As Vietnam’s economic powerhouse and a key driver of the country’s rapid growth, Ho Chi Minh City has all the ingredients to become an International Financial Center (IFC). With a young and tech-savvy population, a strong manufacturing base, and a trade-driven economy, it seems like a natural step forward. Despite its potential, however, the southern city has yet to establish itself as a major financial hub in the region.

Across Asia, cities like Singapore and Hong Kong (China) have long dominated the financial landscape, offering deep capital markets, strong regulatory frameworks, and seamless global connectivity. Meanwhile, emerging players such as Bangkok and Jakarta are making significant moves to attract international financial activity. If Ho Chi Minh City hopes to compete, it must act now.

Industry leaders and financial experts agree that Vietnam has a real opportunity to develop an IFC, but also recognize the challenges that stand in the way. As Mr. William Lawrenson, British Deputy Consul General and Head of Trade and Investment for Ho Chi Minh City, noted, Vietnam is one of the fastest-growing economies in the world, with a heavily trade-dependent market. “Developing an IFC is almost an inevitable next step,” he believes. However, while the vision is clear, the path forward is complex.

Possibilities in place

According to Mr. Lawrenson, Vietnam’s stable government provides a foundation for long-term economic planning. Compared to other countries in the region, political stability is a strong advantage that gives investors confidence. This stability is complemented by strong GDP growth, making Vietnam one of the fastest-growing economies in the world. With a young, digitally-literate, and highly-educated workforce, the country is becoming an increasingly attractive destination for global businesses looking to relocate or expand their financial operations.

Historically, major financial centers have developed in countries with strong trade sectors, as financial services evolve alongside trade activities. Vietnam is no exception. The country’s trade volume is 130 per cent of GDP; one of the highest ratios globally. According to Mr. Lawrenson, developing an IFC is almost a natural next step. IFCs historically grow around trade hubs, and Ho Chi Minh City is already the commercial and financial heart of Vietnam.

The city offers a cost-effective alternative for international financial institutions looking to establish a presence in Asia. With the right policies, it could attract capital, fintech companies, and global banking players seeking expansion opportunities. Ms. Nguyen Thuy Hanh, General Director and Head of Corporate and Investment Banking at Standard Chartered Vietnam, underlined that Vietnam can take advantage of existing global IFCs, studying their successes and failures to leapfrog into a competitive position. By adopting best practices in financial regulation, infrastructure, and investment policies, Ho Chi Minh City could establish itself as a major financial hub in the region, bridging international capital and Vietnam’s fast-growing economy.

Holding it back

Despite Ho Chi Minh City’s potential to become an IFC, key challenges must be addressed before it can compete globally. While Vietnam’s economic stability and trade strength provide a solid foundation, regulatory barriers, financial infrastructure gaps, and investor confidence remain major hurdles.

One of the biggest concerns is Vietnam’s restrictive regulatory environment. Ms. Hanh emphasized that strict compliance requirements could deter global investors. “Only large multinational corporations and financial institutions have the capacity to invest in Vietnam, due to the complexities of market research and regulatory compliance,” she explained. However, if Vietnam’s IFC followed standardized policies and regulations, it would open the door for a wider range of investors, including UK-based small and medium-sized enterprises (SMEs) and fintech startups. “For example, the Dubai International Financial Center (DIFC) has become a hub for thousands of fintech firms, and we expect Vietnam to replicate that success,” she said.

Meanwhile, Mr. Dominic Scriven, Chairman of Dragon Capital, pointed out that while Vietnam has made progress in capital market reforms, slow implementation and legal uncertainties still pose challenges, particularly regarding profit repatriation and foreign exchange controls. “Most observers agree that there is still room for further development,” Mr. Scriven believes.

He added that the low-hanging fruit for enhancing Ho Chi Minh City’s position as a financial hub includes adopting International Financial Reporting Standards (IFRS), foreign exchange (FX) portability, and a structured private placement regime, which are currently gaps in Vietnam’s financial sector and would fit well within an IFC in Ho Chi Minh City. “These are all achievable within Vietnam’s current financial landscape and could significantly contribute to the development of Ho Chi Minh City as a major financial center,” he said.

Financial infrastructure is another obstacle. While the banking sector has modernized, the capital market remains shallow, limiting access to a broad range of financial instruments. Mr. Andrew Oldland, Head of TheCityUK’s IFC Working Group, highlighted the need for greater market depth and liquidity to attract global capital. Without a well-functioning financial ecosystem, it will be difficult for Ho Chi Minh City to establish itself as a premier financial hub.

Making it happen

For Ho Chi Minh City to establish itself as a competitive IFC, Vietnam must take decisive steps to reform regulations, enhance financial infrastructure, and build global investor confidence. While the city has strong economic fundamentals, unlocking its full potential will require a clear, coordinated strategy that addresses its key limitations and positions it as a regional leader.

Regulatory reform is the most urgent priority. Vietnam needs to create a legal framework that aligns with international financial standards while ensuring transparency and efficiency in financial transactions. Ms. Hanh emphasized the importance of simplifying compliance processes, arguing that excessive regulatory restrictions could deter global investors. “For an IFC, capital must move freely and efficiently,” she noted. This means modernizing foreign exchange regulations, easing capital controls, and ensuring that financial institutions can operate with clear, predictable legal guidelines.

Mr. Oldland proposed a set of policies aimed at accelerating Ho Chi Minh City’s development into an IFC, dividing them into measures that can be implemented immediately and those requiring a phased or pilot approach.

Among the immediate priorities is a streamlined registration system based on predefined criteria, allowing businesses to establish operations with greater ease. English would serve as the preferred language within the financial center, carrying the same legal validity as Vietnamese, reducing regulatory hurdles for international firms. Simplified procedures would be introduced for key sectors such as capital markets, banking, insurance, fintech, and the digital economy to attract investment and foster innovation.

For the capital market, specialized regulations would be enacted to promote growth, including incentives for green finance, reforms in securities registration, trading, and clearing processes, and the adoption of international accounting standards like IFRS. Improved market information systems would also be developed to enhance risk management across the operational, market, and credit sectors. Funding for infrastructure development would come from multiple sources, including the State budget, city authorities, and private sector partnerships, with strategic investors playing a key role. Additionally, visa and work permit procedures for foreign professionals and their families would be streamlined, complemented by tax incentives and other support measures for financial center participants.

Looking ahead, longer-term policy considerations include more complex regulatory adjustments, particularly regarding currency regulations. A key proposal under discussion is allowing financial center participants to conduct transactions in foreign currencies rather than being restricted to the Vietnam dong (VND). While details are still being refined, this step would align Ho Chi Minh City more closely with established IFCs, facilitating cross-border investment and trade.