Financial Centers: Global Economic Power and Opportunities for Vietnam
- Virtus Prosperity
- Mar 25
- 4 min read
What is a financial center?
Currently, there is no official definition of a financial center. Simply put, a financial center is an area that hosts numerous major institutions such as banks, securities firms, insurance companies, etc., and is where financial product transactions take place.
Criteria for Evaluating a Financial Center
According to the Global Financial Centers Index (GFCI), the five criteria for evaluating the development of a financial center include:
1) Business environment
2) Human resources
3) Infrastructure
4) Development of the financial sector
5) Reputation of the city hosting the financial center.
The GFCI updates its rankings twice a year (in March and September). As of March 2025, there are 119 financial centers globally.
It can be seen that New York still holds the top position in all five criteria, but there are signs of slowing down, while other centers are rising strongly.
Major Financial Centers in Asia
1. Hong Kong
Hong Kong continues to surpass Singapore to become the largest financial center in Asia and the third largest globally. This success is attributed to several key factors:
The Longstanding Development of the Financial System: Since becoming a British colony in 1841, Hong Kong has been transformed from a fishing village into a bustling trade hub. This development was accompanied by the establishment of foreign banks such as East Fan Bank, Favorable Bank, Standard Chartered Bank, and HSBC. Currently, more than 70 of the world's 100 largest banks operate in Hong Kong, and over 29 multinational banks have set up their regional headquarters there.
A Transparent Legal System: Despite being part of China, Hong Kong maintains the "One Country, Two Systems" framework. The Basic Law helps preserve the British Common Law system, retaining colonial-era regulations such as property rights, freedom of speech, and an independent judiciary.
Attracting Capital from Mainland China and Chinese Enterprises: Around 56% of mainland Chinese enterprises are listed on the Hong Kong Stock Exchange to facilitate access to foreign capital. Additionally, Hong Kong has become a wealth management hub for high-net-worth individuals from mainland China.
Talent Attraction Policies: In December 2022, the government launched the Top Talent Pass Scheme to attract high-income professionals and graduates from top global universities. According to the Immigration Department, a total of 49,737 visas were issued under this initiative in 2023, including 11,686 visas granted to individuals earning no less than HK$2.5 million (US$320,000) in the previous year. As of September 2024, the figures stand at 30,851 visas and 9,225 high-income individuals.
2. Singapore
Singapore ranks 2nd in Asia and 4th globally as a financial center, thanks to the following advantages:
Strategic Location: Situated at the crossroads of major maritime trade routes, Singapore serves as the gateway to Southeast Asia and the Asia-Pacific region. This prime location has made it a key hub for international trade, finance, and investment.
Advanced Fintech Industry: Singapore is the Fintech hub of ASEAN, home to around 40% of Fintech companies in the region, making it a launchpad for entering the Southeast Asian market. It was also the first country to establish a regulatory sandbox, allowing Fintech startups to experiment with new business models.
Strong Financial Infrastructure: The Singaporean government has long viewed financial services not just as a support sector but as a pillar of economic growth. Under Lee Kuan Yew’s "developmental state" approach, the government identified key industries that could contribute to GDP and enacted supportive policies. Today, Singapore boasts a well-developed financial market offering comprehensive services, including banking, insurance, asset management, and foreign exchange trading. The Monetary Authority of Singapore (MAS) plays a crucial role in regulating and overseeing the financial sector, ensuring stability and transparency.
Business-Friendly Environment: Singapore attracts multinational corporations, financial institutions, and investors due to its pro-business regulations, low tax rates, and ease of setting up companies. The country has signed 25 Free Trade Agreements (FTAs) and 90 Double Taxation Agreements (DTAs), further enhancing its appeal as a global financial hub.
Open Market and Competitive Workforce have also contributed to its development as a leading financial center.
2024 | 2023 | |
Total Transaction Value | 305,374 | 258,387 |
Transaction Value per Session | 1,212 | 1038 |
Unit: Million USD
2024 | 2023 | % Change | |
Singaporean Companies | 242,013 | 200,712 | 21% |
Foreign Companies (Excluding China) | 47,167 | 47,180 | 0% |
Chinese Companies | 16,194 | 10,657 | 52% |
Total Transaction Value by Company Type
3. Comparison of Two Centers in Key Financial Sectors (GFCI)
Hong Kong Rank | Singapore Rank | |
Banking | 3 | 5 |
Wealth Management | 2 | 3 |
Insurance | 1 | 4 |
Law | 4 | 6 |
Technology | 6 | 2 |
Trading | 3 | 5 |
Can Vietnam Become a Financial Center?
Recently, Prime Minister Pham Minh Chinh signed Decision No. 1718/QD-TTg to establish a Steering Committee for the Regional and International Financial Center in Vietnam. Additionally, Deputy Prime Minister Truong Hoa Binh visited the UK to expand cooperation opportunities to develop a financial center in Vietnam. Is this plan feasible, with potential locations in Ho Chi Minh City and Da Nang?
Based on the GFCI criteria, we can see:
Business environment: Vietnam is creating policies to attract foreign businesses. However, consolidation and mergers will take time for smooth operation.
Human resources: Vietnam has a golden demographic window, but labor skills need improvement.
Infrastructure: Vietnam is currently pushing public investment, with major projects like Long Thanh Airport set to boost transportation services in the South.
Source: Ministry of Finance, MBS Research Financial sector development: Successfully implementing the KRX and completing procedures to upgrade market status would be a significant boost for Vietnam's financial sector. Additionally, laws concerning digital assets need clear regulations.
Conclusion
In general, Vietnam still faces many challenges in establishing a financial center in the short term. However, with the government's efforts, Vietnam can certainly achieve its goals in the future.
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