Vietnam parliament okays establishing one international financial center in HCMC-Danang

Vietnam will build one international financial center located in both Ho Chi Minh City and Danang, in which initiatives like digital assets and sandboxes will be tested under control, according to a newly-approved parliament resolution.

The resolution, passed by the National Assembly on Friday with over 93.5% votes in favor, will come into force on September 1.

Accordingly, the country will develop one international financial center in the two prominent cities, with unified management and development of separate products based their own strengths.

HCMC in the south is the country's biggest economic hub, while Danang is the heart of the central region in terms of economic and tourism aspects.

The international financial center section in HCMC will house capital markets, banks, currency markets, testing mechanisms (sandboxes) on fintech, innovation in the financial sector, specialized trading floors, and new trading platforms.

The Danang section will develop green finance, apply financial technology, and promote digital services. The city will also test digital assets and digital currencies under control; promote payments; and attract investment funds, remittance funds, and small and medium-sized fund management companies.

The two cities are preparing human resources, facilities and infrastructure, while promoting investments from strategic financial investors to build and operate the international financial center.

The resolution sets out many specific policies for the development of an international financial center in Vietnam.

The policies focus on foreign exchange, banking, tax incentives, capital market development, finance, land, labor, and employment. They will also give rise to controlled testing of financial services applying technology (fintech), innovation, and development of markets and commodity exchanges.

For example, investment projects located in the international financial center within priority sectors shall be given land lease for a maximum of 70 years. For other sectors, the land use term is not more than 50 years. Foreigners working in the center are exempt from personal income tax (CIT) until end-2030.

Products provided in the center include trading floors, trading platforms for commodities and commodity derivatives, carbon credits, cultural and artistic products, rare metals, and green finance.

New investment projects in priority sectors are subject to a preferential CIT rate of 10% for 30 years, tax exemption for a maximum four years, and a 50% tax reduction for the next nine years.

For projects not in priority sectors, the CIT is 15% for 15 years, a maximum tax exemption for two years, and a 50% tax reduction for the next four years.

Parties are allowed to use dispute resolution methods according to Vietnamese law. They can resolve disputes at international or Vietnamese arbitration centers, at the international arbitration center within Vietnam's international financial center, or at foreign or Vietnamese courts.

Vietnam aims to establish an international financial center in 2025. By 2035, the center will be among the top 75 in the world and among the top 20 by 2045.

Nguyen Thuy Hanh, CEO and head of banking and coverage at Standard Chartered Vietnam, said an international financial center could significantly improve access to global capital for Vietnamese enterprises, especially if it is managed by a unified regulatory body.

"International financial centers are known for low operating costs, transparent and flexible regulatory frameworks, and business-friendly environments. Companies setting up headquarters or branches within the center in Vietnam could benefit from preferential tax policies, simplified compliance procedures, and more efficient business operations," she told a capital management forum in HCMC on June 17.

Additionally, the range of financial products and services would expand to include digital banking, digital currencies, commodity index trading, greater flexibility in foreign exchange transactions, centralized cash flow management - still uncommon in traditional banking - and advanced risk management tools for commodity trading.

Second, from a legal compliance perspective, a unified management agency overseeing the center would help standardize and simplify regulatory requirements, further accelerating transaction processing. Furthermore, capital flows into and out of the center could be more flexible than those in the broader economy, she added.

Tran Thuy Ngoc, deputy general director, financial services industry leader at Deloitte Vietnam, commented that the National Assembly resolution lays essential groundwork, strategically positioning the international financial center to help Vietnam transcend the middle-income trap and achieve sustained double-digit economic growth from 2026 to 2045.

Initially, Vietnamese authorities' idea was to build one international financial center in HCMC and another at regional levels in Danang. The idea of building only one has received support from many experts.