Ministry of Information and Communications convenes inter-ministerial working session to refine the draft Law on Digital Technology Industry

On August 12, the Ministry of Information and Communications (MIC) of Vietnam hosted a pivotal inter-ministerial working session to deliberate on the latest draft of the Law on Digital Technology Industry. This legislative effort marks a significant shift in the nation’s economic strategy, aiming to transition the digital sector from a reliance on assembly and outsourcing toward a robust ecosystem of innovation, design, and self-reliant production. The meeting, chaired by Deputy Minister of Information and Communications Bui Hoang Phuong, included high-level representatives from the Office of the Government, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and key internal departments tasked with drafting the legislation.

Legislative Context and Strategic Objectives

The development of the Law on Digital Technology Industry is not merely a regulatory update but a fundamental shift in national policy. For years, Vietnam’s digital economy has been governed by broader Information Technology laws that, while instrumental in the early stages of development, have become increasingly insufficient to address the complexities of modern, high-tech industrial manufacturing.

The draft law seeks to establish a clear legal framework that defines the scope of the digital technology industry, including hardware, software, and digital services. Its primary objective is to move beyond the "low-value-add" model of hardware assembly. By fostering indigenous intellectual property and facilitating a move toward "Make in Vietnam" technologies, the government aims to increase the resilience of the domestic economy against global supply chain fluctuations.

A Chronology of Policy Evolution

The journey toward this legislative milestone has been methodical, reflecting the government’s commitment to building a consensus-driven framework:

• Initial Directives: Following executive instructions from the Prime Minister, the MIC was designated as the lead agency to coordinate with other ministries, ministerial-level agencies, and provincial authorities to formulate the draft.
• Consultation Phase: Throughout the first half of 2024, the MIC conducted several rounds of consultations with industry associations, private sector leaders, and academic institutions.
• The August 12 Working Session: This meeting served as a critical "fine-tuning" session, focusing on specific legal definitions and the feasibility of proposed investment incentives before the draft is presented to the Government and subsequently to the National Assembly.
• Future Milestones: Following this round of inter-ministerial feedback, the drafting committee is expected to integrate revisions before the final submission to the legislative body later this year.

Critical Policy Pillars and Proposed Incentives

During the session, participants emphasized that the success of the law hinges on the precision of its fiscal and operational incentives. Representatives from the Office of the Government, including Deputy Director of the Legal Department Pham Thuy Hanh, highlighted that the draft must focus on two primary policy areas: preferential investment conditions and the establishment of "regulatory sandboxes" for testing emerging technologies.

"To drive the digital technology sector, the most critical issues are investment incentives, streamlined administrative procedures, and preferential tax policies," Hanh stated. "The draft must reflect the highest level of priority for this sector, as these industries represent the future growth engines for the national economy."

Furthermore, the Ministry of Planning and Investment (MPI) provided strategic input regarding the synchronization of this new law with existing regulations. Do Van Sy, Deputy Director of the Foreign Investment Agency under the MPI, suggested that the law should explicitly define "digital technology zones" in a manner consistent with the existing Law on Industrial Parks and Economic Zones. This alignment is vital to ensure that businesses operating in these zones can seamlessly access incentives without conflicting with overlapping regulatory requirements.

Addressing the Talent Gap and Industrial Self-Reliance

A recurring theme in the discussions was the imperative of human capital development. The draft law includes provisions aimed at supporting the goal of training 50,000 highly skilled engineers for the semiconductor and digital technology industries. Experts argue that without a synchronized approach between state-sponsored education, university research, and corporate demand, the goal of moving up the value chain will remain elusive.

The "Make in Vietnam" initiative, which underpins much of this legislation, specifically targets the reduction of dependency on foreign-designed components. The draft law proposes measures to support the domestic production of chips and software components, provided that these products meet strict standards of local content and innovation.

Regulatory Scope and Exclusions

To maintain national security and focus the law’s impact, the drafting committee has been careful to define the boundaries of its application. The law will apply to all agencies, organizations, and individuals involved in digital technology manufacturing, service provision, and research. However, it explicitly excludes the production and provision of digital products and services dedicated to defense, security, and classified government applications, which are governed by separate, more stringent security protocols.

Analysis: Economic Implications and Challenges

The proposed Law on Digital Technology Industry represents a paradigm shift for Vietnam’s economy. Analysts note that while the country has successfully positioned itself as a major manufacturing hub for global electronics giants, the move toward "design and build" requires a sophisticated legal environment.

1. Investment Attraction: By creating a specialized law, the government is signaling to international investors that digital technology is a protected and prioritized sector, potentially leading to an increase in high-tech Foreign Direct Investment (FDI).
2. Taxation and Fiscal Policy: The discussion regarding Value Added Tax (VAT) and tax holidays for research and development is vital. If the law successfully provides a stable, long-term tax environment, it will encourage startups to focus on domestic R&D rather than pure service outsourcing.
3. Regulatory Sandboxes: The introduction of "sandboxes" is a progressive step. It allows companies to experiment with AI, big data, and semiconductor testing without the burden of full-scale regulation, which is essential in a sector that evolves faster than the legislative cycle.

However, challenges remain. The primary concern among industry stakeholders is the speed of implementation. As the global digital economy shifts rapidly toward generative AI and next-generation connectivity, the legislative framework must remain agile. The inter-ministerial cooperation observed on August 12 is a positive indicator that the government is aware of these pressures.

Conclusion

The working session on August 12 provided a clearer roadmap for the finalization of the Law on Digital Technology Industry. By addressing key concerns regarding investment incentives, regulatory consistency, and the integration of the "Triple Helix" model—cooperation between the State, Universities, and Enterprises—the MIC is laying the groundwork for a more self-reliant and innovative future. As the draft moves toward its final presentation to the National Assembly, the focus will likely remain on refining these specific policy tools to ensure they are both globally competitive and locally impactful. With continued inter-ministerial alignment, this law is poised to be a cornerstone of Vietnam’s transition into a modern, digital-first economy.