Vietnam proposes ‘unprecedented’ policies for financial centres in Ho Chi Minh City, Da Nang
This comes as the country bids to attract finances that are shifting from traditional hubs such as Hong Kong and Singapore
Published Thu, Jan 9, 2025 · 04:28 PM
[HO CHI MINH CITY] Vietnam’s Ministry of Planning and Investment has proposed a set of “unprecedented” policies for the country’s upcoming financial centres as it seeks to seize opportunities amid the transition of global capital flows.
According to the document released by the ministry on Jan 3, an international financial centre will be set up in the southern metropolis of Ho Chi Minh City, and a regional-scale one will be located in the central city of Da Nang, with exact geographic boundaries to be proposed by the respective local governments.
The proposal was released to the public for review this week.
The investment ministry said Vietnam possesses the necessary economic elements and natural advantages for new financial centres that are competitive internationally. This is as the country bids to attract finances that are shifting from traditional hubs such as London, Hong Kong and Singapore.
The country is located at the strategic crossroads of global maritime routes from north to south and east to west, while also being situated at the heart of South-east Asia.
In addition, Vietnam operates in a unique time zone that differs from those of the 21 current largest global financial centres. “This is a distinct and special advantage for attracting idle capital during the downtime of trading in these centres,” the ministry noted.
According to the proposal, organisations must register for membership at the centres, in which simplified administrative procedures will be applied for certain activities, particularly the establishment and management of foreign financial institutions.
The centres also enable transactions in Vietnamese dong or other convertible currencies, as well as adopt regulatory sandboxes for the operations of fintech businesses, including cryptocurrency exchanges.
Individuals and corporations that meet certain criteria can enjoy exemption or reduction of taxes from the income earned from activities at the financial centres.
Particularly, investment projects of corporations listed among the 500 largest global companies in Forbes’ ranking and wholly foreign-owned financial enterprises and funds are eligible for special tax holidays.
The government can also provide financial support allocated from the state budget for the training costs of Vietnamese workers at investment projects in the area.
Other policies include incentives and mechanisms for the participation of strategic investors, land usage, construction, infrastructure development, exports and imports of goods and services, as well as fees and dispute settlement within the financial centres.
As most of the proposed policies are “unprecedented” and “beyond the existing regulatory framework of Vietnam”, the investment ministry is seeking feedback from other ministries, government agencies, local authorities and businesses to complete the draft resolution and related reports, before submitting for parliament’s review in February and final approval in May 2025.
A steering committee for regional and international financial centres has also been established and led by Prime Minister Pham Minh Chinh.
Speaking at a recent conference, Chinh said that Vietnam meets five big conditions for building an international financial centre.
They include a gross domestic product of around US$470 billion in 2024 – the 33rd-largest in the world; an open economy with 17 free trade agreements; stock market capitalisation at 70 per cent of GDP; a peaceful and politically stable environment; and achieving remarkable results for open institutions, connective infrastructure and smart governance.
In a separate panel discussion on the topic last October, Wesley Chua, a senior manager in international tax and transaction services at EY and a board member at the Singapore Chamber of Commerce Vietnam, mentioned the challenges for Vietnam to build such centres amid competition with other hubs in the region such as Hong Kong, Singapore and emerging players such as Kuala Lumpur in Malaysia.
“A financial hub also comes with a lot of risks. We really need the authority to come in to govern, to monitor and to control,” he added. “All the legal basics have to be formed first, before we can really say that we are ready for a financial hub.”
