Building a financial hub for Vietnam

Nguyen Thi Hong - Deputy Governor State Bank of Vietnam

Ho Chi Minh City connects different key economic regions of the south and the whole country. The city, therefore, deserves to become a major financial centre with banking and finance services developed in a proper manner.

To turn Ho Chi Minh City into an IFC, the policy differences between the city and Vietnam as a whole need to be reconciled. Banks are essential in the Vietnamese financial system, which is on the way to restructuring itself and integrating into the global playground. A perfect financial centre must be closely connected with the payment system. During recent times, the banking system has been speeding up cashless payments at an average growth rate of 30 per cent per year. This is a good foundation for developing an IFC, which requires the government to have a clear direction and local authorities to be more active. The State Bank of Vietnam has been consistent in this plan and looks forward to the establishment of the future IFC.

Alwaleed Alatabani - Lead financial sector specialist, World Bank

The global environment has become more challenging, with slower growth and rising risks. Amidst rising global headwinds, Vietnam’s growth momentum has been slowing since the beginning of this year. While the outlook remains positive, risks are still firmly titled to the downside.

Vietnam must also prepare to adjust its policies in case downside risks materialise, and deepen structural reforms to boost investor confidence in the short term and raise potential growth in the medium term. Furthermore, the country must further reform to reduce the cost of doing business, including efficient equitisation and corporate governance.

Vietnam should continue banking reforms to accelerate debt resolution and ensure adequate capital buffers to further reduce risks and enhance the efficiency of financial intermediation. Last but not least, the country must be ready to implement free trade agreements’ commitments.

Tran Dac Sinh - Former chairman, Ho Chi Minh City Stock Exchange

Regional and international financial centres are often formed in big cities with high economic and social development, and are a focus point for financial institutions. Not every industrial or commercial city can develop into a financial centre. They also have to satisfy a plethora of related conditions related to competitiveness and innovation.

In addition, the business environment, connectivity, human resources, the legal system, infrastructure, and stable development are also key factors in the formation of an IFC.

Cities that have a favourable environment, stable politics, and good infrastructure – especially financial infrastructure and advanced technology systems – will have the advantage in attracting large financial institutions.

Last but not least, IFCs must focus on important stakeholders in the market, such as financial agencies, investment funds, and services suppliers. Therefore, Vietnam must simultaneously develop all of the related sectors in one system and create attractive enough incentives for them to develop.

Building Ho Chi Minh City into an IFC cannot be just the city’s own aspiration, it needs to be embedded into a long-term national strategy and the related master planning.

Le Hong Giang - Director, investment strategy Tactical Global Management

Tourists who visit Wall Street in New York are often surprised and somewhat disappointed that this famous financial symbol is just a small street not much bigger than Huynh Thuc Khang street in District 1 of Ho Chi Minh City.

Even the New York Stock Exchange headquarters in the middle of Wall Street are quite humble. Perhaps only the bronze bull statue at the beginning of the street, symbolising the growth of the stock market, is an indicator for tourists to believe that they are standing in the heart of the US and the financial world.

What made New York one of the world’s largest financial hubs is not the skyscrapers but the ecosystem of its financial services. This not only applies to New York, but to all other financial centres in the world.

Financial centres depend on two main factors: they are always formed from economic and trading centres, and their software is more important than the hardware. To have a successful IFC, we must also have qualified human resources and an effective legal environment.

Financial services are increasingly relying on technology, so with time they will be transformed into technology centres, or financial centres will merge with technology centres. This will be a challenge for existing centres but also provides opportunities for younger centres.

Vietnam, and particularly Ho Chi Minh City, will find it hard to seize the opportunities in the race to build an IFC in the traditional way, but attracting international coverage for unicorn companies and excellent startups in fintech is completely within reach. This will be the future financial focus and true centre of both Vietnam and Ho Chi Minh City.