U.S. Tech Group Warns Vietnam's Proposed Data Law Could Stymie Business Growth
Monday, Nov 4, 2024 3:12 pm ET
1min read Vietnam's proposed data law, if enacted in its current form, could significantly hinder the growth and investment of U.S. tech companies in the Southeast Asian market. The draft decree, which aims to strengthen data privacy and security, has drawn criticism from the Asia Internet Coalition (AIC), a group representing major tech firms like Google, Facebook, and Twitter. The AIC warns that the law's extensive rules governing data use and transfer could damage Vietnam's digital transformation plans and create unintended consequences.
The draft decree defines sensitive data much more expansively than in Europe or China, encompassing health, finances, politics, location, life, and social relationships. This extensive view means companies must register to process almost any data they wish to collect, imposing a substantial compliance burden. Graham Greenleaf, a professor at the University of South Wales, doubts the government's ability to process all registrations within the required 20 days, given the broad definition.
The draft decree also requires businesses to ask users for explicit consent to collect data, such as through pop-ups on apps or websites. This could lead to more intrusive user experiences and potentially deter users from engaging with these platforms. Additionally, the decree mandates that data intermediary services, such as social media platforms, must store user data within Vietnam, which could hinder real-time data processing and analysis crucial for these services.
Observers caution that overly stringent rules may cause foreign companies to reevaluate their entry into Vietnam's digital sector, potentially slowing international investment and stifling innovation. The tech sector is keeping a close eye on Vietnam as it attempts to strike a balance between economic expansion and national security. The nation's goal of becoming a regional digital hub may be jeopardized if the proposed data law deters foreign investment.
Facebook, for instance, has expressed concerns about the draft decree's potential impact on its operations in Vietnam. The social media giant has been working with local authorities to address data privacy concerns and comply with regulations. However, the proposed law's extensive rules and compliance burdens could make it more challenging for Facebook and other tech companies to maintain a presence in Vietnam.
The Vietnamese government is expected to finalize the data law later this year, and tech companies are urging Hanoi to align with global approaches to avoid unintended consequences. As Vietnam's digital ecosystem continues to grow, it is crucial for the government to find a balance between data privacy and security, on the one hand, and the promotion of innovation and investment, on the other. The future of Vietnam's digital services and its position in the fierce Southeast Asian market could be drastically altered by the conclusion of this law.
The draft decree defines sensitive data much more expansively than in Europe or China, encompassing health, finances, politics, location, life, and social relationships. This extensive view means companies must register to process almost any data they wish to collect, imposing a substantial compliance burden. Graham Greenleaf, a professor at the University of South Wales, doubts the government's ability to process all registrations within the required 20 days, given the broad definition.
The draft decree also requires businesses to ask users for explicit consent to collect data, such as through pop-ups on apps or websites. This could lead to more intrusive user experiences and potentially deter users from engaging with these platforms. Additionally, the decree mandates that data intermediary services, such as social media platforms, must store user data within Vietnam, which could hinder real-time data processing and analysis crucial for these services.
Observers caution that overly stringent rules may cause foreign companies to reevaluate their entry into Vietnam's digital sector, potentially slowing international investment and stifling innovation. The tech sector is keeping a close eye on Vietnam as it attempts to strike a balance between economic expansion and national security. The nation's goal of becoming a regional digital hub may be jeopardized if the proposed data law deters foreign investment.
Facebook, for instance, has expressed concerns about the draft decree's potential impact on its operations in Vietnam. The social media giant has been working with local authorities to address data privacy concerns and comply with regulations. However, the proposed law's extensive rules and compliance burdens could make it more challenging for Facebook and other tech companies to maintain a presence in Vietnam.
The Vietnamese government is expected to finalize the data law later this year, and tech companies are urging Hanoi to align with global approaches to avoid unintended consequences. As Vietnam's digital ecosystem continues to grow, it is crucial for the government to find a balance between data privacy and security, on the one hand, and the promotion of innovation and investment, on the other. The future of Vietnam's digital services and its position in the fierce Southeast Asian market could be drastically altered by the conclusion of this law.
