Flexible, Modern Legal Framework Needed for Digital Economy Breakthrough

Rapid growth

Vietnam has rapidly developed its digital infrastructure. Mobile internet speeds are among the fastest in the world. Fifth generation 5G mobile networks now cover approximately 90% of the population, and 45 data centers are currently in operation. Additionally, more than 80,000 digitally skilled graduates enter the workforce each year, providing a strong foundation to expand the digital economy.

Guided by the Party and the Government, particularly Politburo Resolution 57 on breakthroughs in science, technology, innovation, and national digital transformation, and Prime Minister Decision 411 approving the national strategy for the digital economy and digital society, Vietnam targets the digital economy to contribute 20% of GDP this year and 30% by 2030. Achieving these ambitious goals requires coordinated efforts across government agencies, industries, and the business community.

According to the Digital Economy Working Group of the Vietnam Business Forum (VBF), Vietnam’s strategic direction on digital transformation, especially through Politburo Resolution 57, will enable the country to accelerate in the global technology race and secure a position on the world’s high-tech map. Growth in recent years has been remarkable, and all indicators show that the potential of Vietnam’s digital economy remains very large. A strong digital economy has also been shown to support sustainable development and green growth.

According to Nguyen Phu Tien, Deputy Director of Department of Digital Economy and Society under Ministry of Science and Technology, developing the digital economy is a national strategic goal aimed at creating a new growth model based on data and digital technology. To achieve this, Vietnam must implement a coordinated set of actions in science, technology, and innovation to drive momentum for digital transformation. To reach the target of the digital economy contributing 30% of GDP by 2030, Vietnam must focus on completing policies and legal frameworks that enable the shift of economic and social activities to the digital environment. This includes promoting electronic transactions and implementing controlled sandbox mechanisms to test new business models and digital governance models.

“Developing the digital economy requires digital infrastructure to be built quickly, modern, and secure. At the same time, it is necessary to promote digital platforms owned by Vietnamese enterprises, turning them into spaces that support economic and social activities and address cross-sector and interregional development challenges. Currently, domestic technology companies already own many platforms under Vietnamese control. Based on this foundation, the digital economy can continue to expand and develop. Additionally, attention must be given to ensuring cybersecurity and safety, particularly by equipping citizens with the basic knowledge and tools to protect themselves in the digital environment,” added Tien.

The digital economy is becoming an important growth driver for Vietnam

No unnecessary barriers

According to the Digital Economy Working Group - VBF, for the digital economy to achieve a real breakthrough, government agencies and ministries must ensure that new regulations align with the practical operations of businesses and the market. They should avoid creating unnecessary barriers to business activities or imposing cumbersome administrative procedures that add compliance burdens for companies.

“Research has shown that the more complex and restrictive a country’s regulations are, the lower its capacity for innovation. In a sector that evolves and changes extremely rapidly, such as ICT, authorities may feel compelled to add legal frameworks to manage new and unclear business models. However, the Vietnamese government needs to act cautiously, avoid issuing regulations beyond what is necessary, and refer to international experience to see how other advanced countries are exploring and applying solutions to these new challenges, implementing best practices in the most practical way for the Vietnamese market,” emphasized Seck Yee Chung, representative of Digital Economy Working Group.

In addition, Vietnam must continue efforts to reduce and simplify administrative procedures and business requirements, particularly for enterprises in the digital economy. Regulatory agencies need to balance state management objectives with business interests, avoiding the introduction of new administrative requirements when their purpose and effectiveness are not clearly defined.

Free data flow, unhindered by physical borders, is a fundamental and essential factor for a strong and secure digital economy. When this is ensured, domestic businesses can easily access advanced technologies worldwide, such as data analytics, cloud computing, and artificial intelligence, allowing them to extract greater value from their own data using global modern tools while reducing operational costs.

According to Investment and Trade Working Group - VBF, if Vietnam wants to become a regional digital hub, data transfer regulations need a feasible mechanism. Data Law and Decree 165 currently require impact assessments and approval from competent authorities before core data can be transferred abroad, overlapping with personal data protection regulations, which reduces the attractiveness for large data center investments. Therefore, a simple risk assessment mechanism aligned with international standards while ensuring national security is necessary.

Additionally, requiring foreign e-commerce platform operators to establish a legal entity in Vietnam in certain cases is a major barrier. This rule may discourage foreign businesses from participating in the Vietnamese market, particularly startups and small and medium-sized enterprises (SMEs) that rely heavily on lean digital models. It may also reduce the diversity of services offered to Vietnamese consumers and hinder cross-border e-commerce development. A registration mechanism, representative office, or local contact point could replace this requirement.

According to the American Chamber of Commerce in Vietnam (AmCham), Vietnam should adopt a comprehensive approach aligned with global standards when developing laws and regulations related to the digital economy, such as the amended E-Commerce Law and Cybersecurity Law, recognizing the cross-border nature of digital services. Overlaps and inconsistencies between laws need to be addressed while avoiding the creation of unnecessary barriers. Legal requirements for e-commerce platforms should consider the diversity of business models, avoid duplication with other laws, and minimize unnecessary local representation obligations. Similarly, cybersecurity regulations and Decree 147/2024 should be based on international precedents and avoid domestic data storage requirements that could disrupt cross-border data flow, hinder investment, and slow digital economy development.

The digital economy is becoming an important growth driver for Vietnam, opening new development opportunities for businesses and the economy. Completing a flexible and modern legal system, together with infrastructure and digital talent, will determine Vietnam’s ability to achieve breakthroughs in the coming period.