Ministry of Information and Communications convenes inter-ministerial meeting to finalize the draft Law on Digital Technology Industry

On August 12, the Ministry of Information and Communications (MIC) hosted a critical inter-ministerial working session aimed at soliciting expert feedback and refining the draft Law on Digital Technology Industry. This legislative effort represents a pivotal step in Vietnam’s transition toward a high-tech, innovation-led economy. The meeting brought together representatives from the Office of the Government, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and key divisions within the MIC to ensure the draft is robust, comprehensive, and ready for submission to the Government and the National Assembly.

Context and Legislative Background

The move to draft the Law on Digital Technology Industry follows a directive from the Prime Minister, mandating that the MIC lead a collaborative effort across various government bodies, local authorities, and private stakeholders. Historically, the digital sector in Vietnam has been governed under the broader umbrella of the Law on Information Technology. However, as the global technological landscape shifts toward artificial intelligence, semiconductor manufacturing, and advanced software design, the existing legal framework has proven insufficient to address the complexities of modern industrial development.

The current legal structure, while foundational, lacks the specific incentives and regulatory agility required to move Vietnamese firms up the value chain. The new legislation is designed to bridge these gaps by creating a dedicated legal corridor that fosters investment, mitigates risks, and provides a clear roadmap for the sector’s evolution.

The Strategic Shift: From Assembly to Innovation

The draft law aims to fundamentally transform the character of Vietnam’s technology sector. For decades, the nation has served primarily as a destination for electronic assembly and low-value manufacturing. The proposed legislation seeks to pivot this focus toward research, design, integrated production, and the mastery of core technologies.

By creating a more favorable regulatory environment, the government intends to encourage domestic enterprises to transition into "Make in Vietnam" creators. This transition is not merely a policy preference but an economic necessity. As regional competitors in Southeast Asia and beyond ramp up their digital capabilities, Vietnam faces the imperative to secure its position in the global supply chain, particularly in high-growth fields like semiconductor design and AI-driven software development.

Key Provisions and Scope of Regulation

The scope of the draft law is expansive, covering industrial activities, product development, and the provision of digital services. It also explicitly defines the rights and responsibilities of all stakeholders involved in the digital technology ecosystem.

Crucially, the draft law introduces specific exclusions to avoid overlap with existing regulations. It does not govern digital products or services developed for specialized purposes, such as national defense, state security, or medical-grade equipment, which are subject to their own distinct regulatory regimes. Instead, the focus remains on the civilian, commercial, and industrial aspects of digital technology.

Stakeholder Consultations and Official Responses

During the August 12 meeting, Deputy Minister of Information and Communications Bui Hoang Phuong emphasized the urgency of the process as the submission deadline to the Government approaches. He urged representatives from various ministries to provide direct, actionable feedback.

Pham Thuy Hanh, Deputy Director of the Department of Laws at the Office of the Government, provided a nuanced perspective on the draft’s direction. She identified two primary pillars that must be prioritized to ensure the law’s success: preferential investment policies and a streamlined "regulatory sandbox" mechanism.

"The development of the digital technology industry hinges primarily on investment incentives, administrative procedures, and preferential tax policies," Hanh stated. She noted that the MIC’s proposal to provide high-level incentives is well-aligned with the needs of the industry, given that these sectors are essential for the country’s next stage of economic growth.

From the perspective of the Ministry of Planning and Investment, Van Sy, Deputy Director of the Foreign Investment Agency, suggested that the law should create a cohesive framework for "digital technology zones." He argued that these zones must be synchronized with the existing Law on Industrial Zones and Economic Zones to avoid legal fragmentation. Furthermore, he recommended that the MIC engage specialized legal consultants to conduct a thorough audit of the draft’s clauses to ensure they do not conflict with international trade commitments or existing domestic legislation.

Addressing Structural Challenges: Data and Expert Insights

A significant portion of the discussion centered on the practical hurdles facing the industry. Participants highlighted several critical areas that the law must address to be effective:

• Semiconductor Development: The government has set an ambitious target of training 50,000 semiconductor engineers. The draft law is expected to provide the fiscal framework to support this human capital development.
• VAT and Fiscal Policy: Clarity regarding Value Added Tax (VAT) for digital products is essential for attracting foreign and domestic capital.
• Experimental Mechanisms: The introduction of "sandbox" policies—where companies can test new digital products under controlled conditions without immediate, rigid regulatory enforcement—is viewed as a vital tool for fostering innovation.
• Re-investment Policies: Incentivizing companies to reinvest profits into R&D rather than immediate dividend distribution is a key mechanism being debated to ensure long-term sector health.

Broader Impact and Economic Implications

The enactment of the Law on Digital Technology Industry is expected to have far-reaching implications for Vietnam’s GDP. By codifying support for the digital economy, the government hopes to create a more predictable environment for investors, thereby increasing the flow of Foreign Direct Investment (FDI) into high-tech sectors.

Furthermore, the law acts as a signal to the international community that Vietnam is moving beyond labor-intensive manufacturing. This shift is essential for achieving the status of a developed, high-income nation by the middle of the century.

Beyond economic metrics, the law aims to establish a robust infrastructure for digital sovereignty. By encouraging the development of indigenous technologies and domestic platforms, Vietnam aims to reduce its reliance on external digital ecosystems, thereby strengthening its national digital security posture.

Timeline and Future Outlook

The legislative process is entering its final stages. Following this inter-ministerial working session, the MIC is tasked with integrating the feedback into the draft before conducting a final review. The document will then be presented to the Government for evaluation, followed by submission to the National Assembly for debate and approval.

The speed at which this draft is moving through the administrative pipeline underscores the government’s commitment to the digital transformation agenda. As the country approaches the end of the current year, the legislative and business communities remain closely attuned to the final version of the law, which will likely serve as the primary catalyst for Vietnam’s digital industrialization for the next decade.

In conclusion, the August 12 meeting was more than a procedural requirement; it was a high-level coordination effort to ensure that the Law on Digital Technology Industry acts as a powerful lever for national development. By harmonizing the interests of the finance, investment, and communications sectors, the government is attempting to build a legislative foundation that is both flexible enough to accommodate rapid technological change and stable enough to attract long-term investment. As the draft moves toward the National Assembly, the focus will shift from policy design to implementation, where the success of these legal frameworks will ultimately be measured by the growth of the domestic tech sector and the success of Vietnamese companies on the global stage.