On 16 January 2025, conference on “Developing International Financial Centers in Vietnam” was held in Da Nang. The event brought together provincial leaders, representatives of domestic and international businesses, and other stakeholders to discuss strategies for establishing an International Financial Center (IFC) in Da Nang.
Following the directive of the Da Nang City Party Committee secretary to establish and develop a Financial Center, this conference is being held to highlight the immense potential and advantages of Vietnam's International Financial Center, particularly in Da Nang. The event will serve as a platform to introduce domestic and foreign investors and partners to the collaborative opportunities and growth potential at this new financial center, fostering international cooperation.
Notably, Warrick Cleine MBE, Chairman and CEO of KPMG in Vietnam and Cambodia, shared insights and proposals to enhance the implementation and legal framework for developing the IFC in Da Nang:
The Importance of an International Financial Center: A New Driver for Sustainable Growth
According to Cleine, in the context of global economic volatility following the COVID-19 pandemic and ongoing broader economic challenges, the role of an IFC has become more crucial than ever. An IFC is a bridge between capital and businesses and a powerful engine driving sustainable economic growth and prosperity.
As a financial hub, an IFC facilitates capital mobilization, supports business development, finances trade flows, and invests in infrastructure projects. This helps businesses achieve their goals and fosters economic growth. Beyond financial aspects, the development of an IFC must be guided by a comprehensive regulatory framework that ensures long-term economic and social value.
In Vietnam, establishing an IFC in Da Nang is expected to bring significant positive impacts, contributing to regional development and the national economy.
Four Pillars for Developing the International Financial Center in Da Nang
As a CEO and expert, Warrick Cleine and KPMG in Vietnam emphasized that the success of the IFC requires collaboration among regulators, financial services players, and the professional services sector, focusing on four key areas:
1. Entry Regulations and Capacity Building
The first important area to focus on is entry regulations and capacity building to support the success of the International Financial Center (IFC). This includes developing regulations related to corporate governance systems and facilitating the establishment of companies, issuing of investment licenses, and supporting businesses in ownership changes through mergers, acquisitions, or attracting new investors. Additionally, it involves enabling companies to list and effectively gain capital.
Particularly in the rapidly growing field of financial technology (Fintech), it is essential to establish legal regulations and build supportive institutions to help financial enterprises easily form entities, raise capital, and achieve success. Da Nang requires creating a favorable legal environment to enable companies to establish themselves, raise funds, and freely trade capital.
2. Finance and Accounting
Vietnam has made significant progress in developing financial reporting rules and standards, ensuring investor confidence and supporting businesses in fulfilling their obligations. However, the adoption of International Financial Reporting Standards (IFRS) must be accelerated to meet the needs of broader financial stakeholders.
Harmonizing Vietnamese and international financial reporting standards will reinforce investor trust and be pivotal in building a successful IFC in Da Nang.
3. Tax and Legal Modifying – A Solid Foundation for the IFC
An IFC will only work when all participants understand and adhere to clear legal principles and regulations of the government and each other.
Tax policies must evolve to reflect what it does now, which is the production of goods and services, the economy and the flow of capital within Vietnam and across Vietnam. Addressing the complexities of IFC operations will be a significant challenge for the Vietnamese government.
Vietnam needs to thoroughly scrutinize the taxation of capital flows, interest, and IFC-related services to ensure efficiency and fairness. Mechanisms for protecting rights and resolving disputes effectively are also crucial. IFC participants must be assured that contracts will be enforced, and that transparent legal processes or specialized resolution systems will address any disputes.
4. Human Resource Development – The Core Team
Vietnam urgently needs high-quality human resources to operate the IFC. The establishment of the IFC presents tremendous opportunities for growth but also demands a well-educated, highly experienced workforce that understands the role of an IFC in the economy.
One significant challenge is attracting international experts to Vietnam. Creating an appealing work environment and meeting the high standards of global employers are key to this endeavor. International experts not only contribute to the IFC’s growth but also enhance local workforce capabilities as well.
For success, the government, universities, and organizations like KPMG must join forces to nurture domestic talent while creating conditions to attract global expertise. Only then can the IFC act as a lever propelling Vietnam to greater prominence in global finance.
KPMG in Vietnam: Experience and Key Proposals
Warrick Cleine shared, in 2016, KPMG was the first Big Four in Vietnam to open an office in Da Nang. This strategic decision has greatly benefited KPMG, its clients, and the local economy. The young, dynamic, and talented workforce from Da Nang’] universities has significantly driven the office’s growth.
Additionally, KPMG’s presence has enabled local clients to access professional services conveniently. Provincial authorities have consistently encouraged and supported KPMG’s operations, recognizing its vital role in regional tourism development, infrastructure construction, and manufacturing activities.
Expanding the Ecosystem and Incentivizing Growth for IFC Da Nang
To ensure the success of IFC Da Nang:
It’s essential to look beyond the contributions of KPMG, international banks, and local banks already involved. We must work toward building a broader financial services ecosystem by encouraging additional players to enter the market. This expanded ecosystem will enable greater collaboration, support larger projects, and create the foundation for the IFC’s long-term success through the comprehensive development of the financial services sector.
Additionally, while the government has provided excellent encouragement and support, a more in-depth approach to incentivizing participation in Da Nang’s financial services sector is needed. Establishing operations, expanding presence, hiring top talent, and delivering exceptional services represent significant investments for market participants. These efforts will only be feasible with strong support from all stakeholders, particularly the government. This support should go beyond attending important events but also include the development of new regulations and strategies to attract both investors and clients. By doing so, we can collectively ensure the IFC’s success while driving growth and innovation in Vietnam’s financial services landscape.