Vietnam opens door to foreign digital service providers

• A draft decree enables overseas companies without local partners to provide datacentre, OTT and cloud computing services, aligning with the 2023 Telecom Law
• Public feedback for the decree was solicited until 2 April
• Foreign firms can enjoy simplified regulatory procedures but need to comply with strict user data protection obligations

Vietnam’s Ministry of Information and Communications (MIC) recently closed public feedback on the Draft Telecom Decree, which elaborates on the 2023 Telecom Law’s provisions, including those related to foreign ownership, for the provision of datacentre services, over-the-top (OTT) services and cloud computing. 

One of the key provisions of the 2023 Telecom Law involves opening the door for 100% foreign control and investment in these three rapidly growing sectors, which are classified as value-added telecom services by the MIC. By allowing full foreign ownership in these areas, Vietnam aims to attract global players, foster competition and drive the development of cutting-edge digital infrastructure and services. 

To streamline the entry process for foreign enterprises, the decree proposes a significant reduction in bureaucratic procedures. Unlike the existing requirements, foreign entities won’t need to forge a commercial agreement with a Vietnamese telecom entity. Instead, they are required to notify the Vietnam Telecommunications Authority (VNTA) about their service offerings and provide adequate registration information and documentation. VNTA is then expected to issue confirmations within two to five days of receiving submissions.

Furthermore, the decree meticulously categorises telecom services, introducing precise definitions for emerging service types. It differentiates between basic telecom services and value-added services, with the latter now encompassing OTT, datacentre and cloud computing services. This clarity in service classification is vital for ensuring regulatory compliance and operational transparency for service providers operating in, or planning to enter, the Vietnamese market​.

In line with international norms and the domestic Law on Cybersecurity, the draft decree mandates strict guidelines for the handling and storage of user data, underscoring Vietnam’s commitment to safeguarding user privacy and enhancing cybersecurity measures across the telecom sector​. For example, the draft decree mandates additional cybersecurity measures applying to state agencies, ensuring sensitive government data remains within Vietnam’s jurisdiction.

For foreign entities providing cross-border telecom services, the decree specifies a set of obligations to ensure their operations align with Vietnam’s legal and regulatory frameworks. These provisions aim to foster collaboration between domestic and international firms and contribute to a cohesive and robust telecommunications infrastructure​.

The 2023 Telecom Law is set to take effect from 1 July 2024, the same day that policymakers expect the Draft Decree to be finalised and issued, along with other decrees that elaborate on other provisions of the 2023 Telecom Law. Experts and stakeholders have raised concerns that the law may potentially stifle industry growth and innovation: Criticisms focus on its broad regulatory scope over internet-based and cloud services, which may deter foreign investment and increase operational costs for businesses.

- Joana Bagano, Contributing Editor, TelecomTV