Other BriefingsVietnam Draft AI Law: Regulatory Milestone and Business Implications
Vietnam Draft Artificial Intelligence (AI) Law introduces one of the world’s first comprehensive AI regulatory frameworks, outlining risk-based classifications, compliance requirements, innovation incentives, and strategic opportunities for businesses investing in AI technologies.
Vietnam is positioning itself at the forefront of global AI regulation, emerging as one of the first countries to introduce a comprehensive legal framework governing the development, deployment, and management of AI.
The Draft Law on AI reflects Vietnam’s strategic intent to assert digital sovereignty, enhance technological competitiveness, and attract high-quality investment into its innovation ecosystem.
Unlike many jurisdictions still in exploratory phases, Vietnam has moved directly toward codifying AI governance principles that balance innovation with risk control. In fact, the government has set the groundwork for upcoming AI regulations in its recently approved Digital Technology Law, which takes a forward-looking, risk-based approach to AI. It seeks to ensure that AI technologies contribute to socio-economic development while safeguarding national security, data integrity, and consumer rights.
This proactive policy direction signals to investors that Vietnam aims to build a predictable regulatory framework that enhances investor confidence.
Scope, guiding principles, and governance structure
The Draft AI Law establishes a broad regulatory scope that extends beyond domestic developers to include any organization, local or foreign, whose AI systems impact users, markets, or national interests in Vietnam. This extraterritorial reach ensures that foreign technology providers cannot bypass obligations by operating from overseas, aligning Vietnam with global regulatory trends seen in the EU AI Act.
As per the draft law, AI-related activities must comply with seven foundational principles that define the country’s governance approach, including:
- Human-centric development: AI must serve and support humans rather than replace them in critical decisions. All AI systems should remain under human supervision, with individuals ultimately accountable for their outcomes.
- Safety, fairness, transparency, and accountability: AI systems must be developed and operated in a safe, secure, and reliable manner. They should ensure fairness, prevent discrimination, enable traceability, and clearly define legal responsibilities in cases of harm.
- National autonomy and international integration: Vietnam seeks to strengthen self-reliance in AI technology, infrastructure, and data while promoting international cooperation consistent with global norms and best practices.
- Inclusive and sustainable development: AI development should support Vietnam’s broader socio-economic sustainability goals, ensuring equitable access and benefits for all citizens, protecting the environment, and preserving cultural identity.
- Balanced and harmonized policymaking: AI-related policies must maintain balance among innovation, regulation, and social interests, ensuring harmony in both design and implementation.
- Risk-based management: Government oversight will be proportionate to the level of risk posed by AI systems, with mandatory regulations applied only to those that demonstrate clear potential for harm.
- Promotion of innovation: The State will create a supportive and secure legal and policy environment to encourage research, startups, and the commercialization of AI-related products and services.
These principles set the regulatory tone, emphasizing responsible deployment without stifling technological advancement.
To oversee implementation, the draft law introduces a centralized governance structure led by the Ministry of Science and Technology and a newly established National AI Commission, slated for setup by July 1, 2026.
This commission will coordinate regulatory enforcement, manage the national AI database, approve high-risk AI activities, and develop technical standards. Its role is designed to ensure unified oversight, reduce fragmentation, and facilitate policy alignment between government, enterprises, and international partners.
Risk-based classification and compliance obligations
The Draft AI Law adopts a four-tier risk classification system that determines the level of regulatory control imposed on AI systems. This structure aligns Vietnam with leading global regulatory models, including the EU AI Act, but introduces features tailored to national security and socio-cultural considerations.
Four-Tier Risk System
The draft law defines four risk levels for evaluating AI systems, including:
- Unacceptable risk: AI systems considered a threat to national security, human dignity, or social order are strictly prohibited. These include technologies that manipulate cognitive behavior, deploy large-scale facial recognition without user consent, or produce deepfakes that may destabilize public opinion.
- High risk: AI deployed in sectors such as finance, healthcare, education, infrastructure, and justice is subject to pre-market approval. These systems must undergo mandatory government assessment and registration before deployment.
- Medium risk: Systems that interact directly with users or generate content must ensure transparency and user awareness. Providers must clearly label AI-generated outputs and implement mechanisms for user feedback and oversight.
- Low risk: AI systems with minimal societal or economic impact are allowed self-regulation, subject to general principles and post-market monitoring.
Businesses developing or deploying AI in Vietnam must conduct risk assessments and maintain detailed technical documentation. High-risk AI systems must undergo conformity assessments, register in the National AI Database, and implement mechanisms for human oversight and incident reporting. Foreign providers must appoint a local legal representative to coordinate compliance and act as the contact point for Vietnamese authorities.
Application restrictions
The draft law explicitly bans AI applications that pose systemic threats. These include real-time biometric surveillance in public spaces (without special approval), large-scale facial recognition databases built through unauthorized data scraping, and AI systems designed to manipulate public opinion or behavior in deceptive ways.
Vietnam’s approach mirrors the EU AI Act in its use of a risk-based classification model. However, Vietnam places stronger emphasis on national sovereignty, data autonomy and infrastructure, and cultural stability. While the EU prioritizes harmonization across member states, Vietnam’s framework is designed to accelerate domestic AI adoption while retaining government oversight of strategic technologies.
This risk-based system provides regulatory clarity and signals Vietnam’s commitment to responsible AI deployment, providing defined pathways for compliance and market entry.
National AI infrastructure, data governance, and innovation incentives
The Draft AI Law lays the groundwork for a national AI ecosystem designed to accelerate innovation while ensuring transparency and state oversight. A central feature is the establishment of the National AI Database, which will serve as a registration and monitoring platform for AI systems operating in Vietnam. High-risk AI systems must be registered before deployment, allowing authorities to track development activities, assess conformity, and intervene when necessary. Entities that register high-risk systems and contribute data may receive preferential treatment, such as access to infrastructure or financial support, as specified in the draft.
To mobilize resources, the government encourages public–private partnerships and introduces a pioneering provision that recognizes AI models, algorithms, and data assets as lawful capital contributions. This represents a significant shift in regulatory thinking, providing companies with new financing avenues and supporting Vietnam’s ambition to formalize the digital economy.
The draft aw also proposes the creation of AI Clusters – innovation zones that provide participating enterprises with access to shared infrastructure, tax incentives, land-use benefits, and government-supported research facilities.
Complementing this, the National AI Development Fund will provide grants, loans, and preferential financing to domestic startups, SMEs, and foreign investors developing AI capabilities in Vietnam. Regulatory sandbox mechanisms enable companies to test AI applications under relaxed regulatory conditions, reducing market entry barriers while supporting responsible experimentation. These mechanisms underscore Vietnam’s ambition to establish itself as an AI hub with clear incentives for industry participation.
Business implications and sectoral impact
The Draft AI Law carries significant implications for both domestic enterprises and foreign investors. Companies developing or deploying high-risk AI systems must establish a robust compliance framework that includes data security protocols, impact assessments, and human oversight mechanisms. Foreign providers must appoint a legal representative in Vietnam, creating a clear point of accountability for regulatory authorities. Penalties may be set as a percentage of global revenue, reinforcing strong cross-border deterrence.
At the same time, the law creates strategic opportunities across key sectors. In healthcare, AI applications in diagnostics and patient management stand to benefit from priority access to national infrastructure and funding.
In finance and fintech, AI can accelerate credit scoring, fraud detection, and digital payments under a regulated framework that increases consumer trust.
In manufacturing and logistics, AI-driven automation aligns with Vietnam’s industrial upgrading agenda, supporting supply chain efficiency and export competitiveness. Meanwhile, public services, including e-government platforms and smart city initiatives, will gain support through public–private partnerships and AI clusters.
Localization and R&D integration now determine market entry advantages, particularly in sectors such as healthcare and manufacturing. Companies that align early with sandbox and cluster initiatives can convert compliance investment into a first-mover advantage. This shift enables businesses to use compliance as a strategic lever for market expansion.
Strategic outlook and recommendations for investors
The Draft AI Law marks a structural shift in Vietnam’s digital policy, moving AI from an unregulated frontier into a state-guided strategic industry. The Draft AI Law demonstrates a forward-looking approach that balances national security, ethical standards, and economic competitiveness. Rather than limiting AI-driven industries, the law aims to create a controlled environment that encourages responsible innovation, investment confidence, and sustainable technological growth.
The phased implementation schedule will be as follows:
- From January 1, 2026: Establishment of the regulatory infrastructure and initial implementation framework.
- From July 1, 2027: Full application of obligations for high-risk AI systems.
- From July 1, 2029: Legacy high-risk systems begin their transition period, with 24 months allowed for registration and conformity procedures.
Investors should use this timeline to assess AI assets, classify risk levels, and adapt operational models to upcoming compliance requirements. Early movers will benefit from policy incentives, preferential access to national AI infrastructure, and the opportunity to shape regulatory outcomes through stakeholder engagement.
Investors should prioritize three key actions: integrating compliance into product development, participating in sandbox programs to gain regulatory insights, and establishing local partnerships or R&D operations to qualify for incentives. By aligning AI strategies with Vietnam’s national priorities, businesses can turn regulatory compliance into a competitive advantage.
The Draft AI Law signals a new phase in Vietnam’s digital economy, where regulated innovation becomes a strategic driver for competitiveness and long-term market leadership. Companies that act early and strategically will be well placed to lead in Vietnam’s emerging AI-driven economy.
This article first appeared on Vietnam Briefing, our sister platform.
