Vietnam Advances Strategic Legal Framework to Transform Digital Economy Through the Law on Digital Technology Industry

The Vietnamese government is systematically laying the groundwork for a comprehensive legislative transformation designed to elevate the digital technology sector into a primary driver of national economic growth. On the morning of August 12, the Ministry of Information and Communications (MIC) convened a high-level inter-ministerial working session to gather critical feedback on the final draft of the Law on Digital Technology Industry. This legislative milestone aims to transition the country from a labor-intensive manufacturing and assembly hub into a globally competitive center for research, design, integration, and technological self-reliance.

Chaired by MIC Deputy Minister Bùi Hoàng Phương, the collaborative meeting brought together key stakeholders from the Office of the Government, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and the MIC’s Department of Information and Communications Industry, which serves as the primary drafting agency. The ongoing consultations represent a crucial phase in the legislative process as Vietnam prepares to submit the finalized bill to the Government and the National Assembly for official review and enactment.

Addressing Regulatory Gaps and Strategic Imperatives

For years, the regulation of information technology (IT) and digital infrastructure in Vietnam was anchored primarily within the broader framework of the Law on Information Technology. However, as the global technology landscape evolved—marked by rapid advancements in artificial intelligence, cloud computing, semiconductor manufacturing, and the Internet of Things—these legacy regulations revealed significant limitations and operational bottlenecks.

The new Law on Digital Technology Industry is meticulously crafted to address these shortcomings. By establishing a dedicated legal paradigm, the draft legislation seeks to resolve existing ambiguities while introducing bold, breakthrough policies designed to stimulate rapid sectoral expansion and mitigate commercial risks. According to preliminary drafts, the legislation encompasses all core activities related to digital technology products and services, deployment frameworks, and the rights and responsibilities of domestic and international participants, excluding specialized military, defense, and emergency medical applications.

The strategic vision embedded within the legislation is profound: to overhaul Vietnam’s domestic tech ecosystem. For decades, local enterprises have largely functioned downstream in the global supply chain, relying heavily on low-margin outsourcing, manual assembly, and contract manufacturing. The Law on Digital Technology Industry aims to incentivize a paradigm shift toward original design manufacturing (ODM), original equipment manufacturing (OEM), proprietary technology creation, and intellectual property ownership. Furthermore, it establishes legal mechanisms to foster a robust domestic market for locally designed and manufactured digital solutions.

Inter-Ministerial Collaboration and Strategic Refinements

With the legislative submission deadline approaching, the MIC has intensified efforts to incorporate diverse institutional perspectives. During the August 12 session, participants engaged in rigorous debates concerning the optimal balance between state oversight, market freedom, and targeted incentives.

Ms. Phạm Thuý Hạnh, Deputy Director of the Department of Law at the Government Office, emphasized that the success of the new law hinges on two foundational policy pillars: preferential investment frameworks and controlled sandbox mechanisms.

"To foster the development of the digital technology sector, the most critical factors are investment incentives, strategic capital allocation, tax preferences, and associated support policies," Ms. Hạnh noted during the discussions. She expressed strong institutional backing for the MIC’s proposals to extend the highest possible tier of preferences to digital enterprises, recognizing the sector as an indispensable engine for Vietnam’s immediate and long-term economic modernization.

Adding the perspective of investment planners, Mr. Đỗ Văn Sử, Deputy Director of the Foreign Investment Agency under the Ministry of Planning and Investment, provided targeted feedback regarding regulatory synchronization. He recommended that provisions concerning "digital technology zones" within the draft law be closely aligned with the broader Law on Industrial Parks and Economic Zones, which is concurrently being steered by the MPI. Furthermore, Mr. Sử advised the drafting committee to engage specialized legal consultants to review individual clauses and statutory references to ensure absolute consistency across Vietnam’s commercial code.

Tackling Critical Industry Bottlenecks: Semiconductors, Taxation, and R&D

Beyond broad investment frameworks, the consultative workshop delved deeply into specific operational hurdles facing tech enterprises in Vietnam. Stakeholders addressed several pressing issues that have historically constrained high-tech foreign and domestic investments, including:

• Semiconductor Ecosystem Development: With Vietnam positioning itself as a rising nexus in the global semiconductor supply chain—targeting the development of 50,000 specialized semiconductor engineers by 2030—participants evaluated targeted financial incentives and infrastructure support required to attract capital-intensive fabrication and packaging facilities.
• Value-Added Tax (VAT) Frameworks: Discussions focused on streamlining VAT regulations for high-tech service providers and digital product developers to eliminate administrative friction and enhance cash flow for scaling enterprises.
• Controlled Regulatory Sandboxes: Experts underscored the necessity of establishing legal sandboxes to enable the frictionless testing of emerging technologies, such as artificial intelligence models, autonomous systems, and blockchain applications, without exposing innovators to premature regulatory penalties.
• Reinvestment and Capital Retention: Policies encouraging companies to reinvest profits into research and development (R&D) and talent cultivation were identified as vital components for sustaining long-term competitiveness.

The intersection of state policy, academic institution development, and private enterprise participation was highlighted as the linchpin for achieving ambitious national goals. Experts repeatedly emphasized that sustainable high-tech growth cannot occur in a vacuum; it requires synchronized collaboration across the "Triple Helix" model of government, academia, and industry.

Broader Economic Impact and Future Outlook

The introduction of the Law on Digital Technology Industry arrives at a critical juncture for Vietnam’s economy. As traditional manufacturing sectors face diminishing returns and increasing global competition, the digital economy represents a vital frontier for escaping the middle-income trap.

By providing a transparent, predictable, and highly incentivized legal environment, the legislation is expected to catalyze a surge in both foreign direct investment (FDI) and indigenous venture capital. Multinational technology conglomerates seeking supply chain diversification will find enhanced legal clarity for advanced operations, while Vietnamese startups and scale-ups will gain access to protected domestic markets and robust intellectual property protections.

Following the August 12 working session, the MIC will synthesize the feedback from the Government Office, the MPI, the Ministry of Finance, and external legal experts to refine the text of the draft law. The completed proposal will then be submitted to the Government for review before being formally presented to the National Assembly for deliberation. If approved, the Law on Digital Technology Industry will mark a transformative chapter in Vietnam’s journey toward becoming a powerhouse in the global digital economy.