Patrick Lenain - Assistant director, Organisation for Economic Co-operation and Development
For many cities, hosting an IFC is a key source of economic growth, well-paid jobs, foreign investment, and tax revenue. Apart from New York and London, the largest financial markets are today located in the Asia-Pacific region: Hong Kong, Singapore, Shanghai, Tokyo, Sydney, Beijing, and Shenzhen are all hosting large banks, equity markets, and bond trading floors.
They are all vibrant centres for corporate lending, securitisation, derivative products, wealth management, fund administration, project funding, and also venture capital.
London and Paris have a long IFC history dating back to the 19th century, but other financial hubs are very recent. It has taken just a few decades for Dublin, Luxembourg, Beijing, and Shanghai to become important financial centres with excellent expertise.
What can we learn from their experience? Firstly, a business-friendly environment is essential: financial institutions need to interact with a responsive government that can handle efficiently their licensing requests, administrative permits, and other official procedures.
Secondly, foreign investors will expect to deal with experienced supervisors that can ensure financial stability, protect the market’s reputation, and enforce the rule of law.
Thirdly, well-functioning infrastructure is crucial: airports, highways, mass transit and high-speed digital connections are essential.
Finally, human capital is key: banks need to hire many well-educated workers, with skills in finance, accounting, legal affairs, and computing.
Ho Chi Minh City and Danang are already attractive cities for foreign investors. International rankings such as PISA acknowledge the quality of education in Vietnam. Major public investments are upgrading the transport infrastructure and digital connections. Establishing official supervision agencies with strong expertise in banking and market trading will be essential.
Looking to the future, Vietnam could take a share of fast-rising markets such as blockchain, cryptocurrencies, green finance, and regulatory compliance.
Arnaud Ginolin - Director, Boston Consulting Group
Boston Consulting Group has been supporting governments and cities globally to develop their financial centre activities, both for emerging centres and established global hubs.
There are natural advantages for Vietnam to build successful financial centres, including a fast-growing economy and related financing needs, stability, lifestyle, and attractiveness for talents, key location within Southeast Asia, as well as trade activities.
There is currently a good traction and cities such as Ho Chi Minh City and Danang are well-positioned to emerge as financial centres within the next five years.
However, there will be few critical elements to consider to successfully deploy financial centres. Firstly, a clear strategy and specialisation of financial services is needed.
For example, Singapore or Luxembourg focus on asset management, with 75 per cent of the assets under management in Singapore coming from overseas. The Berlin financial centre specialises in fintech financing and Hong Kong and Mumbai in commodity trading.
Similarly, Vietnamese financial centres will require a clear vision of services to be provided, and what makes them truly attractive compared to other centres.
Secondly, an ambitious but realistic deployment plan. We often take Singapore or New York as examples, but these centres developed through various stages over multiple years.
Vietnam will need to clearly set a development path and milestones to transition from an emerging player to a regional centre and potentially reach the global finance hub stage.
Finally, each of the key success factors of financial centres will need to be thoroughly tackled: business and investor friendliness, innovation and knowledge, talent, infrastructure, financing, branding, and stakeholder coordination.
Vietnam has immense potential, yet a fully thought out strategy, well-orchestrated deployment plan together with a clear set of roles and responsibilities for relevant stakeholders are the key pillars required to propel Vietnamese financial centres to the next level.