Vietnam’s efforts in developing financial centres in Ho Chi Minh City – the Southeast Asian nation’s southern economic hub – and Danang City on the country’s central coast are seen as an endeavour to get better access to global financial markets, but ahead is a rough ride with several challenges.

The country, a newly-established regional production hub, has no operational financial centres to date. However, its plans to establish the two centres show a resolute will to create a breakthrough in the current era of digital transformation and global economic growth, says Nguyen Tuan Anh, a lecturer in finance at the Business School of RMIT University Vietnam – an offspring of the Royal Melbourne Institute of Technology in Australia.

Bumpy ride

Along with the ambition, however, Nguyen notes, come significant challenges in translating it into reality, first among them, an update of its legal system. “Vietnam needs to speed up the completion of a legal framework to ensure compliance with international standards on transparency, accountability and investor protection,” he says. “This is key to building trust and attracting international financial institutions.”

Vietnam already has a roadmap to create a clearer and more streamlined legal foundation. By 2030, the country will issue and implement eight sets of policies based on international standards that fit the conditions in Vietnam and can be rolled out immediately. It will pilot six additional sets of legal policies used by major global financial centres, ensuring a phased approach tailored to the Vietnamese landscape.

Second, a comprehensive development of the Vietnamese financial markets is needed, including the capital, stock and financial derivative ones. By creating supportive conditions to mobilize capital and develop modern financial services, Ngugen reckons, Vietnam can attract more domestic and foreign investment.

A third issue is personnel. The country, the RMIT Vietnam expert says, has to strengthen its talent pool. To do this, selected cities, including Ho Chi Minh and Danang, need to invest in their education and training systems to develop high-quality workforces in finance, accounting, banking and financial technology. This pool of skilled professionals will ensure that the increasing demands can be met.

The fourth need is to build comprehensive and modern infrastructure for transportation, telecommunications and other utilities.

Fifth, Vietnam is already an open economy, but the nation must keep strengthening international cooperation to enhance connectivity with financial centres on a global scale. The finance lecturer explains that as an international financial centre, Ho Chi Minh City needs to pay special attention to building strategic partnerships with other international financial centres and major financial institutions worldwide.

Sixth, he says, it is fintech innovation that counts. The reason is that fintech is one of the fastest-growing sectors, with a significant role in enhancing the competitiveness of financial markets. In this context, Ho Chi Minh City and Danang need to further support innovative fintech businesses.

To attract international investors and compete with major financial centres in the region, such as Singapore and Hong Kong, Vietnam needs to focus on a competitive edge and distinctiveness for its centres.

Seventh, the country, Nguyen points out, should thoroughly study the investment policies of other financial centres, such as Switzerland’s development of an innovation ecosystem for fintech companies through infrastructure support and tax incentives, or South Korean city Busan’s policy to grant tax exemptions to foreign financial institutions meeting certain conditions.

Overall, the implementation of policies and strategies in Vietnam, the expert argues, needs to be carried out carefully and with a specific roadmap, divided into many stages suitable to the nation’s reality, even though the whole financial centre development process is supported by former British prime minister Tony Blair, who is currently the executive chairman at the Tony Blair Institute for Global Change ( TBI ), founded by him in 2016.

TBI backs Vietnam’s drive

As Britain is strong in financial services globally, Blair supports Vietnam’s efforts to set up financial centres. In the Southeast Asian nation, the TBI has been collaborating closely with various Vietnamese ministries, with a focus on the establishment of the Ho Chi Minh City and Danang financial centres, as well as enhancing trade and investment ties between Vietnam and international partners.

Blair, at his February 11 meeting with Vietnamese deputy prime minister Bui Thanh Son in the United Arab Emirates, reiterated his commitment to supporting Vietnam’s drive to develop financial centres, build data centres and promote the artificial intelligence sector.

Financial centre examples from Dubai in UAE, Singapore, Hong Kong and the like, according to Vietnamese experts, provide valuable insights but adaptations to Vietnam’s specific context are necessary.

As a result, a hybrid model is needed for the country, states Rich McClellan, the TBI’s Vietnam country director, and the model’s development must combine the advances of successful international financial centres across the world and adapt them to Vietnamese conditions.

As well, Vietnam, he suggests, should attach great importance to strengthening its core financial pillars, such as the stock and capital markets and banking system.