Vietnam's New Digital Law: Sovereignty Strategy Or Business Barrier? (Video)

Vietnam is entering a new chapter in its technological development. The Digital Technology Industry Law (DTL), set to take effect on January 1, 2026, represents more than a legal milestone—it is a decisive declaration of digital sovereignty. With this legislation, Hanoi has drafted a national blueprint to accelerate the country's rise from a fast-growing investment frontier to a regulated, self-determined digital economy, but it raises significant challenges to foreign capital businesses operating in Vietnam and particularly with regard to IP protection.

A Strategic Blueprint with Global Consequences

The DTL is not an incremental policy. It is a sweeping framework designed to promote domestic innovation, expand local enterprises, and position Vietnam as a serious contender in the global digital economy. Its reach spans artificial intelligence, semiconductor manufacturing, digital assets, and online platforms—industries at the core of the next economic era.

But at its heart, the law asserts Vietnam's right to control its own digital infrastructure, platforms, and data. This approach places Vietnam squarely within a broader Asian trend, echoing the data sovereignty regimes already reshaping business realities in China, Indonesia, and Malaysia.

Core Requirements for Foreign Businesses

For international companies operating in Vietnam, the DTL demands immediate and significant strategic adjustments. Three provisions, in particular, stand out:

• Data Localization:Sensitive categories of data—including personal, governmental, and potentially financial information—must be stored on servers within Vietnam. Officials frame this as essential for national security, but for foreign enterprises used to global cloud architecture, it introduces cost, logistical complexity, and compliance risk.
• Domain Name Regulation:Any service targeting Vietnamese users must adopt a ".vn" domain registered through accredited local registrars. While this aims to strengthen consumer protections and law enforcement jurisdiction, it complicates global branding strategies and creates new exposure to cybersquatting.
• Platform Compliance and Local Presence:Large foreign platforms—social media, e-commerce, streaming—must establish a legal entity or representative office in Vietnam. This ensures accountability under local law, but also subjects platforms to content regulations, IP enforcement obligations, and tax oversight.

These measures align with Vietnam's "Make in Vietnam" strategy, a nationalist drive to reduce reliance on foreign technology and stimulate homegrown innovation. For global businesses, the message is clear: the Vietnamese market will reward those prepared to invest locally, comply fully, and adapt quickly.

Intellectual Property Risks Under the DTL

The law's most consequential impact lies in its treatment of intellectual property. The DTL creates both opportunities—such as reducing piracy and counterfeit trade—and new risks that could erode brand value and weaken enforcement strategies.

• Domain Hijacking:Vietnam's strict first-to-file regime gives registration rights to whoever claims a name first, regardless of international trademark recognition. Opportunistic actors can hijack global brand domains under ".vn," ransom them back, or weaponize them for counterfeit sales and phishing scams. While dispute resolution exists through VNNIC, it is slow, expensive, and uncertain.

• Opaque Takedown System:The Ministry of Information and Communications gains broad discretion to remove content deemed infringing. Unlike the DMCA's transparent processes, Vietnam's procedures lack clear evidentiary standards and written rationales. This opacity leaves foreign companies vulnerable to inconsistent rulings and even malicious takedown abuse by competitors.
• Platform Accountability:The requirement for a locally registered legal entity significantly alters the dynamics of intellectual property enforcement. For platforms with a physical or legal presence in Vietnam, this creates a clear incentive to cooperate with local rightsholders. However, to avoid legal penalties, these platforms may resort to over-blocking, which involves removing more content than necessary, including legitimate user-generated material or commentary, without proper due process. Conversely, foreign platforms without a local legal entity may refuse to enforce takedown requests altogether, effectively creating regulatory gray zones.

The Data Challenge: Evidence Within Borders

The data localization mandate poses a fundamental obstacle for IP enforcement. Evidence—server logs, user data, transaction records—must be generated and preserved in Vietnam to be admissible in local proceedings. Without a Vietnamese data footprint, companies risk losing their ability to substantiate claims.

In effect, the DTL forces foreign firms to build a parallel compliance and enforcement infrastructure within Vietnam. Those who fail to adapt may find their IP protections practically unenforceable.

For companies with IP to protect and eyeing Vietnam's fast-growing digital market, the DTL represents both a barrier and an invitation. Success will depend on proactive engagement:

• Registering all IP locally with the National Office of Intellectual Property.
• Establishing a legal entity or designating a trusted IP agent to gain standing before Vietnamese courts and regulators.
• Conducting due diligence on digital platforms to identify enforcement partners with clear, compliant procedures.
• Developing in-country evidence systems aligned with data localization rules.

Vietnam's courts historically give limited recognition to foreign judgments, making local representation indispensable. An experienced Vietnamese legal partner—well-versed in the country's evolving digital landscape—can mean the difference between protecting brand equity and losing control of it.

Final Thoughts

Vietnam's Digital Technology Industry Law is more than legislation—it is a pivot point in Southeast Asia's regulatory evolution. For forward-looking businesses, it signals both heightened risks and a chance to secure first-mover advantages in a fast-growing digital market.

While DTL compliance does not guarantee success, companies that recognize it not as an obstacle, but as a framework requiring investment and adaptation will give themselves the greatest chance to carve out a strategic presence in Vietnam's digital future.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.