Law on Digital Technology Industry: Key Driver for Vietnam’s Breakthrough in Digital Era

At the 9th session of the 15th National Assembly, lawmaking deputies voted to pass the Law on Digital Technology Industry, with 441 out of 445 votes in favor (a 92.26% approval rate).

The Law on Digital Technology Industry is not only a specialized legal document but also expectedly an institutional leverage for the national digital transformation process. This is a golden opportunity for Vietnam to build an active legal foundation, paving the way for domestic tech companies to achieve robust development and deep international integration and contribute to shaping a new position for Vietnam in the digital era. Vietnam also becomes the first country in the world to enact a dedicated law on the digital technology industry.

The law promptly institutionalizes many important contents on Resolution 57-NQ/TW and Resolution 68-NQ/TW of the Politburo like promoting, incentivizing and supporting the development of digital technology firms, especially private ones; developing high-quality human resources and digital talent; building shared essential digital infrastructure; supporting innovative startups; and establishing order-placing mechanisms and a legal framework for controlled trials.

More than a legal document, the Law on Digital Technology Industry is a guiding compass for solving major challenges of the digital technology industry. The law will address these critical challenges to transform digital technology into a main driver of economic growth, enhance national competitiveness and improve people’s quality of life. Simultaneously, the law helps Vietnam position itself in the global technological value chain and compete with world-leading digital economies.

Besides, the law sets forth major challenges and solutions to turn the digital technology industry into a core economic engine with growth rates 2-3 times higher than GDP. The act introduces special incentives and breakthrough policies. Large-scale investment projects will enjoy corporate income tax (CIT) reductions in many years, access financial support from the Development Investment Fund and doubled research and development (R&D) expense, or even a triple rate for small and medium-sized enterprises (SMEs). Administrative procedures are simplified by decentralizing the authority to establish digital industrial zones to Provincial People’s Committees and applying the “green lane” customs priority scheme. The government prioritizes investment in essential infrastructure like data centers and 5G networks while encouraging private participation in modern infrastructure development. The domestic market is expanded by promoting the use of “Make in Vietnam” technological products in public budget projects and order-placed strategic technological development.

Increasing Vietnam’s share in the digital technology industry

The Law on Digital Technology Industry focuses on increasing the share of domestically made technological products through strategic solutions and concrete support policies. Foreign direct investment (FDI) companies are encouraged to transfer technology and collaborate with local firms through long-term corporate income tax reductions if they meet these requirements. Domestic startups are supported with 50% of the cost to acquire advanced technology and develop prototypes, helping them enhance their “Make in Vietnam” manufacturing capabilities.

Local digital technological products are prioritized to be used in state budget projects, thus ensuring a stable and sustainable output market. R&D activities receive maximum incentives, including tax exemptions and financial support, to foster innovation and enable Vietnamese products not only to meet domestic demands but also to compete internationally.

Additionally, the law aims to help Vietnamese digital tech firms reach international markets, increase revenue and affirm global brands. The “Make in Vietnam” Program is codified, launches trade promotion activities and provides support for companies to expand their international markets. Domestically made digital technological products are prioritized in public procurement projects to provide a solid foundation for domestic market development before going global. Major investment projects enjoy long-term corporate income tax reductions, financial support from the Development Investment Fund, and import tax exemptions for high-tech equipment. Notably, the government is building a network of Vietnamese digital technology representatives in key markets, combined with international cooperation programs, to help Vietnamese companies gradually become multinational firms capable of competing on par with global tech groups.

Expanding the adoption of digital technology among businesses

To accelerate digital transformation and expand the adoption of digital technology among businesses, the Law on Digital Technology Industry introduces comprehensive measures to boost efficiency and competitiveness. The Digital Technology Development Program supports businesses through promotion campaigns and digital skills training and provides industry-specific technology solutions. The government also provides SMEs with financial support and expenses for the adoption of digital technology and creates an enabling environment for digital technology to deeply penetrate all economic sectors.

Increasing digital technology firms to 150,000 by 2035

To build a robust digital tech business ecosystem to realize the goal of having 150,000 digital tech firms by 2035, the Law on Digital Technology Industry introduces comprehensive support policies. SMEs receive financial support for infrastructure investment, high-quality workforce training, and priority access to public procurement projects. Financially, the government funds special projects and innovation activities to enhance business creativity and competitiveness. Digital technology production projects and supporting enterprises receive tax incentives similar to those in extremely difficult areas while the FDI fund is attracted to strengthening production capacity. Developing digital technology industrial zones with attractive incentive policies creates an environment for startups to thrive and grow sustainably, thus helping realize this strategic goal.

In addition, the Law on Digital Technology Industry addresses the promotion of domestic production, the mastery of core technology and strategic digital technology, the encouragement of innovative startups, the training of high-quality digital workforce, the development of artificial intelligence (AI), the management of digital assets, and more. It especially emphasizes the creation of “leading” enterprises to guide the digital technology industry through strategic policies. The government places orders to businesses to conduct pioneering R&D projects and provides financial support and trade promotion for them to expand markets. Large firms implementing large-scale projects enjoy corporate income tax reductions in many years and provide investment capital support for key projects. To attract talent, the law offers five-year personal income tax exemptions for tech experts, five-year visas for foreign specialists, and special mechanisms for salary, bonuses and working conditions.