U.S. tech firms have raised concerns about Vietnam’s proposed law aimed at tightening data protection and restricting data transfers abroad, warning it could hinder the expansion of social media platforms and data centre operations. Vietnam, home to 100 million people, stands as a significant market for platforms like Facebook and is targeting substantial growth in its data centre industry through foreign investments.
The Information Technology Industry Council (ITI), which represents major players like Meta, Google, and Equinix, voiced apprehensions. ITI Chairman Jason Oxman stated that the draft law would “make it challenging for tech companies, social media platforms and data centre operators to reach the customers that rely on them daily.” The law, which is currently under parliamentary review, would also broaden government access to information, as promoted by the Ministry of Public Security.
Efforts to reach the ministries for comment went unanswered. Parliament is expected to deliberate on the law in a session that may pass the measure on November 30, depending on developments. Although current regulations already impose some data transfer limitations, they are rarely enforced. The potential effect of the new law on foreign investment remains uncertain, despite reports like Google’s consideration of a large data centre project in southern Vietnam before the draft law’s emergence.
Vietnam is poised to become a key regional hub for data centres as restrictions on foreign ownership lift next year, according to BMI Research. However, the proposed legislation introduces complications, including a requirement for prior authorisation to transfer “core” and “important” data overseas. These terms remain vaguely defined, raising concerns among foreign businesses. “That will hinder foreign business operations,” Oxman emphasized.
Provisions under the draft law demand that companies share data with the ruling Communist Party and state bodies in various broadly defined scenarios, such as tasks deemed in the public interest. This has sparked fears over the “undue expansion of government access to data,” Oxman added. Industry stakeholders like Adam Sitkoff, Executive Director of the American Chamber of Commerce in Hanoi, highlighted the potential “significant compliance challenges” for the private sector and revealed ongoing discussions to encourage authorities to reconsider the legislative pace.
Featured image courtesy of 80 Level
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