Vietnamese crackdown may harm emerging tech sector - and its investors

ho chi minh city

Disruptive internet technology companies are threatening to undercut profits in Vietnam’s military-owned telecoms industry, sparking a government crackdown on entrepreneurs.

Vietnam is fast becoming one of South-East Asia’s tech hubs and internet innovators have flourished in recent years, supported by the popularity of smartphones, strong internet infrastructure and a proliferation of skilled developers combined with low wage expectations. E-commerce, smartphone games and music streaming services are rated as some of the most promising areas for growth.

However, a tightening of security rules and other onerous policies are threatening to hamper the development of these nascent industries, according to the New York Times.

The Vietnamese government has been keen to attract inbound investment and outsourced production from companies like Samsung, Microsoft and Intel, all of which now have factories in the country. However, newly proposed laws would mean that foreign tech companies must have a local presence in the company in order to offer services there - and the Asia Internet Coalition, which advises multinationals like Google, Facebook, Apple, LinkedIn and SalesForce on policy issues, says it is “very concerned” that this could restrict their ability to operate.

What’s more, the country’s notoriously draconian attitude to freedom of speech seems to have tipped over into a distrust of internet entrepreneurship.

As of last year, administrators of news sites and social networks have had apply for a license and archive all posts for two years – and have been told they must have a university degree to hold the position. New rules due for implementation will insist that online game creators use Vietnam-based payment system, while internet-based voice and text providers are likely to have to sign contracts with telecommunications companies in the near future.

I don’t think it’s going to be a game-stopper,” tech entrepreneur Phil Tran of Glass Egg told the New York Times.  But: “it does have a deterring effect.”