Dreams of establishing an International Financial Center in HCMC will largely depend on Vietnam’s ability to create an appropriate institutional framework.

Analysts have noted that the goal of
establishing an International Financial Center (IFC) in Vietnam is to attract major
financial investors. Doing so, however, requires answering several fundamental questions,
among them: Why should they come to Vietnam? What benefits will they gain?

In the context of increasingly fierce
regional competition, the success of an IFC in Vietnam will depend heavily on the
country’s ability to design and operate a flexible, efficient, and sophisticated
institutional framework.

Competitive key

If Ho Chi Minh City wants to become an
IFC, it must evolve into a regional capital-distribution hub, according to experts.
To achieve that, Vietnam needs to meet at least one of two conditions. First, it
must become a capital-surplus economy with the ability to export capital. Second,
it must leverage shifts in the global financial order. As the world moves towards
multi-polarity, financial centers can serve as intermediaries for global fundraising.
This could be an opportunity, but the competitive equation remains unresolved.

Some observers argue that Vietnam could
compete institutionally by using its late-mover advantage to design a framework
suited to new asset classes and markets such as digital assets.

According to Mr. Phan Duc Hieu, Standing
Member of the National Assembly’s Economic and Financial Committee, the National
Assembly’s resolution establishing the IFC is an important starting point. “The
resolution includes 14 groups of special policies spanning foreign exchange, banking,
capital markets, taxation, imports and exports, residency and travel, and specialized
rules for dispute resolution and jurisdiction,” he said.

He also highlighted key differences in
policy design. Under the framework, English will be the official working language
inside the IFC, while Vietnamese will serve only as a supplementary language. In
addition, economic and commercial transactions conducted there may apply international
law, depending on the needs of the parties involved.

The IFC’s judicial mechanism will operate
as a separate system. Mr. Hieu believes that involving foreign judges should be
considered: “Many have asked whether foreign judges can participate; in my view,
that possibility cannot be ruled out,” he said. However, he also cautioned that
the path from policy approval to effective implementation is long, especially in
attracting investors.

Mr. Pham Tien Dung, Deputy Governor of
the State Bank of Vietnam (SBV), said the central bank is working closely with Ho
Chi Minh City to prepare for the IFC’s rollout and must draft around eight decrees
to establish an appropriate regulatory framework.

One major breakthrough is the proposal
to grant the IFC Executive Board in Ho Chi Minh City full autonomy in all licensing,
supervisory, and management processes for institutions operating within the center.
Additionally, the Executive Board will be authorized to issue guidelines on banking
activities that extend beyond existing regulations, provided they align with the
SBV.

On foreign exchange, Mr. Dung noted that
transactions between the IFC and external entities will be almost fully liberalized.
“Borrowing foreign currency is currently quite complex, but once the financial center
becomes operational, the level of openness will increase significantly,” he said.

Experts emphasize that while a liberal
regulatory corridor is necessary, it is not enough. Institutions must be stable,
predictable, and equipped with exceptionally-strong risk-management capabilities
to earn the trust of global investors.

In an environment of intensifying regional
competition, the success of an IFC in Vietnam will hinge largely on institutional
capacity, not only in designing laws but in operational flexibility and effective
risk governance.

Notable models

At a recent workshop on attracting strategic
investors to Ho Chi Minh City, organized by the Central Commission for Policy and
Strategy, experts agreed that developing an IFC requires a globally-competitive
policy framework, centered on identifying the right “strategic investors.” This
is considered essential to building a deep financial ecosystem, rather than relying
on widespread, ineffective incentives.

According to expert analysis, successful
financial centers worldwide begin by defining and classifying groups of strategic
investors. A common principle is that not every company with large capital qualifies
for preferential treatment. Local authorities select only those operating in priority
sectors, capable of innovation, committed to long-term investment, contributing
to RD, creating high-quality jobs, and generating technological spillovers.
This is a selective approach based on capability and strategic impact, not merely
capital size.

Professor Vu Minh Khuong from the Lee
Kuan Yew School of Public Policy at the National University of Singapore, views
Shanghai’s financial center model as a good example. The Chinese city developed
an “Urban Strategic Partnership” mechanism allowing multinational corporations to
invest under tailored arrangements. These include guarantees of property rights,
free capital transfers, and access to international financial markets, designed
specifically for companies classified as strategic investors.

Shanghai also created a “city-level strategic
investment portfolio” comprising about 100 selected domestic and foreign enterprises
chosen based on technological innovation and spillover potential. These companies
benefit from land access, tax incentives, credit programs, talent development, and
streamlined administrative processes. Administration also supports companies establishing
regional headquarters or RD centers, through policies on visas, residency,
remittances, and specialist services, aimed at keeping the right strategic investors
in place.

Tokyo adopted a different approach but
has maintained a strong focus on strategic investors. Instead of publishing a fixed
list like Shanghai, Tokyo targets clear priority groups. It offers strong incentives,
including fast-track licensing, tax benefits, and workforce assistance, to companies
with strong research capabilities. Though it does not explicitly use the term “strategic
investor,” Tokyo’s policies clearly prioritize a core set of target enterprises.

Singapore, meanwhile, focuses on identifying
“strategic projects” rather than specific companies. Its Refundable Investment Credit
(RIC) allows cash refunds of 10-50 per cent of investment costs over four years,
but only for large-scale projects in international finance, RD, innovation
centers, or regional headquarters. The mechanism is particularly effective under
the Global Minimum Tax of 15 per cent, helping Singapore maintain its competitive
edge in attracting major technology firms and international financial institutions.

Another notable model is Dubai, which
has built 26 specialized free zones, each dedicated to sectors such as finance (DIFC
and ADGM), commodities trading (DMCC), technology (Internet City and Silicon Oasis),
and logistics (JAFZA). Each zone permits 100 per cent foreign ownership, provides
tax exemptions, and ensures free capital flows, and has its own regulatory system.
This allows Dubai to classify investors clearly according to sectoral strategy and
functional needs.

Despite differences in design, successful
IFC models share one principle: rigorous selectivity and focused policy support
for strategic industries, rather than spreading resources thin. Incentives are tailored,
from tax exemptions and direct financial support to talent, RD, administrative
procedures, and services for international professionals.

This offers an important lesson for Vietnam
as it builds an IFC in Ho Chi Minh City. Defining strategic investor groups, identifying
priority sectors, and designing suitable mechanisms will determine the center’s
long-term competitiveness.

VET-Tung Thu