Law firm interviewed: Vilaf
Vietnam, one of the fastest-growing countries in Southeast Asia in recent years, has been eager to bring its economy to the forefront of the latest technological evolution.
Apart from a concerted effort to attract semiconductor companies with incentives, Vietnam has also rolled out plans to overhaul its telecommunication regulations to keep up with the rapid digitalisation of the economy.
In November last year, Vietnam’s National Assembly revamped its 2009 telecommunications system with Law No. 24/2023/QH15 on Telecommunications. The new telecommunications law has entered into effect from July this year except for certain provisions that will come into force on January 1, 2025.
Duyen Ha Vo, senior partner at Vietnamese law firm Vilaf, believes Vietnam is poised for urgent regulatory reform as the country hastens its pace for market access liberalisation.
“In response, Vietnam has introduced a new Telecommunications Law designed to align with the evolving digital landscape and attract foreign investment in the telecommunications sector, while fulfilling its global commitments,” she says.
WHAT ARE THE KEY CHANGES?
One of the most significant reforms under Vietnam’s new telecom regime is that certain services, including Internet-based basic telecom services, cloud computing services, and data centres, can now be owned by foreign investors completely.
Notably, these “non-traditional telecom services”, in particular data centre and cloud services, are defined and regulated under Vietnam’s telecommunication framework for the first time.
The telecoms licenses, which are required for the operation of telecommunications companies, will not apply to the new services including data centres, cloud computing and “over the counter” (OTT) communication services, with certain registration or notification obligations.
“The registration requirement may apply to data centres while the notification requirement may apply to Internet-based basic telecom services and cloud computing services,” notes Duyen.
Under the new law, the licenses may have a term no longer than 10 years (renewable) in the case of non-facilities-based telecom services. That is a shift from the 2009 Law, which provided for a license for the establishment of telecommunications networks (infrastructure) and a license for the provision of telecommunications services.
WHAT IS THE APPROACH TOWARDS DIGITAL SERVICES?
As Vietnam intends to catch the technological fast train and modernise its digital infrastructure while bolstering innovation, the new law has been striking a balance between preventing digital services from running afoul without suffocating technological advances.
As such, regulators have subjected Internet-based basic telecom services and cloud computing services under “light regulation.”
“This classification is generally in line with Vietnam’s international treaty classifications,” says Duyen. “Pursuant to Vietnam’s international commitments, Vietnam will remove all foreign ownership restrictions on non-facilities-based telecom services by January 2024 under the CPTPP and will remove all foreign ownership restrictions on non-facilities-based value-added telecom services by August 2025 under the EVFTA.”
Additionally, “Only businesses with telecom service licenses are required to pay telecom operation fees, therefore, Internet-based basic telecom services and cloud computing services will be exempt from these fees,” she adds.
IN WHAT WAYS CAN THE NEW LAW CONTRIBUTE TO VIETNAM’S GROWTH?
In introducing reforms to the telecommunication sectors, which include industries pivotal in the global supply chain of critical technologies, lawyers are optimistic that the new telecoms law could bring relief to foreign investors looking to operate in the communist country often saddled with red tape and bureaucracy.
“The new law is designed to establish a clear framework for emerging telecom services, including cloud computing services, Internet-based basic telecom services, and data centres, while opening these sectors to foreign investment and not imposing telecom service license requirements or telecom operation fees,” notes Duyen.
“These important changes aim to accelerate the growth of Vietnam’s digital economy. However, it will be important to monitor forthcoming implementing sub-law regulations to assess the full impact of the new legal framework,” she adds.
