Introduction
Artificial Intelligence (“AI”) is developing at a rapid pace, with its potential to transform economies worldwide by way of boosting productivity, creating high-skilled job opportunities and improving efficiency in key industries such as healthcare, manufacturing and finance. In Vietnam, according to a recent report by Google, AI is expected to contribute up to VND 1.89 trillion (approximately USD 79.3 billion) to the economy by 2030, accounting for nearly 12% of the country’s GDP.1
This legal update shall provide key highlights of the current legal landscape for AI development, as well as some insights for investors to unlock AI opportunities in Vietnam.
Policy framework
On 27 September 2019, the Political Bureau issued Resolution No. 52-NQ/TW on a number of policies for Vietnam’s proactive engagement in the Fourth Industrial Revolution (Industry 4.0). In this Resolution, AI is highlighted as one of the cornerstone technologies for socio-economic transformation of the country.
Subsequently, on 26 January 2021, the Prime Minister issued Decision No. 127/QD-TTg, setting out the national strategy for AI research, development and application by 2030. Specifically Vietnam targets to position itself among the top 4 in ASEAN and the top 50 in the world in this field by the year of 2030. Key objectives of this strategy include: (i) establishing a robust legal framework to support AI governance and innovation; (ii) developing state-of-the-art infrastructure; (iii) fostering a vibrant AI ecosystem by way of creating skilled workforce through education and training programs, providing incentives for investments in AI start-ups and R&D, etc.; (iv) promoting the adoption of AI in a wide array of sectors such as healthcare, education, finance, transportation, manufacturing, agriculture, etc.; and (v) encouraging collaboration between domestic and international stakeholders.
In light of this, the competent agencies have issued relevant decisions to implement the national strategy, such as Decision No. 552/QD-BTP dated 12 April 2021 of the Ministry of Justice, Decision No. 2259/QD-BTTTT dated 07 December 2022 and Decision No. 699/QD-BTTTT dated 03 May 2024 of the Ministry of Information and Communications (“MIC”), etc.
In the 13th Party Central Committee’s Resolution No. 29-NQ/TW dated 17 November 2022 on accelerating the national industrialisation and modernisation by 2030 with a vision towards 2045, AI, inter alia, is also emphasised as one of the key priorities in the roadmap.
Recent developments in AI regulation
Draft Law on Digital Technology Industry
With the aim of establishing a comprehensive legal framework to pave the ways for emerging digital technologies like AI, big data, cloud computing, IoT, blockchain and virtual/augmented reality, the MIC introduced the Draft Law on Digital Technology Industry (“Draft DTI Law”) for public consultation on 03 July 2024. The Draft DTI Law has since been finalised by the Government and is now being submitted to the 15th National Assembly for review and approval.2 Notably, an entire Section 5 of Chapter IV is specifically dedicated for AI-related regulations.
Newly-introduced definitions of “AI” and “AI system”: Under the Draft DTI Law, “AI” is defined as a technology that aims to simulate human intelligence by using machines, especially computer systems. Meanwhile, the term “AI system” refers to a machine learning-based system that is designed to generate outputs such as content, predictions, recommendations or decisions for a set of human-defined goals.
Policy incentives: The Draft DTI Law offers a wide range of incentives on investment, taxation, credit, land use or rental fees, etc. for digital technology enterprises and projects, including those in the AI sector. Although they are still general and policy-oriented at this stage, it is expected that the competent authorities will issue detailed regulations on the specific incentives along with the eligibility criteria in specialised legal frameworks, such as laws on investment, taxation, land, etc., in the near future.
Ethical standards, prohibited AI practices and risk-based approach: For the purpose of striking a balance between encouraging innovation and mitigating the potential risks associated with AI, the Draft DTI Law introduces provisions on ethical standards, prohibited AI practices and adopts a risk-based approach to govern AI systems.
Labelling requirement: AI-generated digital technology products are required to be labelled for identification purposes.
Regulatory sandbox: Small and medium-sized enterprises (“SMEs”), including those providing AI systems, are encouraged to participate in the regulatory sandbox mechanism established under the Draft DTI Law. This mechanism facilitates a controlled temporary testing of products or services involving innovative digital technology convergence, particularly those that are unregulated or differently regulated under existing legislation, within defined parameters related to space, time, scope and subjects.
The testing period, based upon the current draft, is 2 years (and may be extended) from the date of approval by the competent authority. Apart from other rights and responsibilities prescribed under the Draft DTI Law, it is worth noting that enterprises participating in the sandbox are granted immunity from civil liability for any damage inflicted on the state and are exempt from administrative and criminal liability, provided that they strictly observe the provisions and requirements outlined in the approval document issued by the competent authority. This exemption, however, shall not apply in case the enterprise knew or should have known about the potential risks but failed to promptly inform or report to the competent authority and did not implement adequate measures to prevent or mitigate possible damages.
Draft Law on Personal Data Protection
On 24 September 2024, the Ministry of Public Security released the Draft Law on Personal Data Protection (“Draft PDPL”) for public feedback. On 11 December 2024, upon request of the Government, the Standing Committee of the National Assembly approved the inclusion of the Draft PDPL in the 2025 Law and Ordinance Development Program. According to the plan, the Draft PDPL will be submitted to the National Assembly for review at its 9th session (in May 2025) and approved at its 10th session (in October 2025).3 Upon enactment, the PDPL will become the first overarching law on personal data protection in Vietnam.
One of the key points of the Draft PDPL is its introduction of the provisions governing data protection in specific sectors such as marketing, behavioral advertising, big data, AI, cloud computing, banking and finance, health and insurance, etc. In the context of AI, the Draft PDPL allows organisations and individuals to utilise personal data for research and development of machine-learning algorithms, artificial intelligence and other automated systems, provided that they must (i) serve notice on the data subjects (which must contain clear explanations on the impacts of the algorithm, artificial intelligence or automated system on legitimate rights and interest of the data subjects) and (ii) offer the data subjects the right to opt out.
Please be noted that, in Vietnam, the development and investment in AI will also be governed by the provisions in specialised laws, such as those on cybersecurity, data, information technology, protection of consumers’ rights, investment, etc.
Others
In parallel with strengthening the legal framework governing AI, Vietnam is also actively working on developing principles for responsible AI. On 11 June 2024, the Ministry of Science and Technology (“MST”) issued Decision No. 1290/QD-BKHCN to introduce the Principles on research and development of responsible AI systems (version 1.0).
Based upon our observation, the Vietnam National University, Hanoi – University of Law, with support from the Aus4Innovation Program, is currently implementing a project to develop a set of principles and guidelines on responsible AI in Vietnam (“Responsible AI Principles”), in which the MST is a key partner for providing feedbacks and evaluating the project’s outputs.4
Under the Responsible AI Principles, there will be 7 core principles, including: robustness, safety and security; privacy and personal data protection; transparency and explainability; fairness; respect for autonomy and self-determination rights; accountability; mechanisms for feedback, complaints and redress. The Responsible AI Principles is anticipated to serve as a “soft law”, and organisations are well encouraged to voluntarily adopt these principles in their businesses in order to foster innovation yet trustworthy AI development in Vietnam.
What investors should do
Given the current legal landscape for AI, investors (especially SMEs) should leverage the incentives afforded by the laws, as well as the sandbox mechanism to facilitate the research and development of new digital technology products within 2 years without being burdened by stringent legal barriers. As the digital technology industry is a field that Vietnam is opening up, investment in high-quality human resources and infrastructures for AI development is also strongly encouraged by the Government.
A notable recent showcase is that, in December 2024, NVIDIA (a US-based technology giant) signed an agreement with the Vietnamese Government in order to establish an AI R&D center in Vietnam,5 followed by the acquisition of VinBrain, an AI start-up from Vingroup.6 This has clearly demonstrated the Vietnamese Government’s efforts and determination on bringing AI advantages into Vietnam economy and businesses.
Disclaimer: This Legal Update is intended to provide updates on the Laws for information purposes only, and should not be used or interpreted as our advice for business purposes. LNT & Partners shall not be liable for any use or application of the information for any business purpose. For further clarification or advice from the Legal Update, please consult our lawyers: Mr Nguyen Xuan Thuy at thuy.nguyen@lntpartners.com
For further information, please contact:
NGUYEN Xuan Thuy, Partner, LNT & Partners
thuy.nguyen@lntpartners.com
