Vietnam’s forthcoming international financial centers (IFCs) in Ho Chi Minh City and Da Nang are not aiming to replicate the models of Singapore or Hong Kong, but rather to build strategic niche specializations aligned with the country’s strengths and development goals.

The Ministry of Finance has submitted a legislative dossier to the Ministry of Justice for appraisal of a proposed National Assembly resolution on establishing international financial centers in Vietnam. On March 26, the National Assembly Standing Committee issued Resolution No. 75/2025 to fast-track this proposal into the 2025 legislative agenda.

Distinct positioning, strategic niches

According to the draft resolution, Vietnam plans to develop its IFCs with a distinct identity rather than duplicating existing models. Each center will focus on different strategic niches to avoid overlap with regional financial giants like Singapore and Hong Kong (China).

For example, Ho Chi Minh City may prioritize international capital markets, banking, fintech, green finance, and regional supply chain services. Meanwhile, Da Nang may specialize in green finance, offshore finance, financial technology, remittances, and regional fund management - tied to the proposed Da Nang Free Trade Zone.

This differentiated strategy aims to ensure balanced development between the two cities and promotes connectivity rather than direct competition. It also allows Vietnam’s IFCs to tap into the global network while avoiding head-on clashes with established centers.

Currency and capital account liberalization

The draft resolution outlines a liberal foreign exchange regime for transactions between IFC members, allowing use of both VND and foreign currencies. For transactions involving non-members or foreign entities, current laws will still apply.

Foreign-invested entities operating within the IFCs will be allowed to freely convert currencies, in accordance with government regulations.

Governance model and oversight

The IFCs will be managed within the framework of Vietnam’s public administrative system but with a high degree of flexibility. A local administrative agency under the respective city’s People’s Committee (Ho Chi Minh City or Da Nang) will oversee day-to-day operations, supported by a specialized international arbitration center for dispute resolution.

These bodies will be formed by the local governments, under professional guidance from central ministries and agencies. A National Steering Committee for IFCs, chaired by the Prime Minister, will coordinate high-level, cross-sectoral issues.

A cross-ministerial supervisory body - including representatives from the State Bank of Vietnam, Ministry of Finance, State Securities Commission, and Ministry of Justice - will monitor financial institutions operating within the IFCs.

This structure is designed to align with Vietnam’s current regulatory environment, ensuring state control while enabling quick implementation. However, it may lack international competitiveness due to its limited flexibility.

Public-private governance models considered

The draft also explores global best practices. In several countries, IFCs are managed by public-private partnerships operating as development funds or companies representing participating banks and institutions. These models offer flexibility, professionalism, and responsiveness to market needs, boosting investor confidence.

However, such models currently do not align with Vietnam’s legal framework and may blur lines of accountability between public and private sectors if not clearly defined.

Pilot regulations and fast-track status for key institutions

Given the novel and advanced nature of policies envisioned for the IFCs, the resolution proposes allowing the government to issue pilot regulations (Decrees) over a maximum two-year period to address issues not yet covered by existing legislation. These will be subject to reporting to the National Assembly Standing Committee and the National Assembly during their nearest sessions.

Additionally, qualified financial institutions, investment funds, and major international corporations meeting global standards may receive automatic recognition as IFC members - exempt from traditional licensing processes.

For example, organizations that meet Basel III capital standards could be exempt from licensing and capital safety requirements applicable to domestic credit institutions.

The Ministry of Finance stressed that swift appraisal is crucial to ensure timely submission to the National Assembly for review and approval at its 9th session, expected in May 2025.

Nguyen Le