the world, promoting conditions to upgrade the stock market. At the same time, researching, testing and gradually putting into operation new markets such as commodity markets, foreign currencies, digital assets, approaching the model of international financial centers...

Associate Professor, Dr. Hoang Cong Gia Khanh, Rector of the University of Economics and Law, Ho Chi Minh City National University, recommends that to build an influential international financial center, there needs to be a combination of policies focusing on technological innovation, sustainable development, a flexible and effective legal framework, developing high-quality human resources, promoting both competition and cooperation, and building a solid economic and legal foundation.

In response to the diverse and valuable suggestions and comments, Editor-in-Chief of Banking Times Le Thi Thuy Sen said that she will develop a report to contribute an additional information channel to help SBV leaders have a basis to build mechanisms and policies related to financial centers.

Concluding the event, Ms. Le Thi Thuy Sen also affirmed: There is no best IFC model for every country. Therefore, each country will have a choice that suits its own conditions. However, experts all recommend that developing IFC is an inevitable need, but must ensure macroeconomic stability, national financial security, and the safety of financial institutions participating in IFC. At the same time, it is also the safety of financial service users...

Source: https://thoibaonganhang.vn/xay-dung-trung-tam-tai-chinh-quoc-te-quyet-sach-nang-tam-quoc-gia-trong-chuoi-gia-tri-kinh-te-toan-cau-162876.html