In brief
- The Vietnamese authorities recently released two draft laws, including the draft Data Law and the draft Law on Digital Technology Industry (“DTI Law“), for public comments. These proposed laws seek to address various issues in the fields of data and digital technology, with the potential to significantly impact businesses across various industries.
- The expected effective date for the draft Data Law is 1 January 2026, without any transitional period. For the draft DTI Law, while there is currently no effective date specified, it is expected that the draft law will be submitted to the National Assembly this October and enacted in June 2025.
In details
A. Draft Data Law
On 1 July 2024, the Ministry of Public Security (MPS) released the draft Data Law for public comments until 1 September 2024, following its proposal in early March this year.
The MPS is positioned as the principal State administration that oversees the Data Law; however, it is also mandated to collaborate with other relevant authorities, such as the Ministry of Information and Communications (MIC) to address cybersecurity and information safety incidents.
Key aspects highlighted in the draft Data Law encompass:
- Material scope
The term “Data” as outlined in the draft Data Law refers to the digital representation of behaviors, objects, events and information, including sounds, images, numbers, writing, symbols, or similar forms.
In essence, the draft Data Law sets the foundation for the following:
- The establishment, operation and utilization of the National Synthesis Database at the National Data Center
- Requirements for specific forms of data processing, applicable to both State entities and private enterprises
- Conditions for engaging in newly recognized data-related services
- Establishment, operation and utilization of the National Synthesis Database at the National Data Center
The Government will oversee the establishment and management of the National Synthesis Database. Data within the National Synthesis Database will be sourced from various origins, including other national and specialized databases of governmental bodies and organizations, encompassing open, shared, and private data. Access to the National Synthesis Database will be granted to stakeholders in the public and private sectors, subject to specific conditions like official approval and/or consent from data subjects.
- Requirements for specific forms of data processing, applicable to State entities and private enterprises
Diverse forms of data processing are defined, with specific obligations imposed on the relevant actors. Data processing activities facing specific regulations and restrictions include combination, adjustment, updating, management, sharing, coordination, State-disclosure, analysis, synthesis, confirmation, authentication, publication, access, retrieval, encryption, decryption, reproduction, transmission, transfer, overseas transfer, revocation, deletion, and destruction of data.
Depending on the nature of the data processing operation, distinct obligations are outlined for State authorities, political or socio-political organizations, as well as other entities and individuals in both the public and private sectors.
- Conditions for engaging in newly recognized data-related services
The draft Data Law proposes the inclusion of the following services in the List of Conditional Business Investment Industries and Professions under the Investment Law 2020:
- Data intermediary services
- Data analysis and synthesis services
- Data trading platform services
Notably, offshore enterprises that are not incorporated or registered in Vietnam are not allowed to render any of the above services.
B. Draft DTI Law
On 2 July 2024, the MIC unveiled the draft DTI Law for public feedback, building upon the initial law proposal from 2022. The public consultation period is set to conclude on 2 September 2024.
Key aspects addressed in the draft DTI Law include:
- Policy incentives for advancing the digital technology industry
The draft DTI Law offers a range of general policy incentives to bolster the digital technology industry across various sectors. Eligible beneficiaries of these incentives encompass manufacturers of crucial digital technology products, credit institutions heavily involved in key digital technology loans, investors engaged in developing infrastructure for concentrated digital technology parks, semiconductor businesses, innovative digital technology start-ups, and vendors of eco-friendly digital technology products and services. Further governmental and ministerial regulations are anticipated to outline the specifics of these incentives and the criteria for qualification.
- Introduction of new concepts in the digital technology sector
The draft DTI Law introduces definitions for digital technology products, AI, digital data, and digital assets, laying the groundwork for delineating rights and obligations concerning fundamental “assets” in the digital economy, which encompass property ownership and more.
- Facilitated but more secure data flow
The draft DTI Law promotes a more secure flow of digital data by encouraging the growth of the digital data market and pricing, enabling the processing of de-identified data to support the production and distribution of digital technologies, and regulating the cross-border utilization and trade of digital data.
- AI as an enforcement focus
Vietnamese policymakers acknowledge AI as a significant catalyst of the fourth industrial revolution. Consequently, the draft DTI Law supports the advancement and application of AI while also outlining ethical standards and prohibited actions in AI practices. Embracing a risk-based approach to AI governance, the draft law assigns compliance responsibilities based on the risk profile of an AI system.
- Regulatory sandbox framework for innovative digital technologies
The draft DTI Law introduces a sandbox mechanism for the temporary testing of pioneering digital technology products and services in a controlled environment. This allows for an assessment of the costs and benefits of innovative technologies, aiding in enhanced risk management before broader implementation.
C. Implications for your businesses
The impacts experienced by companies will vary depending on the nature of their business activities. However, there is a discernible trend in legislation and regulation toward imposing restrictions on data flow and emerging technologies, which will be balanced against by a set of incentivizing measures.
In conclusion
The development of the new DTI Law and Data Law represents remarkable milestones in Vietnam’s legal landscape. These legislative efforts demonstrate the country’s commitment to adapting to the digital era, fostering innovation, and safeguarding data rights.
Upon your request, we are happy to (i) translate the draft Law(s) into Vietnamese, (ii) evaluate their impacts on your business operations in Vietnam, and/or (iii) assist in submitting a comment letter to the drafting team to advocate for favorable regulations.
