Ministry of Information and Communications gathers multi-sector feedback to refine the draft Law on Digital Technology Industry
On August 12, the Ministry of Information and Communications (MIC) convened a high-level consultative meeting with representatives from various ministries, government departments, and industry experts to refine the draft Law on Digital Technology Industry. This legislative effort marks a pivotal moment in Vietnam’s economic trajectory as the nation pivots from a labor-intensive assembly model toward a value-added, innovation-driven digital economy. The session, led by Deputy Minister of Information and Communications Bui Hoang Phuong, focused on addressing regulatory bottlenecks and establishing a robust legal framework that supports the rapid growth of the digital technology sector while mitigating operational risks.
Context and Legislative Background
The development of the Law on Digital Technology Industry is a direct response to the limitations observed in the existing Law on Information Technology. While the current legal framework served the nascent stages of Vietnam’s digital growth, it has become increasingly inadequate for the complexities of modern digital industries, which encompass artificial intelligence (AI), semiconductors, cloud computing, and big data.
Under the direction of the Prime Minister, the MIC has been tasked with coordinating with relevant agencies, including the Ministry of Planning and Investment (MPI) and the Ministry of Finance, to draft a comprehensive piece of legislation. The objective is to provide a legislative "safe harbor" that fosters innovation while ensuring that Vietnam’s digital infrastructure is capable of competing on the global stage.
The Strategic Shift: From Assembly to Ownership
A central theme of the draft law is the structural transformation of Vietnamese digital enterprises. For decades, the domestic tech industry has been dominated by assembly and low-margin outsourcing services. The proposed legislation seeks to shift this dynamic by prioritizing design, research and development (R&D), and the production of "Made in Vietnam" digital products.
The draft law outlines a vision where Vietnamese firms transition from being service providers to being masters of core technology. This shift is essential for national digital sovereignty and long-term economic resilience. By creating a favorable legal environment, the government aims to catalyze the development of local intellectual property, allowing firms to integrate more deeply into global supply chains as architects rather than mere manual laborers.
Key Provisions and Scope of Regulation
The scope of the proposed Law on Digital Technology Industry is extensive, covering activities related to the production of digital goods and services, the development of digital technology infrastructure, and the rights and responsibilities of all stakeholders.
However, the draft clearly delineates its boundaries. It excludes digital products and services specifically designed for national defense, security, and specialized medical applications, which are governed by separate, more restrictive regulations. The target audience for the law is broad, encompassing government agencies, public organizations, and private sector enterprises engaged in any facet of the digital technology ecosystem.
Expert Consultations and Regulatory Hurdles
During the meeting, participants highlighted several critical areas where the draft law must be refined to be effective. Pham Thuy Hanh, Deputy Director of the Department of Laws at the Office of the Government, underscored the necessity of prioritizing two main policy pillars: investment incentives and the mechanism for regulatory sandboxes.
"To successfully develop the digital technology sector, the most crucial elements are investment incentives, streamlined administrative procedures, and comprehensive taxation policies," Hanh noted. She emphasized that the MIC should advocate for the highest possible level of incentives, given the strategic importance of this industry in the current phase of global economic integration.
The discussion also touched upon the need for alignment with other existing laws. Vu Van Sy, Deputy Director of the Foreign Investment Agency (MPI), pointed out the importance of harmonizing the new law with the existing Law on Industrial Zones and Economic Zones. He suggested that specific policies regarding "Digital Technology Zones" should be consistent with broader industrial park regulations to avoid legal friction and ensure ease of implementation for foreign and domestic investors.
Supporting Data and Industry Implications
The urgency of this legislation is underscored by Vietnam’s ambitious human capital targets. The government is currently working toward a goal of training 50,000 high-quality semiconductor engineers by 2030. Industry experts argue that without a modern, supportive legal framework, the talent pipeline will fail to translate into tangible industrial growth.
Recent data suggests that the digital economy contributes significantly to Vietnam’s GDP, yet the value capture remains low due to reliance on foreign technology. By implementing tax breaks for R&D, VAT adjustments for software exports, and dedicated funding for the "re-production" of core components, the government hopes to increase the domestic value-add percentage of tech exports by at least 15–20% within the next decade.
The Role of Regulatory Sandboxes
A significant portion of the deliberation focused on the "sandbox" mechanism—a controlled environment where companies can test new digital technologies without being immediately stifled by rigid, legacy regulations. This is particularly relevant for sectors like Fintech and AI, where innovation often outpaces the legislative process.
The consensus among the attending officials was that the law must provide enough flexibility to accommodate rapid technological evolution. By enabling a "trial and error" environment, the government can observe the impacts of new technologies while protecting the broader public interest, a move that is expected to attract more venture capital into the domestic startup ecosystem.
Next Steps and Future Outlook
As the deadline for submission to the National Assembly approaches, the MIC is moving to consolidate feedback from the various ministries. The ministry has signaled its intent to employ specialized consulting firms to review the draft’s technical clauses to ensure they are compatible with international standards and trade agreements, such as the EVFTA and CPTPP.
The legislative process is expected to follow a rigorous schedule:
- Q3 2024: Finalization of the draft text based on inter-ministerial feedback.
- Q4 2024: Public consultation period to capture feedback from industry players and the academic community.
- Q1 2025: Formal submission to the Government for review.
- Mid-2025: Presentation to the National Assembly for deliberation and potential ratification.
Conclusion: A Foundation for the Future
The move to formalize the Law on Digital Technology Industry represents a mature recognition of the digital economy’s role as the engine of Vietnam’s future prosperity. By addressing the needs of both the public and private sectors, the MIC is attempting to construct a legislative bridge that will carry the nation from its current industrial status to a higher tier of technological capability.
The success of this law will depend not only on the drafting process but on the effective coordination between state regulators, educational institutions, and the private sector. If successful, the legislation will provide the stability and incentives necessary for Vietnam to transform its digital landscape, turning its demographic advantages into a competitive edge in the global tech market. As the consultation process continues, the focus remains on balancing the need for rigorous oversight with the agility required for a thriving, innovative, and globally connected digital economy.
Related posts:
