On June 27, 2025, the National Assembly overwhelmingly passed a Resolution to establish the International Financial Center of Vietnam (“IFC Resolution”). The IFC Resolution will take effect on September 1, 2025. It establishes a framework to create, operate, monitor, and govern the International Financial Center (“IFC”) that will be located in Ho Chi Minh City and Da Nang. Both cities will operate as one financial center but with two destinations.
The IFC Resolution is a large step to establishing Ho Chi Minh City and Da Nang as a regional financial center by 2035 and a global financial center by 2045. For Vietnam to become a high-income country by 2045, it is thought, Vietnam needs to be able to attract global investment, financial capital, and human capital while fostering innovation in the areas of technology and financial services.
To ensure that Ho Chi Minh City and Da Nang City do not compete with each other, the IFC Resolution designates Ho Chi Minh City as the comprehensive financial hub, focusing on capital markets, asset and fund management, insurance, banking, specialized commodity trading, and Fintech experimentation through a regulatory sandbox that will deepen the integration of Vietnam’s financial market with international financial markets.
The IFC in Da Nang, on the other hand, has diverse roles. It will serve as an IFC to create capital markets for innovative startups through crowd-funding, will develop private placement platforms operated by licensed entities under government guidance, will promote green finance, trade finance for start-ups and Small and Medium Sized Enterprises (SMEs), offshore financial services for non-residents, cross-border commerce connected to free trade zones, high-tech parks, and will open economic zones. The IFC Ho Chi Minh City will conduct sandbox program in Fintech and banking. The IFC in Da Nang will conduct sandbox pilot programs in digital assets, crypto currencies, advanced payment systems, and will service smaller investment funds. The IFC Resolution outlines a list of permissible financial products ranging from traditional financial instruments such as stocks, bonds, commodities, and fund certificates to more sophisticated and new financial instruments such as derivatives, tokenized assets, crypto currencies, and carbon credits.
IFC Governance & Management
Three authorities, each with independent and separate powers, will be established to manage IFC operations: (1) IFC Executive Authority; (2) IFC Monitoring Authority, and (3) IFC Dispute Resolution Authority.
The IFC Executive Authority role is to manage and execute activities and operations. The IFC Executive Authority is mandated to manage the IFC and issue regulations specifically to govern the management and operation of the IFC Executive Authority.
The IFC Monitoring Authority will monitor, inspect, scrutinize, prevent, and address violations of law. The Monitoring Authority will be supported by the State Bank of Vietnam, Ministry of Finance, Ministry of Industry and Trade, Ministry of Public Security and other authorities. Because the Monitoring Authority is charged with safeguarding the stability of the IFC system, it will function like an executive body in that it will enforce the law to prevent financial violations.
The IFC Dispute Resolution Authority’s role is to resolve disputes involving members of the IFC. It is made up of the IFC Court and the IFC Arbitration Center. Because it is charged with handling disputes, members of the IFC can include an arbitration clause in their contracts that requires arbitration between the parties to be in English, that follows the law of a particular country, and that arbitration be held before a specific arbitration body (eg, Singapore International Arbitration Center (“SIAC”), American Arbitration Association (“AAA”), Vietnam International Arbitration Center (VIAC), etc. They can agree that the decision of the arbitration body be binding and not subject to judicial review by Vietnamese courts. If the parties do not agree to waive their right to judicial review of an arbitration decision by Vietnamese courts, then rights to judicial review of an arbitration decision can only be heard in the three Provincial People’s Courts of Hanoi, Da Nang, and Ho Chi Minh City.
The new arbitration framework and mechanism established under the IFC Resolution, therefore, ensures the enforceability and finality of arbitration awards and limits legal intervention by Vietnamese courts[1] in commercial disputes.
IFC Membership
Under the IFC Resolution, entities that are eligible to become IFC members include commercial banks, foreign bank branches, securities firms, insurers and reinsurance enterprises, fund managers, fintech and digital asset firms, market infrastructure operators, entities providing consultancy and support services, non-financial service providers, and other entities as prescribed by the government. For a corporation, legal entity, or investor to be a formal member of the IFC, it must register to become a member before it can conduct business within the IFC framework.
To encourage global financial firms and large Vietnamese banks and financial institutions to become IFC members, the IFC Resolution exempts Global Fortune 500 firms and the top 10 Vietnamese charter capital financial institutions by sector if they request to be recognized as IFC members without a formal registration process.[2] Foreign banks and Vietnamese commercial banks will be automatically admitted to IFC membership if they are established in the form of a branch of a foreign bank or single-member limited liability company bank.[3] There are other membership conditions for different types of institutions.
Benefits of Becoming IFC Members
Offshore Investments and Relationships Among IFC Members and Offshore Investors
An IFC member is permitted to engage in investments with offshore investors or non-residents without restriction. Although more comprehensive guidance regarding this investment right is anticipated, it is reasonable to assume that an IFC member will not be required to secure the usual offshore investment approval from Vietnamese authorities for its international investments. Moreover, an IFC member has the option of establishing a holding company to raise capital from offshore investors. This could enable companies to raise capital internationally without having to navigate the complicated offshore holding structures that were necessary in the past. Furthermore, for the IFC to follow international standards, the Resolution establishes that English will be the official language of operations within the IFC, and that companies within the IFC will use international accounting standards, such as IAS/IFRS.
In terms of foreign exchange among IFC members, the IFC Resolution allows IFC members to transact in foreign currencies with one another and with non-Vietnamese entities. Additionally, IFC members that are 100% foreign owned can freely remit funds offshore without being subject to foreign exchange control requirements. This represents a significant advantage over non-IFC members operating outside the IFC framework, where legal entities in Vietnam are generally restricted from using foreign currencies, except in specific circumstances.
IFC members that raise funds abroad can do so without having to obtain permits from Vietnamese authorities, such as the Ministry of Finance or State Bank of Vietnam (“SBVN”).[4] To streamline the bureaucratic process, foreign investors will generally be able to establish a company within the IFC without requiring any investment approval. Furthermore, unlike the requirements outside the IFC, foreign investors do not need to seek approval for mergers and acquisitions when acquiring equity in an IFC member, and there are no limits on foreign ownership of IFC members.
Onshore Transactions between IFC Members and Other Onshore Entities in Vietnam
With respect to onshore transactions involving IFC and other onshore entities, the Vietnamese government has taken a more cautious position to safeguard the domestic market compared to its approach involving the IFC. The government plans to provide additional guidance regarding transactions between IFC members and other onshore entities; however, the overarching principle is that engaging in business with IFC members will be easier than otherwise. Transactions between IFC member and non-members elsewhere in Vietnam must still comply with applicable foreign exchange restrictions. As a result, a foreign currency loan from an IFC Member to a Vietnamese borrower outside the IFC will still need SBVN registration. Transactions between IFC members and onshore entities will still be required, for the most part, to be conducted in VND.
Similarly, investment by IFC members into corporations operating in Vietnam or investment by Vietnamese entities into IFC members will be subject to limitations such as foreign ownership limits. However, the Vietnamese government is expected to issue further guidance to establish an exception mechanism in relation to the licensing process for business sectors in which the government seeks to attract foreign investment.
Land, Infrastructure Tax Incentives, and Labor Incentives for IFC Members
The IFC Resolution provides that investment projects are entitled to long-term land use rights, allocation and lease of clean land funds and land tenure, with potential extensions up to 70 years for projects in priority sectors of significant scale, and up to 50 years for other investment projects. Unlike projects outside the IFC, land held by companies in the IFC and for IFC projects may be mortgaged to offshore creditors.
The IFC Resolution provides tax benefits for foreign financial institutions and for investors that are members of the IFC. The IFC Resolution offers up to 30 years of reduced corporate income tax for projects operating in priority financial sectors. A personal income tax exemption for foreign experts working for IFC members is also available until 2030. The lower corporate tax rate of 10% for priority financial sectors should provide a valuable incentive for foreign investors to invest in Vietnam through the IFC.
To attract foreign employees with valuable expertise to the IFC, the Resolution does not subject IFC members to caps on foreign hires, nor are they required to conduct labor market testing or recruitment for Vietnamese candidates before hiring foreign professionals. Similarly, work permits are not required for expatriates who meet specific qualifications, and long-term visas up to 10 years are available to certain expats and their families. These are very valuable incentives.
IFC Executive Authority to Provide Incentives for the Development of Financial Innovative Sandbox Programs
With the goal to promote Ho Chi Minh City and Da Nang as an IFC, the Resolution provides incentive programs for corporations and companies to engage in innovations in: (a) Green finance; (b) Digital assets; (c) Fintech; (d) Commodities and derivative markets; and (e) Other sectors as approved by the government from time to time.[5]
Furthermore, to encourage innovation in Fintech, the IFC Executive Authority has authority to issue “sandbox regulations” to create a framework that allows Fintech and technology businesses, to test their products and services in a controlled environment without facing the full burden of regulatory compliance. In addition, Sandbox participants’ legal liability may be limited even if they cause damage to the state. Finally, innovative start-ups and Fintech companies may be entitled to grants from the government of Vietnam.[6]
Conclusion
Vietnam’s adoption of an entirely new framework for its new International Financial Center is a significant milestone in Vietnam’s efforts to integrate Ho Chi Minh City and Da Nang with international financial markets. The new legislation is designed to overcome the challenges Vietnam has faced because of regulations, foreign exchange limitations, inconsistent enforcement of foreign judgments and arbitration rulings, negative perceptions and much more. Undoubtedly there will be further decrees to fill regulatory gaps and to clarify the rules for implementing the IFC Resolution. Most importantly, a change in the regulatory environment that has limited financial transactions has been created.
[1] The July 1, 2025, Vietnam Court System Reform provides a legal mechanism that permits formation of specialized courts at IFC centers.
[2] Article 10.2 of the IFC Resolution.
[3] Articles 10.4, 11.6 and 17.1 of the IFC Resolution.
[4] Article 11.1(b) of the IFC Resolution.
[5] Article 25 of the IFC Resolution.
[6] Article 24 of the IFC Resolution.
By Nguyen Hong Thai
