US Tech Firms Caution Vietnam's Draft Data Law Could Restrict Growth of Social Media and Data Centers

HANOI, Nov 4 - U.S. tech companies have cautioned the Vietnamese government that a proposed data protection law, which aims to restrict data transfers abroad and tighten data controls, could hinder the growth of social media platforms and data center operations in the country.

With a population of 100 million, Vietnam is one of the largest markets globally for platforms like Facebook, and the country has ambitious plans to boost its data center sector with foreign investment in the coming years.

The proposed law “will make it challenging for tech companies, social media platforms, and data center operators to reach their daily users,” said Jason Oxman, chair of the Information Technology Industry Council (ITI), which represents major tech firms including Meta (META.O), Google (GOOGL.O), and Equinix (EQIX.O).

Parliament is currently discussing the draft law, introduced by the Ministry of Public Security, with potential plans to pass it on Nov. 30. While existing regulations already restrict some cross-border data transfers, enforcement has been limited.

The full impact of the new law on foreign investments remains unclear. Earlier this year, Reuters reported that Google was considering a major data center in southern Vietnam before the draft law’s introduction.

'Overreach in Government Access'

One of the draft law’s provisions requires prior authorization for transferring "core" and "important" data abroad, though these terms are not clearly defined. "This will obstruct foreign business operations," Oxman told Reuters.

Many tech firms rely on cross-border data flows to enhance services and cut costs. However, regions like the EU and China have enacted similar restrictions, arguing these measures help protect privacy.

Under the draft law, companies would be required to share data with the Communist Party and government organizations in various situations, including for "public interest" tasks. The U.S. tech industry has raised concerns about “an excessive expansion of government access to data,” said Oxman.

The new legislation would create substantial compliance challenges for most companies, noted Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi. Talks are underway to urge authorities to reconsider the rapid legislative timeline.