Draft telecoms law not supportive of Vietnam, foreign investors: experts

Vietnam’s draft Telecoms Law, which would expectedly be passed in late 2023 and take effect in July 2024, may hinder both domestic and foreign companies in the industry and does not keep up with technology trends, according to industry sources.

The draft law is expected to promote all economic sectors to join the development of telecommunications infrastructure and other infrastructure conditions to serve Vietnam’s digital transformation and development of a digital economy, in line with the development trends of technology, while solving shortcomings in the implementation of the current Telecoms Law.

However, the draft law is not close to serving these purposes, Vietnam Chamber of Commerce and Industry (VCCI) head of legal Dau Anh Tuan told a workshop held in Hanoi on Thursday to collect critical comments for this bill.

Some comments from businesses showed concern that the bill expands its coverage to non-telecoms services, such as Internet-based voice, message, and meeting services; cloud services; and data center services. In many other countries, these services are not telecoms services, therefore not governed by their telecoms laws. Therefore, when this bill is passed as it is now, these services need licenses.

Vu Tu Thanh, Vietnam representative of the U.S.-ASEAN Business Council, said this bill’s rules would become barriers against foreign investment in cloud computing and data center services, which have a very important role to play in the development of a digital economy.

“Cloud computing and data center services are not telecoms services. So it is not clear why these services are included in the bill’s coverage,” he said.

At present, foreign OTT service providers are providing convenient means for Vietnamese residents to communicate more easily than before, contributing to IT development in the country. The distinction between OTT service providers and providers of traditional telecommunications services based on rules on foreign ownership caps will make it difficult for Vietnamese OTT service providers to access capital from foreign investors, thus hindering technological innovation in Vietnam.

Concern of higher costs

According to the American Chamber of Commerce (AmCham), businesses and people are benefiting from various Internet-based free services for communications and online meetings. They did make substantial contributions during the Covid-19 pandemic, which caused social distancing.

These OTT services are currently an integral part of business operations. Without taking advantage of these free and effective communication tools, corporate operating costs will increase significantly while Vietnam’s business environment will become less attractive and less competitive, according to market analysts.

AmCham Hanoi vice chairwoman Nguyen Viet Ha said that Internet-based and satellite-backed services will facilitate the country’s socio-economic development thanks to extensive coverage, almost everywhere. Using these services means no investment for undersea cable systems and transmission lines, which are costly and unstable, she said.

The development of cross-border satellite-aided and Internet-based services can become an effective alternative for undersea cables and transmission lines while diversifying Internet connections for many user groups, according to her.

Japan, the Philippines, Indonesia and other Asian countries have explored these services. Therefore, AmCham proposed Vietnam catch up with this trend, therefore the draft law should support suppliers of these services if they have a Vietnam office or a business contract with a Vietnamese partner.

The draft was prepared by the Ministry of Information and Communications. The National Assembly, Vietnam’s lawmaking body, plans to discuss the draft at its sitting session this May and June.