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

On August 12, the Ministry of Information and Communications (MIC) organized a critical inter-ministerial working session to gather expert feedback and refine the draft Law on Digital Technology Industry. This legislative effort marks a pivotal shift in Vietnam’s economic strategy, aiming to transition the nation from an assembly-based digital economy to a design, innovation, and production-oriented powerhouse. The session saw participation from representatives of the Office of the Government, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and the Department of Digital Technology Industry under the MIC, which is tasked with drafting the legislation.

The Strategic Shift Toward Digital Sovereignty

The development of the Law on Digital Technology Industry is not merely an update to existing regulations but a comprehensive restructuring of the legal framework governing Vietnam’s technology sector. Previously, digital technology activities were regulated under the broader, and increasingly outdated, Law on Information Technology. As Vietnam seeks to bolster its position in the global semiconductor and AI supply chains, the need for a specialized legal framework has become acute.

The draft law aims to resolve existing bottlenecks in the implementation of information technology laws, providing a legislative "sandbox" to foster breakthroughs in emerging fields. By moving away from the "outsourcing and assembly" model, the government intends to encourage domestic enterprises to move up the value chain—focusing on design, integration, and the mastery of core technologies.

Chronology of Legislative Development

The push for this legislation follows a clear directive from the Prime Minister, who tasked the MIC with leading a multi-agency effort to draft the proposal.

• Initial Drafting Phase: The MIC began coordinating with relevant ministries, provincial authorities, and industry stakeholders to outline the scope of the law, focusing on the unique requirements of the digital era.
• Consultation Period: Throughout the middle of 2024, various workshops were held to solicit input from the private sector, academic researchers, and legal experts.
• August 12 Working Session: This session served as a final cross-ministry synchronization point to reconcile different departmental views on investment incentives and the administrative management of "digital technology zones."
• Upcoming Milestones: Following this consultation, the MIC will finalize the draft for submission to the Government and, subsequently, the National Assembly for legislative review and potential adoption in the coming sessions.

Key Policy Pillars and Scope of the Draft

The draft Law on Digital Technology Industry is structured around several core pillars. Its primary goal is to create a robust legal corridor that transforms digital technology into a key economic engine.

Scope of Regulation:
The draft law covers a broad spectrum, including digital technology activities, products, and services. It provides a mechanism for government support and defines the rights and responsibilities of both state agencies and private entities participating in the sector. Notably, the law excludes specialized digital products used exclusively for national defense, security, and medical applications, which remain under separate regulatory regimes.

Incentives and Investment:
During the August 12 session, Deputy Minister of Information and Communications Bui Hoang Phuong emphasized that the draft is designed to be the most attractive investment framework currently available. The ministry is proposing high-level incentives to stimulate research and development (R&D) and to encourage large-scale investment in the semiconductor and AI industries.

Official Responses and Inter-Ministerial Coordination

The dialogue between the MIC and other government bodies highlighted the complexity of balancing rapid growth with fiscal discipline.

Phạm Thúy Hạnh, Deputy Director of the Department of Laws at the Office of the Government, underscored that the success of the law hinges on two critical areas: investment incentives and the mechanism for pilot testing (regulatory sandboxes). "Developing the digital technology industry requires a primary focus on investment preferences, simplified investment procedures, and competitive tax policies," Hạnh noted. She voiced strong support for the MIC’s proposal to offer maximum-level incentives, arguing that these sectors are the vital growth engines for the current era.

From the Ministry of Planning and Investment, Mr. Đặng Văn Sử, Deputy Director of the Foreign Investment Agency, suggested a strategic alignment with the existing Law on Industrial Zones and Economic Zones. He proposed that the new law should explicitly define "digital technology zones" to create a cohesive legal environment that prevents overlaps in administration. Furthermore, the MPI recommended that the MIC engage specialized consulting firms to audit the draft, ensuring that every article complies with international trade standards and attracts high-quality foreign direct investment (FDI).

Addressing Challenges: Semiconductors, VAT, and Talent

The working session also addressed the granular challenges facing the industry. A recurring theme was the necessity of human capital. As Vietnam pursues a target of training 50,000 semiconductor engineers, the draft law incorporates provisions to support vocational training and university partnerships.

Other debated topics included:

• VAT Incentives: How to structure tax benefits for high-tech manufacturing without violating international fiscal commitments.
• Pilot Mechanisms: Creating legal space for companies to test new technologies (e.g., AI and IoT) in a controlled environment before full-scale commercialization.
• Support for Domestic Startups: Incentives for intellectual property (IP) protection and the commercialization of homegrown digital products.

Broader Economic Implications

The implications of this law are vast. By formalizing the "digital technology industry" as a distinct sector, the government is signaling to global investors that Vietnam is serious about moving beyond low-cost manufacturing.

If enacted, the law would provide the legal certainty required by multinational corporations looking to relocate R&D centers to Vietnam. For domestic firms, it offers a protective yet competitive environment that rewards innovation over volume. The move is also expected to bridge the gap between "State – School – Enterprise," a triad that is widely recognized as the foundation for a sustainable tech ecosystem.

Analysis: A Path Toward Digital Sovereignty

The drafting process reflects a broader trend in Southeast Asia, where nations are racing to secure their place in the global digital value chain. Vietnam’s approach is notably proactive. By integrating the perspectives of the Ministry of Finance and the Ministry of Planning and Investment, the MIC is attempting to preemptively resolve conflicts between industrial promotion and fiscal policy.

However, the effectiveness of the law will ultimately depend on its implementation. The "regulatory sandbox" mechanism, if designed with enough flexibility, could become the catalyst for a new generation of Vietnamese "unicorns." Conversely, if the administrative requirements remain too rigid, the law may fail to attract the high-tech investment it seeks.

As the draft moves toward the final stages of the legislative process, the consensus among attendees was clear: the Law on Digital Technology Industry is not just another piece of legislation—it is a critical tool for national economic development. The collaboration seen on August 12 represents a necessary step in ensuring that the final document is both comprehensive and actionable, paving the way for Vietnam’s future as a high-tech manufacturing and innovation hub.