Investing in the development of over-the-top services, data centres, the cloud, and high-speed satellite internet is a growing trend. Does the amended law meet businesses’ expectations in these regards?

Vu Tu Thanh, deputy regional managing director for Vietnam at the US-ASEAN Business Council

The amended law aims to build a legal framework consistent with the trend of digital transformation, converting infrastructure into digital means, while overcoming obstacles in the process of enforcing telecom rules and ensuring compliance with current laws as well as relevant international treaties to which Vietnam is a member.

With the current new approach of converging IT and telecommunications, the amended law has included a number of new types of services including data centre and cloud services, which currently are regulated by the IT law, and internet-based communication application services, also known as OTT services.

Recognising the significant differences between the above services and traditional telecommunications services, the amended law has applied a light touch approach to these types of services. Specifically, OTT, data centres and cloud services are not subject to foreign ownership caps, contribution to the public telecommunications service funds, paying telecommunication operating rights fees, and licensing requirements. These services will only have to register or notify the authority of the provision of services.

However, there are still many other obligations applicable to traditional services which now apply to these new services. Specifically, there are about 16 items of traditional service obligations which now apply to OTT services and 24 items applicable to data centre and cloud computing services.

There are obligations that are very specific to telecommunications services, but they still apply to OTT, data centre services and cloud services. For example, there is the obligation to register contract template and boilerplate provisions; obligation to notify, inspect and control networks and services; obligation to apply methods to determine service prices according to methods prescribed by the Ministry of Information and Communications; and obligation to publicise and declare prices, among others

In addition, the amended law also stipulates several periodic and ad-hoc reporting procedures for the aforementioned services. Currently, if cloud and data centre services are still regulated by the Law on Telecommunications Technology, they will not have to fulfill these obligations. Therefore, the “light management” approach no longer seems to make much sense, which causes concerns for investors in these three new service areas.

Will the amended law be able to open new opportunities and make positive changes in the market?

Telecommunications plays an important role in the economic and social development of any country. The law was amended at a time when Vietnam is trying to integrate into the global economy and develop the digital economy. Therefore, this amendment to the law is expected to create more better conditions for all digital economic sectors.

In particular, businesses hope that the amended law will specifically stipulate investment incentives in related services and encourage the development and application of new tech.

However, the amended law fails to meet the expectations of businesses, due to the lack of breakthrough and strategic changes in policies to create better conditions and incentives for businesses to invest in and develop the sector. Policies mentioned in the new law to encourage investment, research and development, and application of new technologies are not specific or clear, so they do not bring practical benefits.

Investors in related fields expect the amended law to have specific and attractive incentives to encourage investment in these nascent technologies, which are playing an increasingly important role. The lack of practical enabling policies and incentives, and the requirement to comply with so many obligations and administrative procedures, will make the Vietnamese market less competitive than other countries in the region.

What regulations need to be added to help the market improve and develop?

The implementing guidance for the amended Telecommunications Law must include specific instructions on the new obligations and procedures stipulated in the law, especially for new types of services that are newly included in the law but are not currently applicable. Simplifying procedures and eliminating unnecessary obligations are practical measures to create better conditions for these services.

The law needs to have more specific regulations on incentives and encouragement to invest in services that are important to the development of the digital economy, such as cloud computing and data centre services, to pull in investment and develop these types of services. The concretisation of incentives will create Vietnam’s attractiveness and competitiveness in attracting investment and advanced technology in the world. Vietnam also needs to open the door to foreign investment in telecommunication fields that use new and advanced technology.

Only then can Vietnam take full advantage of an economy with a young and highly technical workforce to develop the digital economy as well as create a space for innovation and creativity in the future.