On January 4, Prime Minister Pham Minh Chinh was present at a ceremony where the urban planning framework for Ho Chi Minh City for the 2021-30 period, with a vision to 2050, was revealed.

This framework includes plans for establishing an IFC.

Among the attendees were key figures from Vietnam-based foundations, including Alexander Ziehe, chairman of the German Business Association (GBA), and Rich McClellan, country director of the Tony Blair Institute for Global Change (TBI).

"The atmosphere in the room that day clearly showed the government's strong commitment to this transformative project," McClellan said during an exclusive interview with Tuoi Tre (Youth) newspaper.

"The IFC isn't just symbolic; it's set to drive financial and economic innovation in Vietnam."

TBI, which promotes cooperation between Vietnam and the UK, has been collaborating closely with various Vietnamese ministries.

In July 2024, PM Chinh met with Tony Blair, former UK prime minister and executive chairman of TBI, to explore opportunities in trade, investment, and financial sector growth.

McClellan described the establishment of the IFC in Ho Chi Minh City as a bold and timely vision.

"Vietnam is at a pivotal moment," he remarked, highlighting the city's dynamic economy, strategic position, and burgeoning workforce as perfect for leading this venture.

However, he pointed out that the success of the IFC hinges on a well-defined implementation strategy, phased development, and aligning Vietnam's financial systems with international standards.

Strategic and structural requirements

Ziehe described the IFC development strategy as “highly promising.” He emphasized the need for early involvement of the private sector and close collaboration among administrative bodies.

The GBA, which has over 400 members, includes major German financial institutions such as Deutsche Bank, Allianz, and HDI.

In 2024, the association organized visits for German banks, venture capital firms, and insurance companies to explore Vietnam’s market potential.

“Many are still in a phase of observation, waiting for detailed information on administrative reforms and the establishment of financial centers,” Ziehe noted.

Every country has unique characteristics. According to Ziehe, Vietnam should leverage its manufacturing sector strengths to develop the IFC and offer complementary trade finance and sustainable development solutions. 

Examples from Singapore, Hong Kong, and Dubai could provide valuable insights, but adjustments must be made to fit Vietnam’s specific context.

McClellan also recommended adopting a hybrid model, one that combines the strengths of various successful IFCs while tailoring them to local conditions. 

He underscored the significance of creating sector-specific investment incentives, particularly for areas like asset management and sustainable development.

"The key is to develop a practical roadmap for each phase of development, one that aligns with Vietnam's economic goals while remaining flexible enough to adapt to global market trends," McClellan stressed.

Prioritizing foundational reforms

Foreign investors agree that Vietnam’s financial industry must continue advancing with stronger policies and administrative reforms. 

Establishing the IFC could help resolve market challenges by creating an appropriate ecosystem to welcome international financial institutions and lead in liberalization, advanced financial governance, and global economic integration.

“For this to happen, the government needs to carefully review its approach to opening the country, creating a friendly environment for international talent and investors,” Ziehe stressed, adding that foreign expertise will play a pivotal role.

McClellan urged Vietnam to stay dedicated to strengthening core pillars such as the stock market, capital market, and banking system.

Once these foundational aspects are secure, Vietnam can focus on niche areas like fintech, digital banking, green finance, ESG investment, and capital market innovation.

These sectors will distinguish Vietnam’s IFC while aligning with global trends.

Legal frameworks for currency conversion and capital flow movement should also be developed to ensure financial liberalization and foster trust in management systems.

“A successful IFC not only needs mechanisms to attract inflows but also requires transparent systems for capital outflows to ensure investor confidence,” McClellan added.

Danny Kim, an economist at Moody's Analytics who handles Vietnam forecasts, argued that the development of the IFC necessitates a phased approach, complete with clear long-term objectives and transparent financial regulations.

He emphasized that finding the right balance between capital mobility and prudent financial oversight will pose a significant challenge.

"The ambition exists, but turning that into success will require continuous effort and regulatory changes. Vietnam must also bolster its talent pool to meet the standards of an IFC and to compete with established financial centers," Kim concluded.

Source: Tuoitre News