How are Foreign Investors Responding to Vietnam’s New Data Localization Regulation

Vietnam’s new data localization regulation requires domestic and certain foreign companies to locally store personal data. It is unclear how the regulation can be enforced without reneging on its pledge against forced data localization as part of the CPTPP trade agreement. The announcement has rattled business groups and trade partners.

ietnam will introduce a new law on October 1, mandating that all domestic companies and certain foreign firms providing services in areas like telecommunications, e-commerce, and online payment will have to store specific types of data in-country for a minimum period of 24 months.

The new rules were unveiled in August and require firms to locally store personal data, including credit card information, email addresses, recent logins, phone numbers, and the groups users interact with. The regulation has been met with opposition from business groups, notably those from the United States, as well as Vietnam’s Pacific free trade partners.

US business groups warn that the new regulation will create uncertainty and could have a “considerable impact” on investment. Vietnam has emerged as a popular investment destination amid rising geopolitical tensions between the West and China. The Southeast Asian country – known for its beaches, rivers, Buddhist pagodas, and bustling cities – offers low labor costs, international market access, and less political risk than neighboring manufacturing powerhouse, China.

International firms will have 12 months to ensure that they comply with the new regulations once instructions are received from the Minister of Public Security. Vietnam’s Communist Party has particularly strict media censorship laws and has enacted regulations to increase its oversight in the internet domain – this started with a cyber security law in 2019 and moved forward in 2021 with guidelines on social media.

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