Vietnamese authorities have proposed innovative legislative frameworks focusing on data management and digital technology, heralding significant transformations for businesses. The draft Data Law and the draft Law on Digital Technology Industry (DTI Law) are central to these developments. Understanding these laws’ implications is crucial for businesses aiming for compliance and strategic advantage in Vietnam.
The Draft Data Law: Centralizing Data Management
National Synthesis Database
Released by the Ministry of Public Security (MPS) on July 1, 2024, the draft Data Law emphasizes creating and managing a National Synthesis Database at the National Data Center (NDC). This initiative aims to integrate various data forms, ensuring secure and regulated data access and usage. Serving as the backbone of the country’s data infrastructure, the NDC will collect data from various sources, including national databases, specialized governmental records, organizational data, open-access information, and private-sector contributions.
The draft law stipulates that public and private sector entities can access the National Synthesis Database, but only under specific conditions such as obtaining official approval and securing consent from data subjects. This centralized approach is designed to ensure streamlined data management and standardized security protocols, which can profoundly impact how businesses collect, store, and use data. The centralization promises a more structured and reliable data environment, potentially offering businesses valuable insights while mitigating risks associated with fragmented data practices.
Comprehensive Data Processing Requirements
The draft law also outlines explicit guidelines for diverse data processing activities, ranging from data combination, encryption, and transmission to data deletion and destruction. These requirements mean that businesses must adopt stringent data handling practices, ensuring compliance with national standards. The law enumerates multiple forms of data processing activities, such as combination, adjustment, encryption, decryption, transmission, overseas transfer, deletion, and destruction, which places a broad array of responsibilities on businesses involved in data management.
Sector-specific obligations further detail different responsibilities for state authorities, socio-political organizations, private enterprises, and individuals. This nuanced approach ensures tailored compliance measures, addressing the unique needs of various sectors and entities. For instance, private enterprises handling sensitive personal data will need to follow more stringent encryption and data protection protocols compared to state authorities managing public records. This differentiation enforces a level of precision in compliance that aligns with the specific data usage and processing contexts different entities operate within.
New Data-Related Services and Restrictions
A key component of the draft law is the proposal to classify data intermediary services, data analysis and synthesis services, and data trading platform services as conditional business investment fields under the Investment Law 2020. This classification aims to introduce additional oversight and operational standards, ensuring these critical data services operate under stringent regulatory frameworks. By mandating compliance with rigorous standards, the government hopes to foster a trustworthy and secure data environment.
Significantly, the draft law places restrictions on foreign enterprises, prohibiting them from offering these services unless they are incorporated or registered in Vietnam. This measure underscores the Vietnamese government’s focus on prioritizing national interests in data management and maintaining a certain level of control over critical data services. For foreign companies, this restriction implies a need to navigate local regulations more carefully or consider forming partnerships with local entities to maintain their operational presence in the Vietnamese market.
DTI Law: Fostering Digital Technology Growth
Policy Incentives to Energize the Sector
Released by the Ministry of Information and Communications (MIC) on July 2, 2024, the draft DTI Law focuses on bolstering the digital technology sector with robust policy incentives. These incentives target key players, such as manufacturers of critical digital products, investors in tech park infrastructure, semiconductor firms, startups, and eco-friendly technology vendors. By offering these incentives, the government aims to nurture a technologically advanced business environment conducive to innovation and growth.
Further regulations will detail these incentives and the criteria for qualification, guiding businesses in aligning their operations with these policies. This regulatory clarity is vital for businesses aiming to benefit from state support and incentives, as it provides a clear roadmap for compliance and operational alignment. The emphasis on specific sectors, such as semiconductor manufacturing and eco-friendly technology, highlights strategic areas the government intends to develop, encouraging businesses to invest and innovate within these targeted fields.
Defining Digital Concepts
The draft DTI Law introduces new definitions for digital technology products, artificial intelligence (AI), digital data, and digital assets. These definitions set clear parameters for the rights and obligations concerning these fundamental digital economy assets, fostering a more precise understanding of property ownership in the digital realm. This legal clarity is crucial for businesses navigating the complex, rapidly evolving digital marketplace, as it reduces legal ambiguities and helps ensure compliance.
Businesses will need to align their operations with these new definitions, ensuring that they capitalize on the clarified rights and responsibilities. This alignment is pivotal for maintaining a competitive edge and legal compliance in Vietnam’s evolving digital landscape. For instance, clear definitions of digital assets will enable businesses to better manage and protect their intellectual property, while precise AI-related guidelines will help them develop compliant, ethical AI systems. This proactive alignment with legislative frameworks will ensure businesses remain compliant and competitive.
Ensuring Secure Data Flow and Ethical AI
Promoting a Secure Digital Marketplace
The draft DTI Law advocates for a secure digital data flow, emphasizing the creation of a robust digital data market. It encourages data de-identification processes, which are essential for technological development, and regulates cross-border data trade to create a secure and trustworthy digital marketplace. These stringent measures aim to foster an environment where data integrity and security are paramount.
These regulations mean businesses must adopt rigorous data security measures, including robust encryption and compliance with international data protection standards, to protect digital data while adhering to cross-border trade norms. Secure data practices are paramount for maintaining user trust and ensuring regulatory compliance. Companies operating in Vietnam will need to invest in advanced cybersecurity protocols and adopt best practices for data management to align with these new standards.
AI Development and Ethical Standards
Recognizing AI’s pivotal role in driving the fourth industrial revolution, the draft law promotes AI development while instituting ethical standards. Specific practices are prohibited based on AI systems’ risk profiles, ensuring responsible and ethical AI deployment. This focus on ethical AI highlights the importance of balancing technological advancement with societal and ethical considerations.
Businesses must navigate these ethical standards, ensuring that their AI innovations align with national guidelines. This focus on ethical AI development underscores the importance of responsible technology use in fostering sustainable growth. Companies will need to implement rigorous ethical review processes and ensure that their AI applications comply with regulatory requirements. By doing so, they can contribute to building a trustworthy AI ecosystem that supports innovation while safeguarding public interests.
Sandbox Framework for Innovation
Regulatory Sandbox for Digital Products
Vietnamese authorities have put forward groundbreaking legislative frameworks that focus on data management and digital technology, signaling substantial changes for businesses operating in the country. Central to this initiative are two key legislative drafts: the Data Law and the Law on Digital Technology Industry (DTI Law). These proposed laws aim to regulate and standardize the use and management of data and digital technologies within Vietnam.
For businesses seeking to maintain compliance and gain a strategic edge in the Vietnamese market, it is essential to fully understand the implications of these new laws. The Data Law primarily deals with the governance, storage, and processing of data, ensuring that data management practices are secure, efficient, and in line with international standards. On the other hand, the DTI Law focuses on fostering growth and innovation within the digital technology sector, providing a roadmap for businesses to navigate this rapidly evolving landscape.
By establishing clear guidelines and regulations, these laws intend to create a more predictable and stable business environment. Companies that proactively adapt to these changes will not only ensure compliance but also position themselves advantageously to capitalize on new opportunities. Keeping abreast of these legislative developments and integrating them into business strategies will be crucial for success in Vietnam’s increasingly digital economy.
