Several viewpoints were shared by experts on this issue at a seminar titled "Reshaping Global Finance and Vietnam's Strategy", which was held in coordination with Ho Chi Minh City University of Economics (UEH) and Saigon Investment Newspaper during the last week of April.
A corner of HCMC at night. Photo: Hoang HungLocation of Ho Chi Minh City
The idea of making a regional and international financial center in Ho Chi Minh City dates back almost twenty years. In August 2020, the People's Committee of Ho Chi Minh City forwarded a petition to the Government for supporting the goal of developing a regional and international financial center in Ho Chi Minh City. In a document to the 13th Party Congress on a socio-economic development strategy for the period 2021 to 2030, the contents clearly called for promoting the development of Ho Chi Minh City into an International Financial Market.
Dr. Tran Du Lich, an economist who has many years’ experience as advisor to the People's Committee of Ho Chi Minh City, said that no other place in Vietnam is more suitably located for the creation of an international financial market than Ho Chi Minh City. If this City cannot develop this project, then nowhere else can it be created. If Da Nang and Van Don want to become financial markets, they should only be offshore financial markets, similar to Hong Kong or Singapore. These are financial centers that do business offshore, in other words as parasite financial centers, because they do not live on their own economy but depend on global economy. Da Nang wants to develop such a model because the City is oriented towards financial technology products, and not traditional markets.
However, to become an International Financial Center, Ho Chi Minh City still has much work ahead. Specifically, these works must be done in three phases. The first phase from 2021 to 2025 must be the construction phase, which will confirm the role of the national financial market. The reason is that until now, the scale of the financial market in Ho Chi Minh City has been very large, but now it is gradually decreasing. In other words, the amount of money pouring into Ho Chi Minh City is huge but now getting proportionately smaller and smaller. So, first of all, Ho Chi Minh City must regain its position and affirm its role as a national financial market.
During the next phase from 2026 to 2030, Ho Chi Minh City must increase its role as a regional financial market. In a period of ten to fifteen years, an international financial market will begin to shape up. Hence, in order to become an International Financial Market, Ho Chi Minh City must be associated with two more conditions, which are capital account liberalization and currency conversion. However, it will take a long time to meet these two conditions.
In addition, an important point for the success of an International Financial Market is that it is always worth while for international investors and financial experts. Ho Chi Minh City must pay attention to this issue if she wants to become an International Financial Market in the future. Dr. Tran Du Lich also emphasized that the Party Resolution has raised the issue of promoting the development of Ho Chi Minh City into a financial market, but in order to implement it, it is necessary to have a strong program that must be seen as a major national issue.
Consensus is key
Many experts believe that setting up a financial market is a national issue, not just a matter for Ho Chi Minh City to tackle alone. Dr. Truong Van Phuoc, a member of the Economic Advisory Group of the Prime Minister, also shares that if Vietnam is determined to establish a financial market, there is no need to mention the divergence of several stages to implement.
There is a view that this financial center must have a skyscraper in Thu Thiem urban area, similar to Manhattan in New York City, but in reality, if ministries, especially the Ministry of Finance and the State Bank of Vietnam, do not unite, there will be no International Financial Center to start with. The reason is that any International Financial Market is an institution for capital and money markets, which are under the control of these two organizations.
Dr. Phuoc also suggested it be named as the Financial Center of Vietnam in Ho Chi Minh City, because Ho Chi Minh City cannot build a financial center without the support and go ahead of the Ministry of Finance. It is also necessary to view that the financial market located in Ho Chi Minh City serves the entire country and offers adequate financial services, only then institutions will be changed.
Prof. Dr. Tran Ngoc Tho, a member of the National Monetary Policy Advisory Council, said that our current institutions have not kept up with new innovations quickly enough. If you want to have a financial center in Ho Chi Minh City, you must make mobile goals. Our aim is that by 2045 Vietnam will become an industrialized country, but it is a hard and fixed goal. In today's digital world, in order to achieve fixed goals, there must be a set of regulations, which are moving targets, and regulations that are constantly changing to suit the evolving global economy.
In order to develop an International Financial Market in the heart of Ho Chi Minh City, the City must begin to adopt financial technology products (fintech) and drop use of traditional products. Dr. Tran Du Lich agrees with this suggestion, but according to him, from experience of Shanghai, if Ho Chi Minh City is allowed to conduct a controlled testing mechanism on global financial technology products or sandbox, it is possible to implement the formation of international financial markets. Specifically, it must follow the rules for applying real new products and services in the application process. If there is a problem that may affect national security, the new state management agency has to issue regulations to adjust.
If we have to put the regulations before being implemented in the form of waiting for the State Bank of Vietnam and the Ministry of Finance to introduce a new management framework, we will never have a sandbox. In China, all national financial institutions had their headquarters in Beijing, but the largest operations headquarters are still in Shanghai. This is a point Vietnam needs to pay attention to.