By Dr. Thao Nguyen Minh, Head of the Business Environment and Competitiveness Research Department, Vietnam’s Central Institute for Economic Management (CIEM)
Digital transformation and the tech-powered development are undeniable trends in the region. Technology solutions are changing governments, markets, and society. This key trend is also observable in Vietnam, where the government considers the digital economy as one of the key priorities for national development strategies.
In the National Strategy for Developing Digital Economy and Digital Society to 2025, with a Vision to 2030, the government acknowledges the importance of “restructuring, optimising, increasing the proportion and penetration of the digital economy in the entire economy.” At the same time, the government emphasises the need to protect the society during digital transformation, specifically noting to “implement risk management in the process of transition to the digital economy and digital society, and protect people and businesses against risks and bad elements that harm the legitimate interests of people and businesses“.
Thus, in the first half of 2024, there are notable steps taken by Vietnam towards this vision.
The Evolving Regulator’s Landscape
Vietnam’s digital economy development is based on four key pillars: (i) the information technology industry; (ii) digitalisation of key economic sectors; (iii) digital governance; and (iv) digital data. For 2024, the government has identified several specific goals. These targets include supporting 48,000 digital technology businesses operating locally, ensuring that 60% of businesses in industrial parks and export processing zones apply digital platforms in their production and management processes, having 40% of adults use online public services, and connecting 100% of administrative procedure systems of line ministries and localities to the monitoring system (EMC System).
To achieve these goals, the government has assigned several ministries to research, review, and draft relevant regulations, including technology policies. Accordingly, in the first half of 2024, ministries such as the Ministry of Industry and Trade (MoIT), the State Bank of Vietnam (SBV), the Ministry of Science and Technology (MoST), the Ministry of Information and Communications (MIC), the Ministry of Public Security (MoPS), and the National Committee for Digital Transformation (NCDT) have led the drafting and submission of policies and regulations to the National Assembly and the Government for approval of eight legal documents and one guidance document.
In particular, these regulators have focused on: (i) digital payment and fintech; (ii) national database, electronic authentication, and identification; (iii) protection of consumers’ rights; (iv) high-tech; and (v) guidance on drafting regulations and implementing tasks and solutions for digital transformation, as well as promoting innovation and technology application.
While there were no changes in terms of mandate and the areas of focus of ministries, there were movements in key policymakers. Notable changes include:
- Mr Ho Duc Thang, Director of the Information Center at the Commission for the Management of State Capital at Enterprises, was appointed by the MIC to the position of Acting Director of the National Digital Transformation Agency, effective from 1 January 2024.
- Senior Lieutenant General Luong Tam Quang was appointed Minister of Public Security, with his term starting on 6 June 2024.
- General To Lam was elected President and, from 3 August 2024, was elected by the Party Central Committee to hold the position of General Secretary.
- Mr Pham Duc Long, Deputy Minister of MIC, was appointed a member of the National Committee for Digital Transformation (NCDT) to replace Mr Nguyen Huy Dung, Deputy Minister of MIC, according to Decision No 256/Decision-TTg dated 29 March 2024, which consolidates the members of the NCDT.
This year marks the third anniversary of the government’s organisation of National Digital Transformation Day, which is celebrated on 10 October every year. On 7 June 2024, the MIC introduced this year’s theme: “Popularisation of digital infrastructure and digital applications to develop the digital economy: New driving force for economic growth and productivity.”
As such, regulators, including ministries and local governments, are required to launch and organise related activities. These activities include initiatives and competitions on innovation, introducing the public to “Make in Vietnam” platforms and digital governance models, guiding people on how to use online public services, non-cash payment methods, and e-commerce platforms, and fostering a safe and secure online environment for the digital society.
The Evolving Tech Policy Landscape
In the first six months of 2024, special attention has been paid to technology regulations aimed at promoting digital transformation, technology development, and innovation. In particular, legal documents have been issued with a focus on the following areas: (i) establishing, exchanging, exploiting, using, and managing digital data; (ii) promoting digital payment, non-cash payment, and the sandbox for fintech; (iii) improving the legal basis for consumer rights protection; and (iv) revising policies to promote high-tech investment.
Some notable technology regulations are as follows:
- Regulations on Digital Payment and Fintech. On 18 January 2024, the National Assembly passed the Law on Credit Institutions (Law No. 32/2024/QH15). This law provides for the establishment, organisation, operation, early intervention, special control, reorganisation, dissolution, and bankruptcy of credit institutions. Notably, the Law on Credit Institutions has created a legal basis for the development and promulgation of a decree detailing regulations for fintech sandboxes.
Currently, the SBV is drafting a decree on fintech sandboxes. Since its launch in 2021, there have been seven (7) draft versions. The latest version (March 2024) stipulates three activity groups that will be allowed to undergo sandbox testing, including: (1) credit scoring; (2) sharing data via open application programming interface (Open API); and (3) peer-to-peer lending (P2P lending). The testing period for fintech solutions is a maximum of two years, depending on the specific solution and area, from the time the SBV issues a certificate of participation in the sandbox. The SBV will decide the scope of operation of the fintech solutions. At the same time, in the draft decree, the SBV has proposed several risk management policies.
- Regulations on Database, Electronic Authentication and Identification. The MIC and the MoPS have drafted and submitted three relevant tech regulations for approval, which will take effect from 1 July 2024.
The MIC, in coordination with other agencies, has drafted and submitted Decree No. 47/2024/ND-CP, dated 9 May 2024, to the government for approval. This decree outlines the list of national databases, as well as the processes for building, updating, maintaining, and using these databases. Consequently, the national database will be built and utilised uniformly from central to local levels. The MIC is tasked with managing and using information resources and national databases. Compliance with regulations on the management, connection, and sharing of digital data within the national database will be carried out regularly and continuously. MIC is also expected to ensure a unified connection between the national database and other databases and information systems through the National Data Sharing and Integration Platform. Additionally, all activities must comply with standards, technical regulations, and the Vietnam e-Government Architecture Framework. In summary, this decree aims to improve the legal framework to realise the goal of developing a digital government.
The MoPS, also in coordination with other agencies, has drafted and submitted two additional decrees for approval. Decree No 69/2024/ND-CP, dated 25 June 2024, focuses on electronic authentication and identification, while Decree No 70/2024/ND-CP, dated 25 June 2024, elaborates on certain articles and measures for enforcing the Law on Identification. Decree No 69/2024/ND-CP focuses on the various aspects of electronic identities, including the issuance, management, and use of e-identification accounts, as well as the update and storage of information within the electronic identification and authentication system. It also specifies the conditions and procedures for connecting with this system. Decree No 70/2024/ND-CP, on the other hand, outlines regulations for collecting, managing, connecting, and sharing information within the National Population Database. Both decrees aim to streamline administrative procedures, create more favourable conditions for citizens to exercise their legitimate rights and interests, and strengthen the effectiveness and efficiency of state management regarding population and identification.
- Protection of Consumers’ Rights: The MoIT has drafted and submitted Decree No 55/2024/NĐ-CP, dated 16 May 2024, to the government for approval. This decree elaborates on the Law on Protection of Consumers’ Rights. It regulates general requirements for contracts with consumers, standard form contracts, and general trading conditions. Additionally, the decree includes a chapter on the responsibility for defective products and goods. The decree also stipulates the responsibilities of business organisations and individuals towards consumers in specific transactions, including the establishment and operation of digital platforms, as well as the disclosure and removal of warnings for consumers about transactions in cyberspace.
- On Emerging Technologies and High-Tech Regulations: The MoST has drafted and submitted Decree No 10/2024/ND-CP, dated 1 February 2024, to the government for approval. This decree aims to improve legal policies on high-tech parks and create a favourable investment and business environment to mobilise private resources for high-tech development.
Notably, in early 2024, the National Committee for Digital Transformation (NCDT) approved Decision No 58/QD-UBQGCDS, dated 19 April 2024, which promulgates the 2024 Work Plan of the NCDT. This plan aims to promote actions for digital transformation and implement the goals and tasks outlined in the national digital programmes and strategies. The work plan includes four groups of key tasks (information technology industry, digitalisation of economic sectors, digital management, and digital data) and eight key groups of related solutions: (i) inspection and supervision; (ii) promoting the digital technology industry; (iii) digitalisation in economic sectors; (iv) digital governance; (v) digital data; (vi) digital infrastructure; (vii) information safety and security; and (viii) developing digital communications and human resources.
Progress and Implications for Vietnam’s Digital Economy
Vietnam’s tech regulations have contributed to creating remarkable changes in the economy. Tech regulations reform stems from the rapid changes in consumer behaviours, rise in technology application in businesses, and digitalisation in state administration. It is evident that improving the regulatory environment through tech policies and legal frameworks is a top priority for the government in 2024.
In the latest report on Vietnamese consumer shopping behaviour published by NielsenIQ Vietnam, consumers are twice as likely to shop online compared to 2023. The digital economy in the first six months of 2024 is estimated to grow by 22.4%, and the proportion of the digital economy in GDP is estimated to reach 18.3%. Revenue from the ICT sector of the digital economy is estimated to grow by 26% over the same period in 2023, which is the highest growth for the sector since 2020.
Additionally, according to reports at the 9th session of the NCDT, total sales on five online retail platforms in the first six months of 2024 increased by approximately 80% compared to the same period in 2023. This growth far exceeds the forecast that Vietnam’s e-commerce market revenue in 2024 would only increase by about 35% compared to 2023. The proportion of adults with payment accounts reached 87.08% (up 9.67% compared to the end of 2023), exceeding the target set for 2025. The number of Vietnamese digital technology enterprises increased by 8% over the same period; digital technology business development reached 50,350 businesses, higher than the government’s target of 48,000 businesses.
With the sandbox for Mobile Money, the total cumulative number of customers reached more than 8.8 million, of which 6.3 million were in rural, mountainous, and remote areas. Non-cash payment transactions increased by 58.2% in quantity and 36.7% in value. Data sharing transactions between platforms and information systems through the National Data Exchange Platform (NDXP) in the first six months of 2024 increased sharply by 67% over the same period in 2023.
Also, in the first six months of 2024, for the first time, monitoring and measuring online public services were done automatically through the application of technology and based on databases. Vietnam measured the quality of mobile telecommunications and fixed broadband networks online using the “Make in Vietnam” tool.
Notable changes in tech governance in Vietnam is a step towards, creating positive changes in businesses, consumer behaviours, and state governance. However, organisations and individuals also face many challenges.
For example, tech regulations are urgently issued to ensure compliance with the effective date of higher relevant legal documents, but there are still legal gaps. One such gap is the legal framework for new business models and for early warning and risk management. Additionally, some documents are long overdue, such as the guidelines for the fintech sandboxes and the circular economy sandboxes. In addition, the policies are drafted with strict regulations because regulators are often concerned about the risks.
Another possible area of interest is the process of promulgating regulations. Currently, the process follows the order and procedures of regular legal documents, thus taking a long time. In many cases, this can hinder emerging business models.
Finally, most ministries and localities invest in IT applications in a siloed manner, without coordination with other state agencies. There is also a lack of exchange systems or platforms across government agencies, which can also lead to inefficiencies.
To promote Vietnam’s digital economy, there are key areas regulators can focus on. First, it is necessary to monitor the implementation process to ensure the effectiveness and efficiency of the new tech regulations. Second, a pilot basis can be implemented, either locally or by sector, for new business models. Clear implementation roadmaps should also be in place for innovative ways of conducting business. Third, it is also necessary to strengthen monitoring activities based on data and conducted through platforms. Finally, more research is needed, especially in the areas of emerging technologies. Artificial intelligence (AI), for example, has seen an increase in adoption in Vietnam. Government agencies, such as the MIC, can lead research initiatives on how AI can be leveraged for development. The research can also provide some samples of how AI applications can also be used for public administration and public services.
About the writer:
Dr. Thao Nguyen Minh is the Head of the Business Environment and Competitiveness Research Department, at the Central Institute for Economic Management (CIEM), Vietnam. She is an expert in business environment and digitalisation. She is also the key drafter of Vietnam’s National Strategy for Fourth Industrial Revolution by 2030.
The views and recommendations expressed in this article are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute.
