Vietnam is poised to take a significant leap in its economic development with the establishment of an International Financial Centre (IFC) in Ho Chi Minh City and a Regional Financial Centre in Da Nang. This initiative, one that TheCityUK has been supporting in collaboration with the Foreign, Commonwealth and Development Office (FCDO), is part of Vietnam's broader vision to become a high-income country by 2045 and achieve its 2050 net zero commitment.
Vietnam's economic success story is well-documented, with the country emerging as one of the fastest-growing economies in the world. The government's ‘Vision 2045’ sets the ambitious goal of becoming a high-income country by 2045 through increasing Vietnam's role in global value chains and leveraging digitalisation to drive economic growth. The development of an IFC is seen as a key component in achieving these goals. As the UK has one of the oldest, most successful and highly regarded IFCs in the world, it is uniquely positioned to support Vietnam on this journey. The project was formalised in a Memorandum of Understanding signed in November 2023 between TheCityUK and the Foreign Investment Agency of the Ministry of Finance (formerly Ministry of Planning and Investment).
At the request of the Vietnamese Government, and sponsored by the FCDO, we have been working with our members to support Vietnam in the development of an IFC since December 2022. Through our work, we have established the UK-Vietnam IFC working group and several thematic sub-working groups, comprising senior members from TheCityUK with experience in establishing IFCs, representatives of the Vietnamese private sector, and the Vietnamese Government. These groups conducted detailed investor needs analyses and provided feedback on the optimal strategy for Vietnam’s IFC development.
The project and its intended outcomes build on the UK-Vietnam Strategic Partnership and Free Trade Agreement (FTA) between the two nations to deepen bilateral trade and investment links. Our unique approach involves bringing together a comprehensive understanding of investor requirements, taking a practitioner-led approach, and collaborating closely with regulators and officials to address their needs; thereby creating an environment that is fit-for-purpose and attractive to investors. The proposed IFC aims to attract regional and international investment, enhance financial inclusion, and support the development of climate-resilient infrastructure.
To aid the Vietnamese Government address investor concerns and build a compelling commercial value proposition in key sectors of the economy, we have also partnered with The Moller Institute at Churchill College, Cambridge University, to develop and deliver two specialised and advanced leadership courses in Foreign Direct Investment (FDI),
The IFC development comes with several potential challenges, such as the need for significant legislative and institutional reforms and the importance of building capacity and expertise. Therefore, as part of the development of the IFC, a list of recommendations was presented to the Vietnamese Government and the Politburo for consideration which included:
- Ensuring political support: Consistent and high-level political support is essential for the success of the IFC.
- Staged Development: The IFC should be developed in stages, allowing the government to choose a pace that aligns with its long-term strategy.
- Ensuring an onshore presence: The IFC should have a significant onshore presence to benefit the entire economy.
- Complementary Reforms: The IFC should complement ongoing national financial sector reforms.
- Hybrid Model: is recommended, which can be developed incrementally towards a full model if required.
- Focus Areas: Initial focus areas include Green Finance, FinTech, and Capital and Commodities Markets development.
- Establish a Regulatory Regime based on international best practices, governed by Vietnamese laws.
- Infrastructure and Talent: Develop high-quality infrastructure and create an environment attractive to skilled professionals.
We continue to support Vietnam in this ambitious endeavour, offering expertise and capacity building to ensure the successful development of the IFC. If it succeeds in its aims, the IFC can offer significant growth potential for Vietnam's professional and business services sector, driven by the country's integration into global value chains and the acceleration of digitalisation. It is also expected to create wider employment opportunities throughout the economy, boosting foreign direct investment, enhancing financial inclusion, and positioning Vietnam as a leading financial hub in the region.
This project has been a cross- industry effort and we would particularly like to offer our thanks to Michelmores, Standard Chartered, HSBC, CISI, ACCA, ICAEW, Freshfields Bruckhaus Deringer, Clifford Chance. KPMG, London Stock Exchange, Simmons and Simmons, Allen & Overy, Hogan Lovells, Fidelity International, as well as the UK Government, the British Embassy in Ha Noi and British Consulate General in HCMC, British Chamber of Commerce Vietnam, and the British Corporate Advocacy Council (BCAC) and its Members.
