[HO CHI MINH CITY] As Vietnam accelerates efforts to establish an international financial centre (IFC) with an eye on positioning it among global hubs such as Singapore and Dubai, industry observers are raising red flags about critical missing pieces: a sound legal framework, and a financial market that would inspire investor confidence and attract capital inflows.

At the heart of the concern is whether Vietnam’s civil law foundation and its stringent financial controls can meet the complex demands of global investors and businesses without radical adaptation.

The South-east Asian nation is developing a dual-city IFC in the inland Ho Chi Minh City – now the economic heart of the country – and Da Nang, which is on the coast about 925 km further north.

Common law vs civil law: A strategic dilemma

In many of the world’s top financial hubs such as London, Singapore, Dubai and Hong Kong, common law frameworks are a cornerstone. Foreign investors are familiar with the principles, case-based interpretations and predictability in commercial disputes.

But Vietnam runs on a civil law system it inherited from the French legal tradition, in which laws are codified and judicial precedent plays a limited role in legal interpretation.

The country has drawn up a special legal framework at the level of a parliament’s Resolution for the dual-city IFC, but has not decided to adopt a fully independent legal system underpinned by common law.