In recent years, Vietnam’s digital development has rapidly progressed, driven by the government’s release of the National Digital Transformation Program 2025. This program aims to promote innovation and growth across all industries through the widespread application of digital technologies. By 2025, Vietnam aspires to become one of Southeast Asia’s leading digital economies. For businesses planning to expand into Vietnam, understanding the country’s digital development level, information technology regulations, and the challenges of global IT system integration is critical to formulating a successful digital strategy.

1. Vietnam’s Digital Regulations and Market Access

Data Protection Regulations:

Vietnam’s Law on Cybersecurity was officially enacted in 2019, stipulating that companies conducting digital business in Vietnam must comply with local data storage and privacy protection requirements. The law mandates that businesses store local users’ data within Vietnam, and sensitive data cannot be transferred abroad without the user’s consent. Additionally, data transmission and processing activities related to national security must receive prior government approval.

Specific Requirements: Companies that handle the personal data of Vietnamese citizens must set up local servers to store this data and strictly adhere to privacy protection regulations. Companies violating these regulations could face significant fines and operational restrictions.

Content Control:

Under Vietnam’s Information Technology Law and the Law on Cybersecurity, companies’ online content must comply with Vietnamese regulations. The government maintains strong oversight and management capabilities over internet content and information flow on e-commerce platforms. Therefore, foreign businesses operating in Vietnam must ensure that platform content meets local regulatory standards to avoid legal violations.

E-commerce and Payment Regulations:

Vietnam’s e-commerce market is growing rapidly, particularly in the B2C and B2B sectors. Businesses must understand and comply with the Law on E-commerce and the Law on Payment Services. When dealing with cross-border payments and electronic contract execution, businesses should ensure that their payment systems and contract management platforms comply with relevant regulations.

Market Access: Foreign companies involved in financial technology must obtain approval from the State Bank of Vietnam and meet several local operational qualification requirements.

2. Challenges of Global IT System Integration

Data Storage and Management Across Locations:

Due to Vietnam’s data localization requirements, businesses must adopt a hybrid cloud or multi-cloud strategy within their global IT architecture. Vietnamese data must be stored on local servers while maintaining real-time synchronization with other global data centers. This decentralized data management approach could increase data management costs and complicate system operations.

Implementation Steps: Choose a local data storage service provider that complies with Vietnam’s cybersecurity laws, such as FPT or VNG, and ensure that the global cloud architecture has strong data synchronization and management capabilities.

IT Infrastructure Differences:

While Vietnam’s digital infrastructure is well-developed in major cities (e.g., Hanoi and Ho Chi Minh City), smaller cities and rural areas still suffer from inadequate network coverage. This uneven infrastructure could pose challenges for integrating global IT systems, particularly in terms of data transmission speed and system stability.

Solution: When implementing IT systems in Vietnam, businesses should adjust their system architecture according to local network limitations. By using Edge Computing technology, part of the data processing can be shifted from central servers to local devices, reducing dependence on the network.

Legal Risks of Cross-Border Data Flow:

Vietnam imposes strict regulations on cross-border data transfers, especially when dealing with personal data and sensitive information. Companies must obtain government approval before transferring data out of Vietnam, meaning that data synchronization and backups in global IT systems will require additional legal review and approval processes.

Recommended Measures: When designing global data transmission processes, businesses should clearly define data transfer paths, ensuring that all Vietnamese users’ data is processed locally. Additionally, businesses should work with legal advisors to secure the necessary legal authorizations for cross-border data transfers.

3. Digital Transformation Market Environment

Vietnam’s Digital Economy Potential:

Vietnam’s digital economy is experiencing explosive growth, with its digital economy expected to reach USD 52 billion by 2025. Key drivers include e-commerce, financial technology (fintech), and smart manufacturing. Businesses entering the Vietnamese market should focus on these cutting-edge fields of digital development and leverage localized IT systems to drive digital transformation.

Practical Application Example: A multinational manufacturing company can introduce smart manufacturing systems in its Vietnamese factories, automating production and using local IoT platforms to monitor equipment operations and production status in real-time, reducing manual intervention and production downtime.

Local Partnerships and Technical Support:

Choosing local IT partners can significantly improve project execution efficiency and compliance when implementing digital transformation in Vietnam. Local partners can not only provide data storage, IT services, and security management but also offer localized technical support to help businesses solve infrastructure differences and other technical challenges.

Recommended Strategy: Establish strategic partnerships with leading local technology companies, such as FPT or VNPT, to leverage their localized technological expertise and rich digital experience, ensuring smooth execution of the company’s digital transformation plans.

4. Data Security and Privacy Protection

Cyberattack Risks and Defenses:

Cybersecurity threats in Vietnam are increasing, particularly targeted attacks on businesses. To counter this, businesses must implement robust cybersecurity strategies to ensure that their global IT systems’ branches in Vietnam are adequately defended against data breaches or system failures.

Key Actions: Businesses should deploy advanced cybersecurity protection systems, including firewalls, Intrusion Detection Systems (IDS), and encryption technologies. Regular vulnerability scans and cybersecurity audits should be conducted. Businesses should also train local IT staff to enhance cybersecurity awareness and collaborate closely with local cybersecurity agencies to respond quickly to threats.

Compliance and Certification Requirements:

During digital transformation in Vietnam, businesses must ensure that their IT systems comply with international data security certification standards such as ISO 27001 and GDPR (if handling EU users’ data), as well as Vietnam’s cybersecurity law’s local certification requirements.

Operational Details: Businesses setting up branches in Vietnam should apply for ISO 27001 certification to ensure that their information management systems meet both international and local data security standards. Additionally, businesses should undergo third-party security assessments annually and optimize their data security strategies based on the assessment results.

5. Case Study: Digital Transformation of a Multinational Retail Company

Background: A multinational retail giant planned to enter the Vietnamese market by introducing an Online-to-Offline (O2O) shopping experience. The company’s main challenges were integrating its global Customer Relationship Management (CRM) system with local user data compliance and ensuring the efficient operation of payment systems and logistics chains.

Operational Approach:

• Localized User Data Management: The company chose VNPT, a local cloud service provider, as its data storage partner in Vietnam, ensuring that user personal data complied with the Law on Cybersecurity’s local storage requirements. The company also used encryption technologies to protect data security during cross-border transfers and performed localized data cleaning and compliance checks before the data entered the global CRM system.
• Omnichannel Payment System Integration: The company partnered with Momo, a local payment service provider, integrating popular Vietnamese electronic payment methods. The payment data was ensured to comply with Vietnam’s Law on Payment Services, mitigating cross-border payment risks.
• Digitalization of Logistics and Warehousing: To improve logistics efficiency, the company introduced a local smart warehouse management system in Vietnam. By using IoT technology, they monitored inventory in real-time and optimized product dispatch and delivery processes, ensuring seamless integration between online platforms and offline stores.

Through this content, businesses can systematically understand Vietnam’s digital transformation market environment, IT system integration challenges, and digital regulation compliance requirements, enabling them to successfully enter the Vietnamese market and achieve successful digital transformation.