Vietnam Ministry of Information and Communications leads inter-ministerial consultation to finalize the Digital Technology Industry Law
On August 12, 2024, the Ministry of Information and Communications (MIC) convened a high-level inter-ministerial meeting to solicit critical feedback on the draft Digital Technology Industry Law. This legislative initiative represents a pivotal shift in Vietnam’s economic strategy, aiming to transition the nation from a traditional assembly and outsourcing hub to a global center for research, design, and high-tech manufacturing. The session, chaired by Deputy Minister of Information and Communications Bui Hoang Phuong, involved key stakeholders from the Office of the Government, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and various industry experts to refine the legal framework before its formal submission to the Government and the National Assembly.
The Strategic Shift in Vietnam’s Digital Ambitions
For decades, Vietnam’s technology sector has been dominated by assembly-heavy operations and foreign-led manufacturing, particularly in consumer electronics. While this model provided immediate employment and export growth, it left the domestic economy vulnerable to low value-added cycles and a lack of technological sovereignty. The proposed Digital Technology Industry Law is designed to break this cycle.
The core objective is to institutionalize a legal corridor that incentivizes "Make in Vietnam" products—technologies that are not only manufactured locally but are also researched, designed, and integrated by domestic entities. By shifting focus from manual assembly to high-value innovation, the government hopes to foster a robust ecosystem that supports indigenous software development, semiconductor design, and advanced hardware manufacturing.
Chronology of Legislative Development
The development of this law follows a clear, top-down mandate directed by the Prime Minister. Following initial directives, the MIC was designated as the lead agency responsible for drafting the bill. Since the inception of the task, the ministry has engaged in a multi-stakeholder collaborative process:
- Initial Drafting Phase (Q1 2024): The MIC established a drafting committee to review existing regulations under the Law on Information Technology, identifying gaps that hindered the transition toward an advanced digital industry.
- Consultation Round 1 (May–June 2024): Initial feedback was gathered from local provincial authorities and academic institutions to understand the infrastructure needs of digital technology clusters.
- Inter-ministerial Working Session (August 12, 2024): The meeting brought together representatives from the Ministry of Planning and Investment and the Ministry of Finance to address the crucial intersection between technology policy, financial incentives, and investment law.
- Future Milestones (Late 2024–2025): The draft is expected to undergo further review by the Government Office and the Ministry of Justice before being presented to the National Assembly for debate and final ratification.
Addressing Policy Gaps and Economic Incentives
During the August 12 meeting, the discussions centered on two critical pillars: investment preferences and the implementation of regulatory sandboxes. Pham Thuy Hanh, Deputy Director of the Legal Department at the Office of the Government, emphasized that for the law to be effective, it must offer world-class incentives that can compete with regional neighbors.
"The development of the digital technology sector hinges on the clarity of our investment incentives, administrative procedures, and preferential tax policies," Hanh stated. She advocated for the highest possible level of support for nascent tech industries, arguing that these sectors are the engines of Vietnam’s future economic growth.
The Ministry of Planning and Investment (MPI) provided a nuanced perspective on how to integrate these policies with existing frameworks. Van Sy, Deputy Director of the Foreign Investment Agency, suggested that the new law should align closely with the Law on Industrial Parks and Economic Zones. By creating specific "Digital Technology Zones," the government could provide a streamlined regulatory environment, tax holidays, and infrastructure support that would attract both foreign high-tech firms and domestic startups.
Scope and Exclusions
The current draft of the Digital Technology Industry Law explicitly defines its scope to include the entire lifecycle of digital technology products and services—from research and development to market entry and consumer support. However, it also draws a clear line of demarcation. The law will not govern digital products or services used exclusively for national defense, security, or sensitive public-sector applications, which remain under separate, specialized legal frameworks.
This exclusion is essential to ensure that the primary focus of the law remains on the commercial development of the civilian digital economy, allowing for a more flexible and business-friendly approach without compromising national security protocols.
Key Policy Challenges: The Path to 50,000 Engineers
One of the most pressing topics addressed during the consultation was the "human capital gap." As Vietnam strives to become a global hub for semiconductor design and AI, the demand for highly skilled labor has surged. Current projections suggest a need for at least 50,000 specialized engineers in the semiconductor and AI fields.
The draft law attempts to address this by proposing incentives for enterprises that invest in training and human resource development. The consensus among the participants was that the "Triple Helix" model—a close partnership between the State, academia, and industry—is the only viable path to achieving these human resource targets. Without a legal framework that makes it fiscally attractive for companies to establish R&D centers and training labs within Vietnam, the country risks remaining a consumer of technology rather than a creator.
Economic Implications and Future Outlook
If enacted, the Digital Technology Industry Law will serve as a foundational document for Vietnam’s "Digital Decade." Its success depends on several factors, including:
- Taxation Reform: Moving beyond simple corporate income tax reductions to include VAT exemptions on critical R&D equipment and software-as-a-service (SaaS) exports.
- Regulatory Sandboxes: Enabling firms to test emerging technologies—such as blockchain, autonomous systems, and AI—in a controlled environment before full-scale commercialization.
- Institutional Synergy: The effectiveness of the law will rely on the Ministry of Finance and the Ministry of Planning and Investment working in lockstep with the MIC to ensure that fiscal policies are consistent with technological goals.
The feedback provided by the ministries during the August 12 session will now be integrated into a revised version of the draft. This process reflects a broader, more systematic approach to law-making in Vietnam, where economic legislation is increasingly informed by data-driven analysis and input from those directly involved in the sector.
Conclusion
The effort to draft the Digital Technology Industry Law is a testament to Vietnam’s ambition to ascend the global value chain. By moving from assembly to design, and from imitation to innovation, the government is signaling to international investors that it is ready to be a serious player in the global technology landscape. While the path to legislative passage remains complex, the ongoing dialogue between the MIC and other regulatory bodies suggests a strong political will to create a legal environment that nurtures the next generation of Vietnamese tech giants. As the country prepares for the final submission to the National Assembly, the focus remains on balancing rigorous oversight with the flexibility required to thrive in the fast-paced, ever-evolving global digital economy.
