[HO CHI MINH CITY] Vietnam’s parliament on Friday (Jun 27) approved a slew of special mechanisms and incentives for members of the country’s International Financial Centre (IFC), with the aim to develop it into one of the world’s top 20 IFCs by 2045.
Set to be established this year, the IFC will span two cities – Ho Chi Minh City in the south and Da Nang in the country’s centre. Dedicated management and oversight bodies, including a court and international arbitration centre for dispute resolution, will also be created.
The parliament’s resolution, effective from September, mandates the registration and admission of IFC members – particularly those in sectors such as banking, insurance, securities brokerage, fund management, financial market infrastructure, fintech, digital assets and advisory services.
Under the approved policies, members will be permitted to conduct transactions and borrow in foreign currencies within the IFC or with external entities and individuals. They will also be granted tax holidays on their corporate income as well as on the personal income of their highly skilled personnel.
For instance, new investment projects in the IFC’s priority sectors could enjoy a preferential corporate income tax rate of 10 per cent for 30 years, with a tax exemption for up to four years and a 50 per cent tax reduction for the following nine years.
In addition, they may be eligible for land-lease terms of up to 70 years and receive priority allocation of state sites for their developments.
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Both Vietnamese and foreign experts working in the IFC will be exempt from income tax until the end of 2030.
Upon obtaining approvals from the centre’s authorities, member organisations will also be able to establish trading platforms for commodities and derivatives, carbon credits, cultural and artistic products, precious metals, green finance instruments, and other specialised products.
Disputes in the IFC can be resolved under Vietnamese law or through either domestic or foreign arbitrators and courts.
Encouraging participation
The other policies include incentives and mechanisms to encourage the participation of strategic investors and foreign banks or their branches. There are also provisions for the immigration of foreign experts, construction, infrastructure development, regulatory sandboxes for fintech, and the export and import of goods and services at the IFC.
Addressing parliament, Finance Minister Nguyen Van Thang said that the government will develop detailed guidelines to implement these policies, including a comprehensive legal framework for supervisory mechanisms, transactions on trading platforms, capital-flow controls, anti-money laundering measures, and flexible liquidity management tools.
Tyler McElhaney, country head for Vietnam at Apex Group, an alternative assets services provider, said that the most successful IFCs in the world often rest on a common set of policies designed to “ensure money and the people who manage it can move freely”.
Apex Group, which is headquartered in Bermuda, has more than US$3.4 trillion in assets under management. It was among the first firms to establish a presence in Dubai IFC in 2006, as well as Abu Dhabi Global Market in 2013. Earlier this year, it opened a Vietnam office in Ho Chi Minh City.
“Equally critical is the coordinated allocation of budgets between central and local governments to build the underlying infrastructure – utilities, real estate developments and mixed-use complexes – that anchors a financial district,” McElhaney added.
The local governments of the two cities hosting Vietnam’s IFC have designated sites cleared for future developments, aiming to attract and channel billions of dollars in investment projects.
Ho Chi Minh City recently unveiled an ambitious scheme to seek US$7 billion to develop the centre within the next five years. The core area will span 9.2 hectares (ha) in the Thu Thiem New Urban Area, a peninsula in the city’s downtown that lies across the Saigon River.
Meanwhile, Da Nang has earmarked six land parcels for the IFC’s development, including a main zone of five lots spanning 6.17 ha along a street that connects the city centre to My Khe Beach.
Foreign investors have shown strong interest in these prime locations, with the Trump Organization eyeing a tower in Thu Thiem, and other groups of American and Singaporean investors proposing major developments for the IFC in Da Nang.
