International Financial Center in Vietnam

Series: Casual Talk about Vietnamese Law #2

By Minh Nguyen,
Principal of Vietnam Premier Laweyers LLC

25 July 2025

Why just casual talk about law? 😎
Because Vietnamese legal documents are now being issued continuously in large numbers, some legal documents are signed and come into effect on the same day. You need to read continuously and quickly to keep up with the pace of new laws. Meanwhile, I’m not young anymore, my reading speed can’t keep up, and my thinking is slow, so I can only casually talk about it. 😂😂😂

#VietnamLaw #InternationalFinancialCenter #LegalReform #ForeignInvestment

On June 27, 2025, the National Assembly of Vietnam passed Resolution No. 222/2025/QH15 on the International Financial Center in Vietnam (“Resolution”) with the goal (among the specific objectives set out in Article 4 of the Resolution) to build an International Financial Center located in Ho Chi Minh City and Da Nang (“IFC”) “to become a leading international financial center… operating according to advanced international standards, connected with major financial markets and centers worldwide, facilitating the linkage of domestic exchanges with international markets, promoting capital flows and development of technology-applied financial services” at a high level.

To achieve these goals, the Resolution introduced unprecedented breakthrough policies in all related fields, from foreign exchange policy (free use of foreign currency), corporate income tax incentives, personal income tax (low tax rates, long tax incentive periods), 10-year visas and temporary residence cards for foreigners, separate entry-exit zones at international airports in Ho Chi Minh City and Da Nang, exemption from work permits; mechanisms to minimize administrative procedures in all areas from land, construction, investment, labor, employment; mechanisms encouraging innovation, fintech sandbox; specialized courts; establishment of commercial arbitration in the IFC to resolve disputes among members of the IFC, etc.

Experts hope these policy breakthroughs for the IFC will set a precedent and pave the way for continued improvement of Vietnam’s legal, investment, and business environment in general.

Media, experts, and colleagues have written, discussed, and held seminars about these unprecendented policies, so I won’t talk about them further.

Here, I would like to casually reflect on a frequently occurring issue: the chicken-or-egg question in legal regulations.

Clause 5, Article 16 of the Resolution stipulates that “The transfer of foreign investment capital into the IFC, the transfer of capital, profits, and lawful income from the IFC abroad by foreign investors shall be conducted in foreign currency through foreign currency payment accounts opened in the name of the foreign investor at credit institutions or branches of foreign banks permitted to operate within the IFC.” This raises the chicken-or-egg issue.

According to this provision, foreign investors can register and apply for recognition as IFC members but, in reality, can only start their investment activities at the IFC after at least one limited liability bank with 100% domestic or foreign capital or a branch of a foreign bank has been licensed by the State Bank of Vietnam to be set up and operate within the IFC (per Article 17 of the Resolution). This provision de facto requires that at least one license bank already exists in the IFC and this bank has already completed its investment in system setup and banking operation to allow foreign investors to open accounts and transfer investment capital into the IFC.

From the business practical standpoint, it is very logical and reasonable that a bank will only decide to invest and set up its operation in the IFC when there is already a sufficient market and business opportunity, meaning the bank needs to have enough potential customers and banking transactions to recover its investment in the IFC.

So…..

Fortunately, the Resolution delegates the Government to issue guidelines, and this chicken-or-egg issue should be resolved in such guidelines to unlock the execution capacity of the IFC. A viable solution might be that the Vietnamese state needs to open one bank in the IFC so that this Project can run. 😘

On the same topic, it seems the Resolution also forgot to regulate whether the capital transfer from domestic to the IFC and capital repatriation by Vietnamese investors from the IFC must be conducted via bank accounts operating within the IFC. It is somewhat reasonable to conclude that this is unnecessary because domestic investment into the IFC can be controlled under current foreign investment laws. This remains speculation and needs clarification in forthcoming Government guidelines.

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