U.S. technology companies are sounding the alarm regarding Vietnam’s proposed legislation aimed at tightening data protection regulations and imposing restrictions on data transfers abroad. This draft law, currently under parliamentary discussion, threatens to stifle the growth of social media platforms and data centre operations in a country that boasts a population of 100 million and serves as a critical market for major players like Facebook and Google.
Jason Oxman, chair of the Information Technology Industry Council (ITI), which represents tech giants such as Meta, Google, and data centre operator Equinix, emphasized the potential impact of the draft law. “This legislation will make it increasingly challenging for tech companies, social media platforms, and data centre operators to connect with the customers who rely on their services daily,” he warned.
The proposed law seeks to bolster the government’s access to information, a move backed by Vietnam’s Ministry of Public Security. As the Vietnamese parliament deliberates on this legislation, there are concerns about its timing, with a potential vote scheduled for November 30.
Vietnam has already established certain limitations on cross-border data transfers, but enforcement has been inconsistent. If the new law is enacted, it could significantly alter the landscape for foreign investment in the country. Reports indicate that Google was contemplating the establishment of a substantial data centre in southern Vietnam before the introduction of this draft law.
A notable aspect of the proposed legislation includes requiring prior approval for the transfer of “core data” and “important data,” terms that remain vaguely defined. This provision is likely to create obstacles for foreign businesses attempting to navigate the regulatory landscape, according to Oxman.
Tech firms argue that cross-border data flows are essential for reducing operational costs and enhancing service delivery. However, many jurisdictions, including the European Union and China, have instituted similar restrictions under the premise of protecting sensitive information and privacy.
Additionally, the draft law stipulates that companies must share data with the Vietnamese Communist Party and state entities in a variety of vaguely defined scenarios, including when fulfilling “specific tasks in the public interest.” This provision has raised significant concerns among U.S. tech leaders about the potential for excessive government access to private data.
Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, expressed alarm over the compliance challenges the new law would impose on private sector companies. He confirmed ongoing discussions with Vietnamese authorities to reconsider the expedited legislative process for the proposed law.
As Vietnam positions itself as a burgeoning hub for the data centre industry—potentially becoming a major regional player as restrictions on foreign ownership ease next year—U.S. tech firms are urging the government to adopt a more balanced approach that fosters growth while safeguarding privacy.
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