Vietnam Ministry of Information and Communications leads inter-ministerial dialogue to finalize the draft Law on Digital Technology Industry
On August 12, the Ministry of Information and Communications (MIC) convened a pivotal inter-ministerial working session aimed at refining the draft Law on Digital Technology Industry. This legislative effort represents a significant shift in Vietnam’s economic strategy, moving away from a reliance on assembly and simple manufacturing toward a model defined by indigenous innovation, design, and ownership of core technologies. The session, chaired by Deputy Minister of Information and Communications Bui Hoang Phuong, brought together key stakeholders from the Office of the Government, the Ministry of Planning and Investment (MPI), the Ministry of Finance, and relevant regulatory bodies to harmonize the legal framework before its formal submission to the Government and the National Assembly.
The Strategic Imperative of the Digital Technology Law
The development of the Law on Digital Technology Industry is not merely a bureaucratic formality but a strategic move to address the inherent limitations found within the existing Law on Information Technology. While the current legal framework served its purpose during the early stages of Vietnam’s IT adoption, it has increasingly become a bottleneck for the rapidly evolving digital landscape.
The proposed legislation aims to provide a robust legal corridor that fosters the growth of the digital technology sector, transforming it into a primary economic engine for the nation. By pivoting from low-value assembly—a sector historically dominated by foreign direct investment (FDI)—toward high-value-added activities like software research, hardware design, and complex systems integration, Vietnam seeks to move up the global value chain.
Chronology and Legislative Development
The drafting of this law follows a clear directive from the Prime Minister, tasking the MIC with the responsibility of coordinating with various ministries, departments, and local authorities to build a comprehensive regulatory framework. Since the initial mandate, the process has undergone several stages:
- Early 2024: Initiation of the drafting process, involving internal consultations within the MIC and preliminary surveys of the digital industry landscape.
- May–July 2024: Intensive inter-departmental review of the scope and definitions, ensuring the draft aligns with international trade standards and domestic economic objectives.
- August 12, 2024: The high-level working session, marking the transition from preliminary drafting to finalizing the document for executive review.
- Late 2024 (Projected): Formal submission of the finalized draft to the Government for evaluation, followed by a presentation to the National Assembly for debate and potential enactment.
Addressing Structural Challenges and Policy Gaps
During the August 12 meeting, participants highlighted that the current draft must prioritize two critical areas: investment incentives and the regulatory framework for "regulatory sandboxes."
Pham Thuy Hanh, Deputy Director of the Department of Legal Affairs at the Office of the Government, emphasized that the success of the digital technology sector hinges on the state’s ability to provide the highest level of investment support. "The development of the digital technology sector requires aggressive incentives regarding investment procedures, taxation, and specialized administrative support," Hanh noted. By positioning Vietnam as a competitive hub for high-tech investment, the state aims to attract both domestic and international capital that is increasingly wary of traditional manufacturing volatility.
Furthermore, the discussion touched upon the necessity of creating "regulatory sandboxes"—a controlled environment where companies can test innovative products or services without being stifled by rigid, legacy regulations. This is particularly vital for emerging fields such as Artificial Intelligence (AI), blockchain, and semiconductor design, where technology often outpaces existing legal definitions.
Integration with National Economic Planning
The Ministry of Planning and Investment (MPI) provided a critical perspective on the intersection of the new law with existing industrial infrastructure. Van Sy, Deputy Director of the Foreign Investment Agency under the MPI, argued that the law should explicitly define policies for "digital technology zones." These zones would need to be synchronized with the existing Law on Industrial Zones and Economic Zones to avoid legal fragmentation.
The recommendation from the MPI is to engage specialized consultancy firms to conduct a thorough review of the draft’s clauses, ensuring that the legal language is airtight and consistent with international best practices. This technical oversight is intended to prevent conflicts with international trade agreements, such as the CPTPP or the EU-Vietnam Free Trade Agreement (EVFTA), which mandate specific protections and market access protocols.
Scope and Exclusions: Defining the Digital Frontier
A central point of the draft law is its defined scope, which covers the entire lifecycle of digital technology, including production, services, and the rights and responsibilities of entities operating within the sector.
Crucially, the legislation includes specific exclusions. Activities related to digital products or services used exclusively for national defense, security, or sensitive government operations remain outside the purview of this law. This separation ensures that the legislation focuses on the commercial and industrial growth of the civilian digital economy while maintaining the necessary sovereignty and security protocols for sensitive state functions.
The Human Capital Factor
A recurring theme in the discussions was the urgent need for a skilled workforce. The Ministry’s goal, as reflected in the broader legislative context, is to support the training of at least 50,000 high-level semiconductor engineers by 2030. Industry experts at the meeting noted that tax incentives and regulatory easing are insufficient if the country cannot provide a pipeline of talent capable of mastering complex system-on-chip (SoC) design and advanced software engineering.
The Law on Digital Technology Industry is expected to provide the legal basis for state-funded scholarships, public-private partnerships (PPP) in education, and tax breaks for companies that invest in R&D and employee training programs. By integrating human capital development into the legislative framework, the government aims to create a sustainable ecosystem where innovation is driven by a domestic workforce rather than imported expertise.
Broader Implications and Future Outlook
The implications of this law, if enacted as proposed, are far-reaching. By shifting the focus from "Made in Vietnam" (assembly) to "Designed by Vietnam" (creation), the country is positioning itself as a strategic partner in the global digital economy.
- Economic Resilience: Reducing reliance on low-end manufacturing makes the economy less vulnerable to global supply chain shocks and the "middle-income trap."
- Technological Sovereignty: By mastering core technologies, Vietnam can protect its data and digital infrastructure, a critical concern in an age of cyber-geopolitics.
- Investment Magnetism: The promise of high-level incentives and a transparent regulatory sandbox will likely attract a new tier of investors—those focused on high-tech R&D rather than just cheap labor.
The inter-ministerial meeting concluded with a consensus on the need for continued, granular collaboration. As the draft moves toward its final stages, the MIC faces the challenge of balancing ambitious economic goals with the realities of fiscal policy and international legal obligations. The upcoming sessions will be critical in ensuring that the final draft of the Law on Digital Technology Industry is not only a visionary document but also a practical, enforceable instrument that propels Vietnam into the ranks of leading digital economies in the region.
The commitment demonstrated by the Ministry of Information and Communications and the supportive stance of the Office of the Government and the MPI suggest that the legislative path is clear. The success of this endeavor will eventually be measured by the number of patents registered by Vietnamese firms, the growth of local tech companies transitioning to high-value products, and the long-term impact on the country’s GDP as it undergoes its most significant digital transformation to date.
