Viet Nam is actively and urgently promoting the establishment of International Financial Centers (IFCs), with specific directions and special incentives to attract and effectively operate such centers. As a legal expert with extensive experience and a strong interest in this endeavor, Mr. Nguyen Hung Quang, Managing Partner of NHQuang&Associates (Ha Noi Bar Association), shared his insights with Vietnam Law Newspaper (PLVN).
Mr. Nguyen Hung Quang expressed high expectations for the development of an IFC in Viet Nam, particularly from the perspective of international investment and trade. First, the creation of an IFC will diversify investment capital flows into Viet Nam, providing new fundraising channels for projects and business activities. If successfully implemented, an IFC will diversify Viet Nam’s capital market.
Second, the IFC framework will also open up opportunities for Vietnamese enterprises to invest abroad. This aligns with the current trend of diversifying investment destinations and expanding markets for Vietnamese businesses, enabling them to access or acquire foreign enterprises and bring technologies and production capabilities into Viet Nam. The IFC, with its liberal mechanisms, will allow domestic firms to pursue these goals without being constrained by Viet Nam’s usual administrative procedures and strict legal conditions.
Another key expectation is that once one or two IFCs are established in Viet Nam, they will positively influence the country’s legal system and public governance methods for business and investment activities, helping to improve the investment environment and legal protections for both domestic and foreign investors.
Developing an IFC: Ensuring Efficiency and Modernity
Q: You are certainly following the discussions around the draft Resolution of the National Assembly on establishing IFCs in Vietnam. What aspects do you find most important? How should an IFC be developed to align with Vietnam’s conditions and context?
A: From my perspective, there are two basic models for building an IFC: First, a national economy with a comprehensive legal system, administrative infrastructure, and productive capacity capable of attracting international financial transactions. This model is evident in economies like Hong Kong and Singapore, which built IFCs on a foundation of strong industrial production and international trade going back 40–50 years.
Second, an IFC as an independent institution within the national system. It should include not only modern physical infrastructure (such as energy systems, green energy, broadband) but also a qualified workforce capable of engaging in international finance-meaning at minimum English proficiency and financial knowledge. This institution also requires a liberal, effective, and efficient legal and policy framework to support its operation.
Critically, to attract investors, clients, and financial transactions, an IFC must be well-managed, ensure investment safety, provide a liberal legal framework for financial transactions, and integrate with state institutions beyond the center itself. For Viet Nam, this means many of our existing legal provisions must be revised. Otherwise, the IFC could become an “island” with modern infrastructure but ineffective operations.
We must also establish dispute resolution mechanisms that are effective and modern. The draft Resolution already mentions alternative dispute resolution (ADR) methods like negotiation, mediation, and arbitration. However, for ADR to be viable in a modern financial market, supporting institutions such as courts and enforcement agencies must also be modernized-ensuring that mediated agreements and arbitral awards are recognized and enforced swiftly and efficiently.
This brings me to the broader judicial system in Viet Nam. Civil procedure rules must be updated accordingly. Court operations should adapt to accommodate new types of disputes. We need a comprehensive review of legal and institutional frameworks, including enforcement bodies.
As mentioned earlier, human resource development is also critical. Vietnamese workers must be trained to meet the demands of international finance operations. Domestic educational institutions must offer specialized programs to support IFC activities.
In the initial stage of IFC operations, laws should permit unrestricted employment of foreign workers. Entry-exit regulations, long-term residency, citizenship eligibility, and home ownership for professionals must be liberalized so Viet Nam can attract top talent.
Harmonizing with the national legal system
Q: The IFC is expected to function as a “special administrative zone” with unique preferential policies and a tailor-made legal framework defined by the National Assembly and Government. What’s your view on this? On what basis should this legal framework be built?
A: I believe the legal framework in the current draft Resolution is quite open and has made significant breakthroughs compared to existing laws. However, I’m concerned about the degree of harmony between the IFC’s liberal framework and Viet Nam’s general legal system. We must ensure that financial transactions originating from the IFC and extending into Vietnamese territory are still valid and enforceable. This means the IFC’s legal system must align with Viet Nam’s broader legal system.
Many effective IFCs today – such as in the UK, Singapore, and Hong Kong – operate under common law systems, which are often viewed as more conducive to financial and commercial transactions. Viet Nam, with its civil law system, must carefully consider which elements of common law can be adapted without disrupting the structure and coherence of our own legal system. This is a major challenge. We should study models from civil law countries that have developed IFCs, similar to what Viet Nam intends to build.
Finally, if Viet Nam’s IFCs are to compete with those in the region and globally, we must study both successful and failed examples from emerging economies and Asian countries such as Hong Kong, Singapore, Japan, and South Korea. More importantly, we must develop unique and distinctive features to differentiate our IFCs – otherwise, we will not be able to compete with established centers.
From what I’ve observed, financial incentives like tax breaks are no longer a major focus for many countries or multinational financial groups. These groups are more concerned with capital markets, profitability, asset safety, and favorable geographic and trade conditions.
Thank you, Mr. Nguyen Hung Quang, for your insightful discussion!
If we lack distinctiveness in developing our IFCs, it will be difficult to attract capital flows into Vietnam through these centers. A differentiation strategy is essential; incentives alone are not enough.
By Doan Trang, Vietnam Law Newspaper (PLVN), April 16, 2025