Vietnam Accelerates Legislative Framework for Digital Technology Industry Development Ahead of Government and National Assembly Submissions

The ongoing transformation of Vietnam’s economy from traditional labor-intensive manufacturing to an innovation-driven powerhouse requires robust legal architecture. In a significant step toward achieving this strategic objective, the Ministry of Information and Communications (MIC) convened a high-level inter-ministerial working session on the morning of August 12 to gather comprehensive feedback on the final draft of the Law on Digital Technology Industry.

This pivotal legislative initiative is slated for formal review by the Government before being submitted to the National Assembly for deliberation. The meeting brought together key policymakers, legal experts, and administrative leaders, including MIC Deputy Minister Bùi Hoàng Phương, representatives from the Government Office, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and the Department of Information and Communications Technology under the MIC—the primary agency tasked with drafting the bill.

The formulation of the Law on Digital Technology Industry represents a critical milestone in Vietnam’s legislative agenda. Tasked directly by the Prime Minister, the MIC has spearheaded an exhaustive cross-sectoral collaboration involving central ministries, ministerial-level agencies, local authorities, and specialized socio-economic organizations to design a statute capable of propelling the nation into the upper echelons of the global digital economy.

Addressing Gaps in Existing Legal Frameworks

For years, the regulation governing information technology (IT) and digital industries in Vietnam was anchored primarily within the broad provisions of the 2006 Law on Information Technology. However, rapid technological advancements, the advent of artificial intelligence, cloud computing, big data, and the semiconductor revolution exposed significant limitations and regulatory bottlenecks within the legacy framework.

The new Law on Digital Technology Industry is meticulously crafted to resolve these existing shortcomings and operational impediments. Beyond rectifying regulatory loopholes, the statute is designed to introduce groundbreaking policy mechanisms aimed at accelerating industry growth while mitigating structural and operational risks inherent to high-tech sectors.

By replacing outdated regulatory paradigms, the draft law establishes a comprehensive legal corridor tailored to the unique dynamics of digital enterprises. A core mandate of the legislation is to facilitate a structural shift within Vietnamese technology companies—transitioning them away from traditional outsourcing, assembly, and low-margin manufacturing models toward indigenous creation, advanced design, system integration, core technology mastery, and high-value domestic production. Furthermore, the law aims to cultivate a vibrant domestic market for digital products and foster self-reliance in cutting-edge technological goods.

Scope of Regulation and Strategic Objectives

According to the current draft, the scope of the Law on Digital Technology Industry encompasses the governance of digital technology operations, specialized products and services, institutional safeguards for industry development, and the distinct rights and obligations of domestic and international entities participating in the ecosystem.

Notably, the legislation intentionally excludes specialized activities, production, and the provision of digital products and services dedicated exclusively to national defense, security, and cipher operations. The target demographic for the law’s applicability includes all domestic and foreign state agencies, organizations, enterprises, and individuals directly engaged in or functionally connected to the digital technology landscape.

During the August 12 working session, MIC Deputy Minister Bùi Hoàng Phương underscored the urgency of the consultation process. With the statutory submission deadline to the Government rapidly approaching, the Ministry prioritized direct, cross-sectoral dialogue to refine the draft law and ensure absolute alignment with broader national economic policies.

Key Policy Pillars: Investment Incentives and Regulatory Sandboxes

Providing deep technical insights into the legislative framework, Phạm Thúy Hạnh, Deputy Director General of the Department of Legal Affairs at the Government Office, emphasized that the draft law must concentrate heavily on two foundational policy pillars: preferential investment frameworks and controlled regulatory sandbox mechanisms.

"For the comprehensive development of the digital technology domain, the most critical element is investment incentives, capital allocation, preferential taxation, and associated structural policies," Hạnh stated. She expressed strong endorsement for the MIC’s proposal to extend the highest possible tier of statutory incentives, noting that these sectors represent critical growth engines that require aggressive cultivation during this foundational development phase.

The imperative for synchronized legal frameworks was further reinforced by Vũ Sỹ, Deputy Director General of the Foreign Investment Agency under the Ministry of Planning and Investment (MPI). Offering perspective from the agency responsible for crafting special economic incentives for emerging technologies and foundational sciences, Sỹ recommended harmonizing the provisions concerning "digital technology zones" within the draft law with the broader Law on Industrial Parks and Economic Zones, which is concurrently overseen by the MPI. Furthermore, he advised the drafting committee to commission specialized legal consulting firms to conduct a rigorous article-by-article audit of the statutory text to guarantee absolute internal consistency and compliance with international trade commitments.

Addressing High-Stakes Sectors: Semiconductors, VAT, and R&D

The inter-ministerial consultation also served as a platform to dissect several complex, high-stakes matters central to Vietnam’s high-tech ambitions. Representatives from various ministries engaged in rigorous debates concerning targeted investment incentives for the semiconductor industry—particularly in light of Vietnam’s national strategy to train 50,000 high-level semiconductor engineers by 2030.

Other critical subjects on the agenda included the application of Value-Added Tax (VAT) exemptions or reductions for nascent digital services, the establishment of experimental regulatory sandboxes to test disruptive innovations without immediate legal liability, and specialized fiscal policies designed to encourage continuous reinvestment in research and development (R&D).

Experts noted that fostering a thriving semiconductor and digital design ecosystem requires more than just financial subsidies; it demands a predictable, frictionless regulatory environment that encourages venture capital influx and protects intellectual property. The integration of controlled testing environments—or regulatory sandboxes—will allow fintech, artificial intelligence, and Internet of Things (IoT) startups to deploy solutions in real-world conditions under regulatory supervision, minimizing systemic risk while maximizing innovation velocity.

Broader Economic Implications and Next Steps

The ongoing refinement of the Law on Digital Technology Industry reflects Vietnam’s broader socio-economic transition toward the Fourth Industrial Revolution. As global supply chains diversify and multinational technology giants increasingly look to Southeast Asia for engineering talent and advanced manufacturing hubs, having a modern, progressive legal framework is paramount.

By legally redefining digital enterprises not merely as low-cost assemblers but as intellectual property creators, the legislation aims to elevate Vietnam’s position in the global value chain. The successful enactment of this law is expected to boost foreign direct investment (FDI) inflows into high-tech sectors, encourage domestic technological entrepreneurship, and generate high-paying jobs for the nation’s burgeoning engineering workforce.

Following the inputs gathered during the August 12 working session, the MIC will incorporate the recommendations from the Government Office, the MPI, the Ministry of Finance, and other stakeholders. The finalized draft will subsequently undergo final administrative reviews before being formally submitted to the Government and presented to the National Assembly for legislative consideration, marking a monumental step forward in Vietnam’s digital legislative evolution.