The Vietnam International Financial Centre (VIFC) has been established. Accordingly, the question of greatest interest to many investors is no longer what incentives the VIFC will offer, but rather what conditions enterprises must satisfy in order to establish a presence and operate within the VIFC.

To date, the registration and member recognition mechanism is still being further developed. However, the Licensing Handbooks for banks, commodity exchanges and clearing houses have already provided fairly clear indications of the regulatory approach that the VIFC Operating Authority intends to adopt.

1. VIFC is moving towards a dedicated "market entry" mechanism instead of the traditional investment model

For many types of enterprises, particularly non-financial enterprises permitted to operate within the VIFC, the focus will no longer be on obtaining an Investment Registration Certificate (IRC) and subsequently establishing an enterprise under the ordinary procedures. Instead, enterprises will complete the registration procedures or apply for member recognition through the VIFC Operating Authority.

This reflects an approach commonly adopted by many international financial centres, where the right to enter the market is established not only through the incorporation of a legal entity but also through the assessment and recognition by the competent regulatory authority that the applicant satisfies the applicable operating requirements.

If this approach is maintained in the official regulations, the VIFC will establish a separate "market entry gateway" operating in parallel with Vietnam's existing investment regime.

2. A single regulatory authority with multiple sector-specific licensing procedures

Instead of requiring enterprises to work with multiple authorities under the traditional regulatory model, the Operating Authority is expected to act as the central body responsible for receiving applications, conducting the appraisal process, consulting relevant authorities, and issuing licensing decisions or member recognition decisions. This reflects the trend towards establishing a one-stop mechanism for receiving and coordinating procedures, which is a common feature of many international financial centres.

However, centralising the regulatory authority does not mean applying a single set of requirements to all enterprises. The draft documents indicate that the VIFC will develop separate Licensing Handbooks for each sector, under which each type of organisation will be subject to different eligibility requirements, application documents and review procedures.

For example, the licensing process for a commercial bank is designed as a two-stage process, including an approval-in-principle stage before the issuance of the official licence, with an estimated processing time of up to 120 days. Meanwhile, the licensing procedures for a commodity exchange or a clearing house are shorter, taking approximately 30 working days from the receipt of a complete and valid application dossier.

This demonstrates that the VIFC is adopting a regulatory approach based on the risk profile of each type of activity, rather than applying a uniform administrative procedure to all applicants.

In addition, for entities operating in the finance, banking, or other regulated sectors, registration or recognition as a VIFC member does not replace the licensing procedures required under the relevant sector-specific laws. Depending on the nature of the business activities, an enterprise may still be required to obtain the necessary licenses or approvals from the competent regulatory authorities - such as the State Bank of Vietnam, the State Securities Commission of Vietnam, the Ministry of Justice, or other relevant sectoral regulators - before proceeding with the registration or application for recognition as a VIFC member.

3. The focus of the assessment shifts from "investment conditions" to "operational capability"

Under many traditional investment procedures, the primary focus is generally placed on charter capital, business licences and the legal status of the investor. In contrast, the application dossier for the VIFC is designed to assess whether an enterprise has sufficient capability to operate a financial institution in accordance with international standards.

This is clearly reflected in the categories of documents required in the application dossier, including:

(i) the corporate governance model;

(ii) the internal control structure;

(iii) the risk management system;

(iv) compliance policies;

(v) a multi-year business plan;

(vi) a Business Continuity Plan;

(vii) information technology systems; and

(viii) documents demonstrating the experience and reputation of the management team.

In particular, not only the enterprise itself but also the individuals proposed to hold management, executive and supervisory positions must demonstrate their professional qualifications, experience and professional ethics.

For many international financial groups, this is a familiar approach. However, for enterprises entering the Vietnamese market for the first time, this requirement means that the preparation of the application dossier will no longer be solely the responsibility of the legal department, but will require the involvement of the risk management, compliance, information technology, finance and senior human resources functions.

4. Information technology and cybersecurity become licensing criteria

Under the draft documents, enterprises are required not only to describe their information technology systems but also to demonstrate the operational stability of their trading systems, data protection capabilities, backup arrangements, disaster recovery mechanisms, information security standards, and connectivity with the regulatory authority.

For commodity exchanges, the application dossier is further required to provide a detailed description of the electronic trading platform, margin management system, clearing and settlement system, transaction monitoring system, and real-time data storage mechanism.

Meanwhile, for clearing houses, compatibility with the information technology system of the parent commodity exchange becomes a prerequisite for licensing consideration.

This demonstrates that the VIFC does not regard technology merely as an operational support function, but rather as an integral part of an institution's governance capability that will be assessed from the licensing stage.

5. A risk-based regulatory approach is gradually taking shape

The regulatory authority will not only assess whether an enterprise satisfies the applicable legal requirements but will also evaluate whether the organisation has sufficient capability to identify, measure and control the risks that may arise during its operations.

This explains why the application dossier is expected to require extensive documentation relating to:

(i) credit risk management;

(ii) market risk;

(iii) liquidity risk;

(iv) operational risk;

(v) technology risk;

(vi) internal audit;

(vii) compliance management; and

(viii) business continuity.

This approach is consistent with the practices adopted by many developed international financial centres, where the licensing process serves not only to confirm the legal status of an applicant but also to assess its ability to operate safely and sustainably over the long term.

6. VIFC is gradually aligning with international practices while maintaining its own characteristics

Overall, many features of the draft documents indicate that the VIFC has drawn upon the experience of international financial centres such as Singapore, the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC).

The similarities can be seen in the classification of licences by business sector, risk-based assessment, and the stringent requirements relating to corporate governance, risk management, information technology and standards applicable to the management team.

However, the VIFC is also developing characteristics that are tailored to Vietnam's specific circumstances.

Rather than establishing a fully independent financial regulatory authority such as those in the ADGM or the DIFC, the VIFC is intended to operate through the Operating Authority under a coordination mechanism with the existing state regulatory authorities. This approach may help leverage Vietnam's existing legal framework while providing flexibility during the transition to a specialised regulatory model.

Accordingly, investors should not expect the VIFC to be a replica of any existing international financial centre. Instead, it should be viewed as a "hybrid" model combining international practices with Vietnam's legal system.

What should foreign investors prepare now?

Although the official regulations are still being finalised, the current draft documents are sufficient for enterprises to begin their preparations.

In addition to reviewing their investment structure and selecting an appropriate form of presence within the VIFC, organisations should proactively prepare their group's legal documentation, audited financial statements, documents demonstrating financial capability, and materials relating to corporate governance. The latest draft VIFC membership application forms circulated by the Executive Authority for consultation are largely similar in content to the enterprise registration forms prescribed under the current Vietnamese enterprise law. Although these forms are still being refined prior to their official issuance, foreign investors may refer to the existing enterprise registration forms to prepare the required information and supporting documents in advance. Doing so may help shorten the time required to complete the application dossier once the VIFC membership registration mechanism comes into effect.

More importantly, enterprises should conduct a compliance assessment to evaluate the readiness of their governance framework, internal control system, risk management framework, cybersecurity, and information technology infrastructure against the anticipated requirements of the VIFC. Early preparation will significantly reduce the time required to complete the application dossier once the official licensing framework is issued.

For multinational financial groups, identifying the proposed management team in advance, reviewing the applicable standards, and preparing documents demonstrating the qualifications of key personnel will also be important, as these are among the areas particularly emphasised in the draft documents.

Conclusion

Although the registration and member recognition mechanism of the VIFC is still being developed, the current draft documents already demonstrate a clear direction towards establishing a modern market entry framework that focuses on investors' governance capability, operational capability, and level of compliance.

Accordingly, entry into the VIFC is likely to be more than a mere administrative procedure; rather, it will be a comprehensive assessment of the capabilities of the applicant organisation. Investors that prepare early in terms of their legal structure, governance, technology, and human resources will enjoy a distinct advantage once the official framework is implemented.