U.S. technology companies are sounding the alarm over a proposed Vietnamese law aimed at tightening data protection regulations and restricting the transfer of data abroad. These measures, they warn, could significantly hinder the growth of social media platforms and data center operators in a country that boasts a population of 100 million and is rapidly emerging as one of the largest markets for online services such as Facebook and Google.
The draft law, currently under consideration in the Vietnamese parliament, aims to bolster data security while providing authorities with increased access to information—a move that has raised eyebrows among both local and international stakeholders. Jason Oxman, chairman of the Information Technology Industry Council (ITI), which represents major tech firms like Meta, Google, and Equinix, voiced concerns that the law “will make it challenging for tech companies, social media platforms, and data center operators to reach the customers that rely on them daily.”
As Vietnam seeks to expand its data center industry and attract foreign investment, the implications of this legislation are profound. While existing regulations already impose limitations on cross-border data transfers, enforcement has been lax. The potential passage of the new law raises questions about its impact on foreign investment, particularly as major companies like Google have expressed interest in establishing large data centers in the region.
The draft law includes provisions requiring prior authorization for the overseas transfer of “core data” and “important data,” terms that remain vaguely defined. Oxman noted that these requirements could impede foreign business operations, creating unnecessary barriers in an already complex regulatory landscape.
Furthermore, the legislation mandates that companies share data with Vietnam’s ruling Communist Party and state organizations in various instances, including vague stipulations for “fulfilling a specific task in the public interest.” This provision has prompted significant concern from the U.S. tech industry regarding what they view as an “undue expansion of government access to data.”
Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, highlighted that the proposed law would pose “significant compliance challenges for most private sector companies.” He also mentioned ongoing discussions aimed at encouraging Vietnamese authorities to reconsider the rushed legislative process surrounding the law.
As Vietnam’s parliament navigates the complexities of this proposed legislation during its current month-long session, it is scheduled to decide on the law by November 30, pending its eligibility. The outcome could reshape the future of the tech industry in Vietnam, potentially stifling growth opportunities while raising critical questions about user privacy and data management.
With the landscape of data protection regulations constantly evolving, the tech community remains hopeful for a balanced approach that safeguards privacy without jeopardizing innovation and investment in one of Southeast Asia’s most promising markets.
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