Cybersecurity

Vietnam's New Cybersecurity Law Will Hurt Economic Growth

As U.S. Ambassador to Vietnam from 2011 to 2014, I would console myself when faced with a diplomatic setback that Vietnam has always achieved progress by taking two steps forward and one step back. However, the passage of a restrictive cybersecurity law by Vietnam’s National Assembly is a giant step back—one that comes at the expense of Vietnam’s small and medium-sized businesses (SMBs) in particular.

In May 2017, the Vietnamese Government released an ambitious directive to guide the country through the Fourth Industrial Revolution (4IR). Directive 16, as it is officially known, instructed government agencies to improve Vietnam’s competitiveness by leveraging digital and communications technology. It warned against falling behind in the development of digital capabilities and exhorted government agencies to “enable people and enterprises to easily and fairly grasp the opportunities for digital content development.”

The directive assessed the information and communication technology (ICT) sector’s significant potential contribution to Vietnam’s economy accurately. Vietnam’s GDP growth topped 6.8 percent last year, supported by a buoyant internet economy and foreign direct investment. According to a recent study by Temasek and Google, the internet economy increased from $3.3 billion to $5.7 billion between 2015 and 2017. E-commerce is also a particularly promising sector. The Ministry of Industry and Trade has also reported that Vietnam’s e-commerce retail sales growth in 2016-20 will reach 20 percent per year.