Vietnam’s digital transformation journey represents one of Southeast Asia’s most compelling success stories. The nation has achieved remarkable momentum with its digital economy expanding at approximately 20% annually since 2022, significantly outpacing regional peers and contributing 18.3% to national GDP as of 2024. E-commerce has emerged as a particularly dynamic sector, with retail sales reaching US$25 billion and securing Vietnam’s position among the world’s top 10 fastest-growing e-commerce markets.

Strategic policy frameworks are driving this transformation forward. The National Digital Transformation Programme charts an ambitious course toward becoming a top 30 global digital economy by 2030, while Resolution No. 57 provides the foundation for breakthroughs in science, technology, innovation, and digital transformation. Legislative developments are keeping pace with market evolution, as the draft E-commerce Law prepares for National Assembly submission in 2025, promising a comprehensive legal framework for the digital marketplace.

To sustain this remarkable growth trajectory, it’s essential for Vietnam to think of a fit-for-purpose governance approach that balances innovation with protection. This involves crafting regulations and frameworks that address Vietnam’s specific context while anticipating future technological and business model trends, creating sufficient room for innovation to flourish.

Recognising this imperative, the Tech for Good Institute, in partnership with the Hanoi Association for Communication and Public Relations and the Institute for Policy and Strategy, conducted a research dialogue on “The Evolution of Tech Governance in Southeast Asia with a spotlight on Vietnam.” The event aimed to explore key trends, regulatory developments, and policy priorities shaping Vietnam’s rapidly expanding digital economy, bringing together policymakers, industry leaders, and academic experts.

Speakers:

1. Dr Nguyen Minh Thao, Head of the Science, Technology and Innovation Research Department, The Institute for Policy and Strategy (Moderator)
2. Nguyen Huu Tuan, Director of the Center for Development of E-Commerce and Digital Economy, the E-Commerce and Digital Economy Authority, Ministry of Industry and Trade
3. Prof. Dr Sci. Ho Tu Bao, Scientific Director, International Research Center for Artificial Intelligence.
4. Nguyen Thanh Hung, Advisor to Vietnam E-commerce Association (VECOM)
5. Nguyen Quang Dong, Director of the Institute for Policy Research and Communication Development (IPS)
6. Nguyen Vo Hung, Deputy Director, the Innovation Promotion Center, Agency of Innovation, Ministry of Science and Technology
7. Dr Nguyen Quoc Viet, University of Economics and Business – Vietnam National University
8. Citra Nasruddin, Programme Director, Tech for Good Institute
9. Keith Detros, Programme Manager, Tech for Good Institute

Key takeaways:

1. There is a strong call for a light-touch regulatory framework to support ongoing innovation and the growth of the digital economy.

Vietnam has embarked on this transformative journey with the amended Telecommunications Law that took effect on January 1, 2025. The former Ministry of Information and Communications, now integrated into the Ministry of Science and Technology, proposed light-touch regulatory frameworks aimed at fostering digital development. This new legislation exempts Over-the-Top (OTT) services, cloud computing, and internet data centers from traditional telecommunications obligations, recognising their unique characteristics and the need for regulations that encourage innovation rather than restrict it.

This light-touch strategy is consistent with a broader regional trend among Southeast Asia’s leading digital economies. Singapore’s Infocomm Media Development Authority (IMDA) has effectively executed this strategy with its class licensing scheme, which establishes minimal criteria to maintain key values while promoting significant industry growth. Similarly, Malaysia has implemented minimum restrictions for cloud services to improve data security while allowing for operational freedom. In the Philippines, Bangko Sentral ng Pilipinas (BSP) demonstrates this philosophy through its implementation of regulatory sandboxes and a light-touch approach to payment systems, allowing fintech innovations to flourish under controlled conditions.

This approach acknowledges that emerging fields, particularly digital technologies, evolve much faster than traditional regulatory development cycles. Experts at the research dialogue emphasised that regulatory frameworks should facilitate the growth and innovation of digital commerce, rather than obstruct it. This involves developing laws and policies that are inherently adaptable, offering clear guidance while maintaining the flexibility to accommodate new digital business models.

2. Inclusive policy design with the participation of diverse stakeholders continues to be considered a necessary approach for effective digital governance.

Vietnam recognises that stakeholder consultation and feedback represent crucial elements in policy formulation, significantly contributing to policy quality and determining the success of policy implementation. This commitment has been formalised through the 2025 Law on Promulgation of Legal Documents, adopted early this year, which makes public consultation mandatory in the legislative process. The participation of relevant stakeholders helps the policy development process receive innovative ideas, gather diverse perspectives from multiple information sources, and obtain specialised knowledge support across different professional domains, creating fairness while helping to avoid or anticipate risks that may arise during policy adoption and implementation.

This multidimensional approach requires close coordination among regulatory authorities, technology enterprises, related sectors, professional associations, and user communities. The panel discussion highlighted that policy development with the participation of platforms, business associations, small and medium-sized enterprises (SMEs), and consumers will help to ensure that regulations address real market needs rather than theoretical concerns. This collaborative framework creates more effective and practical outcomes by incorporating ground-level insights from those who will ultimately be affected by the regulations.

3. To be able to help balance innovation and regulation, policy innovation initiatives should be considered.

Policy sandboxing was highlighted as a valuable tool for testing and refining regulations in a rapidly evolving digital environment. It allows regulators to maintain oversight while providing controlled spaces for technological experimentation.

Vietnam has recently joined this regional movement with significant policy developments that reflect a growing commitment to regulatory innovation. The country announced its first regulatory fintech sandbox to pilot innovations in credit scoring, peer-to-peer lending, blockchain in banking, and API data sharing. More substantially, Government Decree No. 94/2025/ND-CP establishing banking sector sandbox mechanisms takes effect from July 1, 2025, marking Vietnam’s formal institutionalisation of experimental regulatory frameworks.

Regional examples demonstrate diverse applications. Singapore is known for its advanced sandbox initiatives, with a privacy-enhancing technology (PET) sandbox launched in 2022 and a generative AI evaluation sandbox started in 2023, complemented by the LaunchPad platform for safe AI experimentation in the public sector. Malaysia operates drone and robotics sandboxes aligned with its national Drone Technology Action Plan 2022-2030, positioning itself as a regional drone hub, while the Philippines implements an agricultural insurance sandbox to address the country’s disaster-prone nature and support agricultural sector resilience through innovative insurance solutions.

During the panel discussion, experts underscored that institutions should be reformed and experimental space expanded to avoid falling behind in rapidly developing technology sectors. The dialogue reinforced sandbox mechanisms as innovative and useful pathways for testing new approaches in controlled environments, allowing both regulators and innovators to learn and adapt together. This policy innovation approach might enable Vietnam to move beyond traditional sequential policymaking toward more agile governance models that can respond effectively to the pace of technological change while maintaining necessary protections for consumers and national interests.

4. Collaborative frameworks driven by industry-led initiatives, such as standards and codes of conduct, should complement formal regulations, especially in rapidly evolving digital sectors.

This approach acknowledges that in fast-changing technological landscapes, waiting for comprehensive formal regulations can lead to governance gaps that either hinder innovation or leave emerging risks unaddressed. The creation of voluntary standards by industry associations and professional bodies offers timely guidance while formal legal frameworks are still being developed, bridging the gap between immediate market needs and eventual regulatory clarity.

During the panel session, experts noted that laws don’t have to be perfect from the outset and that overly strict regulations implemented without a solid understanding of technological nuances may create unnecessary barriers to innovation. A practical recommendation emerged for addressing emerging issues: industry associations should proactively gather feedback from their member enterprises and establish sector-specific Codes of Conduct before regulatory agencies issue formal regulations. This bottom-up approach helps ensure that governance keeps pace with market development while incorporating real-world insights from practitioners who understand the technical and commercial implications of new technologies. Such collaborative frameworks enable swift responses to emerging challenges while maintaining legitimacy through broad stakeholder participation.