Vietnam’s new data law a test for its big tech ambitions

Transferring information across borders could be a touchy topic in authoritarian Vietnam as the government wants to accelerate its digital transformation with a sweeping new data law.

Last month, the National Assembly (NA) of Vietnam overwhelmingly passed a new data law, which aims to streamline digital administration from local and central authorities and support socio-economic development.

However, there are concerns over how data will be controlled. Two major projects planned under the law include a national data center to be run by the Ministry of Public Security, and a data exchange platform for data-related products and services.

It is unclear who will provide the data exchange platform services, or which data will be exchanged. However national defense, security, international affairs, state secrets, and « unconsented » data are barred.

Vietnam’s authoritarian government can apply loose definitions to these categories, raising concerns over how data will be used. 

Communist-ruled Vietnam has strengthened its internet rules in recent years. It implemented cybersecurity laws in 2019, national guidelines for social media behavior in 2022 and just recently updating rules of management, provision and use of Internet services and online information.

Concerns of US tech companies

In response to a draft of the data law released for public analysis earlier this year, US tech companies collectively expressed their concerns last month.

« Vietnam holds great promise as a growing market for digital services in the Asia-Pacific region, and its extensive cross-border service commitments, embedded in binding trade rules, is key to that growth, » Jonathan McHale, Vice President of Digital Trade from The Computer & Communications Industry Association (CCIA) said in a statement.

He added that the recent data policies, which hinder data processing among stakeholders, « harm both foreign companies and the local economy that flourishes with outside participation. » 

Specifically addressed were regulations on the cross-border data transfers included in the draft law.

This requires all data classified as core data to receive approval from competent authorities prior to being shared and transferred outside of Vietnam.

« A disproportionate implementation of restrictions around important and core data is likely to undermine Vietnam’s efforts to attract foreign investment, including in strategic sectors such as the semiconductor industry, » the statement said. 

The US tech firms were also « extremely concerned » about broad powers of Vietnam’s authoritarian government, which demands that the private sector supply particular data for « special cases » related to « national interest » and « public interest. »

Most NA delegates called for clarity on a further revision of the data law by July 2025.

Lawmakers have tasked the Vietnamese government with issuing detailed guiding decrees, ensuring that regulations remain aligned with practical applications and comply with the demands of digital transformation.

They identified several ambiguous aspects that could significantly influence Vietnam’s efforts to promote globalization and advance digital transformation.

Vietnam emerging as a tech destination

Google recently announced it is considering the construction of a large data center in Vietnam.

Last week, Google also confirmed it would open its Vietnam office in 2025 to improve on its advertising base and help with Vietnam’s digital transformation.

SpaceX has announced plans to invest $1.5 billion to improve internet access for all Vietnamese.

Last week, Vietnamese Prime Minister Pham Minh Chinh and President and Nvidia CEO Jensen Huang were seen together after the government and the tech company signed a cooperation agreement to establish an artificial intelligence (AI) data center and research and development hub in Vietnam.

Huang described Vietnam as Nvidia’s « second home. » Shortly thereafter, Google made an official announcement regarding the launch of Google Vietnam. 

Marc Woo, Google’s managing director for Vietnam and the Asia-Pacific region, recently posted on X about the potential Vietnam has as a digital destination.

« The right place at the right time — while Vietnam’s digital economy is on track to a potential $200B [billlion] by 2030, I continue to be in awe with the dynamic landscape of SEA and Vietnam as trends and innovation continue to evolve at a rapid pace. »

By 2025, Vietnam is striving to become one of the 70 leading e-government countries, with at least 80% of administrative operations performed online. 

However, conflict between the interests of the authoritarian state and the big tech companies, which want as little regulation as possible, will continue.

Bich Tran, a postdoctoral fellow at the Lee Kuan Yew School of Public Policy in Singapore, wrote in a recent study that Vietnam recently established digital partnerships with Singapore and Indonesia to enhance the digital economy and infrastructure.

« The United States has also pledged support for Vietnam’s efforts in developing high-quality digital infrastructure. These partnerships will provide Vietnam with access to expertise, technology, and financial resources, » noted Tran.

By Thao Nguyen – Deutsche Welle – December 13, 2024