Vietnam Ministry of Information and Communications Holds Crucial Consultation for Draft Law on Industrial Digitalization

HANOI, Vietnam – August 12, 2024 – The Ministry of Information and Communications (MIC) convened a significant working session today to gather expert opinions and stakeholder feedback on the draft Law on Industrial Digitalization. This pivotal meeting aims to refine the legislation before its presentation to the Government and subsequent submission to the National Assembly. The initiative underscores Vietnam’s commitment to fostering a robust digital economy and ensuring its industrial sector is well-positioned for future growth and innovation.

The consultative meeting was presided over by Minister of Information and Communications Nguyen Manh Hung. In attendance were representatives from key government bodies, including the Office of the Government, the Ministry of Planning and Investment (MPI), and the Ministry of Finance. The MIC itself, as the lead agency responsible for drafting the legislation, was extensively represented at its Hanoi headquarters.

This proactive consultation process follows a directive from the Prime Minister, tasking the MIC with spearheading the development of the Law on Industrial Digitalization. The ministry has been working collaboratively with various ministries, ministerial-level agencies, and other relevant organizations to construct this foundational legal framework.

Addressing Gaps in Digital Economy Regulation

The draft Law on Industrial Digitalization is designed to address existing challenges and inconsistencies within the current legal framework governing information and communications technology (ICT). Specifically, it aims to resolve various issues and disparities that have emerged in the implementation of the existing Law on Information Technology. The proposed legislation seeks to create a more comprehensive and effective regulatory environment for the burgeoning digital sector.

A core objective of this new law is to establish policies that proactively encourage digital transformation and simultaneously mitigate potential risks associated with industrial digitalization activities. This dual focus highlights the government’s strategy to harness the benefits of digital technologies while ensuring responsible and sustainable development.

Vision for a Thriving Digital Industrial Sector

According to the preliminary draft, the Law on Industrial Digitalization is intended to create a conducive legal environment for the development of the industrial digitalization sector. The ultimate goal is to transform this sector into a significant contributor to the national economy, driving innovation and competitiveness.

The legislation emphasizes a strategic shift for Vietnamese industrial digitalization enterprises. It aims to move them from primarily focusing on assembly and integration to emphasizing original design, creation, and innovation, thereby becoming true technology leaders. Furthermore, the law seeks to cultivate a dynamic market for industrial digitalization products and services, promoting the development of domestically designed and manufactured digital products.

Scope and Key Provisions of the Draft Law

The scope of the Law on Industrial Digitalization is broad, encompassing:

• Industrial Digitalization Activities: This includes the production, supply, and service of digital products and solutions.
• Development of the Digital Industrial Sector: The law aims to ensure sustainable growth and advancement within the sector.
• Rights and Responsibilities: It clearly defines the rights and responsibilities of all stakeholders, including organizations and individuals involved in or affected by industrial digitalization.

Crucially, the law will not stipulate regulations for the production and supply of specialized digital products and services for national defense, security, or essential public services. The application of the Law on Industrial Digitalization is expected to extend to all organizations and individuals engaged in or having interests related to industrial digitalization.

A Strategic Approach to Legislation

As the submission to the Prime Minister’s Office draws nearer, Minister Nguyen Manh Hung reiterated the MIC’s commitment to open dialogue. He emphasized the ministry’s desire for active participation from representatives of ministries, sectors, and businesses to engage in direct discussions and provide constructive feedback on the draft Law on Industrial Digitalization.

Pham Thu Hang, Deputy Director of the Legal Department at the Office of the Government, highlighted the critical policy directions that the draft law must address. She stressed the need for a concentrated focus on two major policy areas: the investment environment and the establishment of a robust legal framework that ensures scientific and technological innovation.

"To develop the industrial digitalization sector, the most important aspect is the investment environment, including investment policies, capital mobilization, and related policies," stated Hang. "We need to create an optimal investment environment, as advocated by the Ministry of Information and Communications, to ensure the highest level of investment, as this sector is foundational for development and is of utmost importance in the current phase."

Fostering an Enabling Investment Climate

Vo Van Hoan, Deputy Director General of the Department for Foreign Investment under the Ministry of Planning and Investment (MPI), addressed the need for clear legal frameworks for newly emerging industrial sectors. He proposed the development of "industrial zones" within the Law on Industrial Digitalization, which would align with the existing Law on Industrial Zones and Economic Zones, overseen by the MPI. This integration aims to create a coherent and supportive ecosystem for digital businesses.

Regarding investment policies within these digital industrial zones, the MPI representative suggested that the draft law should consider incorporating provisions for the establishment of specialized consulting firms. These firms would be tasked with reviewing and assessing investment capital and other legal regulations, ensuring a streamlined and efficient process.

Addressing Key Concerns and Stakeholder Input

During the working session, representatives from various ministries and related sectors provided input on several critical issues that are expected to be addressed in the Law on Industrial Digitalization. These include investment incentives for the digital industry, value-added tax (VAT) policies, and policies related to research and development and the production of digital assets.

The discussions also touched upon the crucial need for incentives to support the development of Vietnam’s semiconductor industry, a sector identified as strategic for future growth. Experts also raised questions regarding VAT implications for digital services and the legal framework for research and development, as well as policies for digital asset production.

These contributions from experts are expected to clarify numerous aspects of the Law on Industrial Digitalization, paving the way for its successful finalization.

Background and Context: The Digital Transformation Imperative

Vietnam has been actively pursuing a comprehensive digital transformation strategy, recognizing the profound impact of digital technologies on economic growth, competitiveness, and societal development. The National Digital Transformation Program, launched in 2021, aims to make Vietnam a leading digital nation by 2030.

The industrial sector, in particular, is seen as a critical area for digital adoption. The Fourth Industrial Revolution (Industry 4.0) presents both opportunities and challenges for Vietnamese industries. While embracing technologies like Artificial Intelligence (AI), the Internet of Things (IoT), and big data can significantly enhance productivity, efficiency, and innovation, it also necessitates a robust legal and policy framework to guide this transition.

Historically, Vietnam’s legal framework for technology has evolved, starting with the Law on Information Technology in 2006. However, the rapid pace of technological advancement has outstripped the existing regulations, creating a need for more specific and forward-looking legislation. The Law on Industrial Digitalization is a direct response to this evolving landscape.

Strategic Objectives and Expected Outcomes

The Law on Industrial Digitalization is anticipated to achieve several key objectives:

• Enhance Competitiveness: By fostering innovation and efficiency in the industrial sector, the law aims to improve the global competitiveness of Vietnamese businesses.
• Attract Investment: A clear and supportive legal framework is expected to attract both domestic and foreign investment into the digital industrial sector.
• Promote Job Creation: The growth of the digital economy is projected to create new, high-skilled employment opportunities.
• Drive Economic Growth: By unlocking the potential of digital technologies, the law aims to contribute significantly to Vietnam’s overall economic development.
• Strengthen National Security: A well-regulated digital sector is crucial for safeguarding national security and critical infrastructure.

Insights from Related Stakeholders

The consultative meeting provided a platform for diverse perspectives. Representatives from the Ministry of Finance, for instance, are expected to focus on the fiscal implications of investment incentives and tax policies related to digital products and services. Their input will be crucial in ensuring that the proposed incentives are both effective in stimulating growth and fiscally sustainable.

The Ministry of Planning and Investment’s role is paramount in shaping the investment landscape. Their focus on defining "industrial zones" and ensuring alignment with existing economic zone laws signals a desire to create integrated development hubs that can foster synergy between digital and traditional industries.

The Office of the Government, acting as a central coordinating body, plays a vital role in ensuring that the draft law aligns with the government’s broader economic and development agenda. Their emphasis on the investment environment and legal framework underscores the importance of creating a stable and predictable operating space for businesses.

Looking Ahead: The Path to Legislation

The consultative process is a critical step in the legislative journey. Following this meeting, the MIC will likely consolidate the feedback received and further refine the draft law. The revised draft will then be presented to the Prime Minister for review and approval before being submitted to the National Assembly for deliberation and enactment.

The successful passage of the Law on Industrial Digitalization is expected to be a landmark achievement, providing a robust legal foundation for Vietnam’s ambitious digital transformation goals and solidifying its position as a key player in the global digital economy. The commitment to broad consultation signifies a transparent and inclusive approach to crafting legislation that will shape the future of Vietnam’s industrial landscape.