US tech firms warn that planned Vietnam law will hamper data centers and social networks – Tech

Tech companies have warned Vietnam’s government that a draft law to tighten data protection rules and restrict data transfers abroad will prevent social media platforms and data center operators from growing their businesses in the country.

The Southeast Asian nation of 100 million is one of the world’s biggest markets for Facebook and other online platforms, and it is looking to exponentially grow its data center industry with foreign investment in the coming years.

The bill “will make it harder for technology companies, social media platforms and data center operators to reach the customers who rely on them every day,” said Jason Oxman, chairman of the Information Technology Industry Council (ITI), a trade association representing major technology companies including Meta , Google and data center operator Equinix.

The bill, which is being debated in parliament, is also designed to make it easier for authorities to access information, and has been supported by the Ministry of Public Security, Vietnamese and foreign officials said.

The Ministry of Public Security and the Ministry of Information did not respond to e-mail and phone calls.

Vietnam’s parliament is debating the law in its current monthly session and plans to pass it on Nov. 30 “if it is acceptable,” according to its agenda, which is subject to change.

Existing Vietnamese regulations already restrict cross-border data transfers in some circumstances, but they are rarely enforced.

It is unclear how the new law, if passed, will affect foreign investment in the country. In August, Reuters reported that Google was considering setting up a large data center in southern Vietnam before the draft law was introduced in parliament.

Research firm BMI said Vietnam could become a major regional player in the data center industry as restrictions on foreign ownership are lifted next year.

Among the provisions of the draft law is a preliminary permission for the transfer abroad of “basic data” and “important data”, which are currently vaguely defined.

“It will disrupt foreign business operations,” Oxman told Reuters.

Tech companies and other firms favor cross-border data flows to cut costs and improve services, but numerous jurisdictions, including the European Union and China, have restricted these transfers, saying it allows them to better protect privacy and sensitive information.

Under the bill, companies would be required to share data with Vietnam’s ruling Communist Party and state organizations in several vaguely defined cases, including to “perform a specific task in the public interest.”

U.S. tech industry representatives have raised concerns with Vietnamese authorities about “unwarranted expansion of government access to data,” Oxman said.

The new law “will cause significant compliance challenges for most private sector companies,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, noting that talks are underway to persuade the government to “revisit the rushed legislative process” on the law.

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