Ministry of Information and Communications Holds Crucial Consultation on Draft Law on Digital Industry to Foster Innovation and Growth

HANOI, VIETNAM – On August 12th, the Ministry of Information and Communications (MIC) convened a pivotal working session with various ministries, sectors, and relevant entities to solicit feedback and refine the draft Law on the Digital Industry. This critical legislative initiative is poised to create a robust legal framework for the burgeoning digital sector, paving the way for its submission to the Government and the National Assembly.

The meeting, held at the MIC’s headquarters, was presided over by Minister of Information and Communications, Mr. Bo Hoang Phuong. Attendees included representatives from the Government Office, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and the Ministry of Information and Communications itself. The gathering underscored the government’s commitment to proactively shaping policies that will propel Vietnam’s digital economy forward.

This consultative process follows the preliminary work undertaken by the MIC, in collaboration with other ministries, central agencies, and relevant organizations, to draft the comprehensive Law on the Digital Industry. The overarching objective of this new legislation is to address existing inadequacies and inconsistencies within the current legal framework governing the information technology (IT) sector, specifically within the broader Information Technology Law. The proposed law aims to establish a clear and supportive policy environment to encourage innovation, accelerate development, and mitigate potential risks associated with digital industry activities.

Strategic Objectives of the Digital Industry Law

The draft Law on the Digital Industry is envisioned as a foundational pillar for fostering the growth of the digital industry, transforming it into a significant contributor to the nation’s economic development. Its core objectives include creating a conducive legal environment that stimulates the digital industry’s expansion and positions it as a vital engine for national economic growth.

Specifically, the law aims to guide Vietnamese digital industry enterprises towards a higher value chain, emphasizing originality, innovation, design, and integration, ultimately becoming the core of the digital economy. It also seeks to establish a market for the digital industry to promote the development of products, from conceptualization to production, within Vietnam.

The scope of the Law on the Digital Industry is comprehensive, encompassing digital industry activities, digital products, and digital services. It also addresses the assurance of digital industry development and defines the rights and responsibilities of organizations and individuals involved in or related to the digital industry.

Key Policy Directions and Scope

The proposed legislation outlines specific policy directions for the digital industry. It emphasizes the transition of Vietnamese digital industry enterprises from basic assembly to sophisticated creation, design, and value addition. A crucial aspect is the development of a robust market for digital products and services, encouraging domestic production and innovation.

The draft law intends to create a favorable ecosystem for digital businesses, fostering a shift from reliance on foreign technology to indigenous innovation and development. This includes promoting research and development in key digital technologies, encouraging the creation of intellectual property, and supporting the commercialization of digital solutions.

The scope of application for the Law on the Digital Industry is broad, covering all entities and individuals engaged in or affected by digital industry activities. This includes:

• Digital Industry Activities: This encompasses research and development, design, manufacturing, and provision of digital products and services.
• Digital Industry Development Assurance: This includes policies and mechanisms to ensure the sustainable and robust growth of the digital sector.
• Rights and Responsibilities: Clear guidelines will be established for the rights and responsibilities of state agencies, organizations, and individuals participating in or related to the digital industry.

Furthermore, the law explicitly addresses the production and supply of digital products and services for national defense, security, and essential public services, ensuring national interests are protected. The application of the Law on the Digital Industry is intended to cover all entities, organizations, and individuals involved in or related to the digital industry.

Consultation Process and Key Stakeholder Involvement

The consultative process leading up to the draft law’s submission reflects a deliberate effort to ensure inclusivity and gather diverse perspectives. Minister Bo Hoang Phuong highlighted the Ministry’s intention to foster open dialogue and direct exchange of ideas with representatives from various ministries and industries. This collaborative approach is crucial for producing a comprehensive and effective piece of legislation.

The meeting on August 12th served as a crucial platform for these discussions. The presence of representatives from the Government Office, MPI, and Ministry of Finance underscores the cross-sectoral nature of the digital industry and the need for coordinated policy development.

Expert Insights and Key Policy Considerations

The draft law has garnered significant attention from various stakeholders, each bringing unique perspectives and concerns. Ms. Pham Thu Hang, Deputy Director of the Legal Department at the Government Office, emphasized that the draft law needs to focus on two primary policy areas: investment incentives and the establishment of a robust legal framework.

"To develop the digital industry, the most important aspect is investment incentives, including preferential policies, tax incentives, and related policies that align with the direction set by the Ministry of Information and Communications to create the highest possible incentives, as these are the cornerstones of development and will be crucial in this phase," stated Ms. Hang. This highlights the government’s recognition of the critical role of financial and fiscal policies in driving digital industry growth.

Mr. Duong Van Vu, Deputy Director of the Foreign Investment Agency at the Ministry of Planning and Investment (MPI), proposed the creation of "digital industry zones" within the framework of the Law on the Digital Industry, aligning with the Law on Industrial Zones and Economic Zones, which MPI oversees. This suggestion aims to create concentrated hubs for digital innovation and business development, fostering synergy and efficient resource allocation.

"We need to build policies for ‘digital industry zones’ within the Law on the Digital Industry, ensuring they are consistent with the Law on Industrial Zones and Economic Zones, which is under the purview of the Ministry of Planning and Investment," Mr. Vu remarked. This proposal underscores the importance of spatial planning and specialized zones to attract investment and facilitate the growth of digital businesses.

MPI also advocated for the inclusion of provisions in the draft law that would allow for a review of foreign investment capital requirements, ensuring they are aligned with existing legal regulations. This indicates a desire to streamline investment processes and ensure consistency across different legislative frameworks.

Addressing Critical Issues and Future Outlook

During the working session, representatives from various ministries and sectors raised pertinent issues requiring careful consideration within the draft law. These include investment incentives for the digital industry, specifically for the semiconductor sector, VAT policies, and tax policies for research and development and the production of assets.

The discussion also touched upon the need to clarify definitions and policy frameworks for emerging areas within the digital economy, such as digital assets and data monetization. The insights provided by these experts are instrumental in refining the draft law and ensuring it is comprehensive, practical, and forward-looking.

The consultation process has been effective in clarifying numerous aspects related to the Law on the Digital Industry. The diverse range of opinions and suggestions gathered will undoubtedly contribute to a more robust and effective final legislation. The Ministry of Information and Communications is committed to a thorough review and incorporation of these valuable inputs as it moves towards finalizing the draft for submission to higher authorities. The successful enactment of this law is expected to significantly shape Vietnam’s digital future, fostering innovation, attracting investment, and solidifying its position as a key player in the global digital economy.

The government recognizes that the development of a vibrant digital industry is not merely about technological advancement but also about creating a supportive policy and regulatory environment. This law is a testament to that understanding, aiming to create a predictable and attractive landscape for both domestic and foreign investment in Vietnam’s digital sector. The ongoing dialogue and collaborative efforts are crucial to ensuring that the Law on the Digital Industry effectively addresses the challenges and capitalizes on the opportunities presented by the rapidly evolving digital landscape.

Timeline of Development and Next Steps

The development of the Law on the Digital Industry has been an iterative process, involving extensive research, drafting, and now, crucial stakeholder consultations. The MIC’s proactive engagement with other government bodies and industry experts signifies a commitment to a well-rounded legislative approach.

With the Government and the National Assembly as the ultimate recipients of the draft law, the current phase of consultation is critical for refining its provisions. Following this, the draft law will undergo further review and potential amendments based on the feedback received before its official submission. The expectation is that the law will be a cornerstone of Vietnam’s digital transformation agenda, providing clarity and impetus for growth in the coming years.

The integration of feedback from diverse stakeholders, including those from the Ministry of Finance concerning VAT policies and tax implications for R&D, and those addressing the nuances of taxation for digital assets, is vital. These detailed considerations will ensure that the law is not only ambitious in its vision but also practical and equitable in its implementation, fostering a sustainable and inclusive digital economy for Vietnam.

The collaborative spirit demonstrated in these meetings is a positive indicator of Vietnam’s commitment to building a strong and competitive digital sector. The Law on the Digital Industry is anticipated to be a landmark piece of legislation, shaping the trajectory of Vietnam’s economic development in the 21st century.