Favorable Conditions for Vietnam’s Aspiring Financial Center
On November 15, 2024, Vietnam took a significant step towards economic progress as the country’s Politburo approved the proposal to establish Ho Chi Minh City as a comprehensive international financial hub. This ambitious initiative encompasses the development of money markets, banking systems, capital markets, and derivative commodities trading.
With a clear government roadmap, the launch of Ho Chi Minh City’s financial center is set for 2025, aiming for full completion within the next five years. To fast-track this process, a dedicated 29-member Steering Committee for Financial Center Development has been formed this year, led by the Ho Chi Minh City Party Secretary Nguyen Van Nen.
Economic expert Dinh The Hien highlights Ho Chi Minh City’s strong potential as a financial hub, especially in commodities exchange development. The city has already attracted the attention of numerous international investment funds and capital-raising organizations, establishing their headquarters within its boundaries.
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| Economic expert Dinh The Hien underscores Ho Chi Minh City’s promising position as a financial hub, particularly regarding commodities exchange development. (Photo: baochinhphu.vn) |
The Ho Chi Minh City Stock Exchange (HoSE), Vietnam’s largest securities exchange, is undergoing substantial enhancements to elevate its reputation as a trading hub that appeals to global investors.
Hien further emphasizes that Vietnam’s sustained economic growth bolsters Ho Chi Minh City’s financial aspirations. In 2024, the country achieved an impressive GDP growth rate of 7.09%, leading the pack among Southeast Asia’s six largest economies. Per capita GDP reached an estimated USD 4,700, and labor productivity stood at USD 9,182 per worker, marking a notable increase from the previous year.
Vietnam’s digital economy has also experienced remarkable expansion, contributing an estimated 18.3% to the GDP in 2024. With an annual growth rate surpassing 20%, the country leads the region in digital economic advancement and is among the top 10 fastest-growing e-commerce markets globally.
“These factors,” Hien stated, “could propel Vietnam, and Ho Chi Minh City in particular, into a regional and global financial powerhouse. It has the potential to become not just a destination for foreign investment but a key player in global capital mobilization.”
Ho Chi Minh City’s International Financial Center: Opportunities and Challenges
From a business perspective, the establishment of an international financial center presents domestic enterprises with significant opportunities. However, many Vietnamese businesses still heavily rely on bank loans for financing their projects and operations.
According to Hien, the creation of this financial hub will provide local enterprises with access to a diverse range of funding sources, including equity capital, corporate bonds, convertible bonds, and investment funds such as mutual funds and venture capital.
Associate Professor Dr. Ngo Tri Long concurs, adding that participation in an international financial center will be particularly beneficial for small and medium-sized enterprises (SMEs). It will enable them to expand their capital sources, enhance competitiveness, and achieve long-term sustainable growth.
Beyond financing, businesses can also leverage the emerging financial and technology ecosystem surrounding the financial center. Fintech solutions are expected to play a pivotal role in improving SME efficiency, especially in payments, lending, and financial management.
Moreover, the development of an international financial center will facilitate connections with multinational corporations, offering opportunities for revenue growth and improved profitability through financial support, technology transfers, and workforce training. Data from the World Bank and OECD underscores the impact of this integration, showing that SMEs engaged in global supply chains experience a significant boost in revenue and profit margins.
However, experts caution that deeper integration into global finance brings both opportunities and challenges. Regional trade agreements have intensified competition, particularly from Thai firms, causing concern among Vietnamese businesses. Some domestic companies and industry associations continue to rely on government protectionism, advocating for import tariffs and policy interventions that contradict the very essence of global integration. This mindset hinders not only competitiveness but also the ability to adapt to the dynamic international business landscape.
Despite these challenges, Long emphasizes the necessity for Vietnamese businesses to embrace the rigorous financial regulations and intense competition associated with international financial centers. SMEs, in particular, face a dual task: navigating compliance barriers while competing with multinational corporations that possess substantial financial and technological advantages.
Additionally, limited access to cutting-edge technologies such as fintech, artificial intelligence (AI), big data, and advanced business models remains a hurdle for many SMEs. This challenge is highlighted in a 2024 PwC report, which revealed that 60% of Vietnamese financial firms struggle with digital transformation.
“Successfully establishing an international financial center,” Long concluded, “entails more than just attracting global financial giants. It requires the cultivation of a dynamic marketplace that ensures the sustainable growth of domestic businesses, especially SMEs. To accelerate this process, Vietnamese enterprises must proactively enhance their competitiveness and foster a transparent financial ecosystem.”
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